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Why Long-Term Real Asset Retention Beats Passive Investing

Tags: wine

Investing in fine Wine has never been more profitable. Figures from the Liv-ex 100, which tracks the world’s top 100 most sought-after wines, show that fine wine has been a better-performing asset class over the last fifteen years than global equities.

Wines from famous regions like Burgundy and Bordeaux have played a huge part in this growth, attracting significant attention from investors in recent times. For instance, Liv-ex’s Burgundy 150 index experienced an incredible 34.9% growth during 2018, while Bordeaux accounted for 60.7% of the total value of all wine traded in the same year. Bottles from these regions are now incredibly valuable—take Petrus, which has been hailed by wine merchants Justerini & Brooks as “the most exclusive and most expensive wine of Bordeaux”, with some vintages now worth over £10,000. Investors can therefore stand to turn a serious profit. As Bloomberg have noted, “there’s a chance for a 20 to 40 percent increase in [a wine’s] value after only one or two years”

However, beyond the simple monetary gains, building a wine collection is valuable in other ways. After all, drinking and collecting wine are historic pastimes that have never solely been about making money.

Wine gets better with age

The fact that some wines age extremely well can pay dividends for those with a collection they’ve spent years amassing. The aging process is caused by complex chemical transformations caused by tannins—phytochemicals found in grape stems, seeds, and skins. Over time, these slowly react with the wine’s alcohol and esters (acidic alcohols) to reduce the acidity of its flavor. An aged wine also offers a better mouthfeel, with mature tannins lingering pleasantly on the gums, cheeks, and tongue. Only certain grapes possess the right balance of sugars, acids, and tannins to age properly, however.

If you’re a wine lover, collecting bottles that age well allows you to enjoy them at their optimal quality. This also saves you money, as aging wine yourself is much cheaper than buying aged wine from others.

You’ll always have world-class wine on hand

For those who regularly entertain guests, or just enjoy a bottle with dinner, having delectable wine on hand is ideal. With access to every bottle you’ll ever need at home, you’ll no longer have to think ahead or make last-minute shopping runs. These wines can be also represent the perfect gift in both private and professional circles. Invited to a dinner party at the last minute? No need to worry—just grab a bottle from your stash, and you’re good to go.

You will have a greater variety of potential food and wine pairings

Food and wine is unquestionably one of life’s great matches. Yet it’s not always easy to pair them satisfactorily—take Cabernet Sauvignon and caviar, a pairing which Wine Folly compared to “drinking canned grape juice in a swamp”. If you only have a limited number of bottles, it’s easy to mismatch wine and food in that fashion.

Yet, by owning a diverse wine collection you’ll likely always have wine to pair with whatever you’re cooking. Making steak? Grab a Cabernet Sauvignon drink with it. In the mood for salmon? Pour some Pinot Noir or Syrah. This level of flexibility is transformative, and can save having to traipse out to wine stores when planning dinners.

Wine collecting makes you more knowledgeable

As you become a more experienced buyer and diversify your collection, you’ll be able to reassess your wine biases and broaden your palate, which means new favorites and more a enjoyable wine-drinking experience. You’ll learn which wines are best for different special occasions too, and also save money by discovering what the best vintages are. This prevents you from shelling out later down the line when others have caught on and the price has soared.

While wine certainly has investment potential, it needn’t be just an asset. For casual wine lovers out there, starting a wine collection can bring great joy in itself.

The post Why Long-Term Real Asset Retention Beats Passive Investing appeared first on Ground Report.



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