In this day and age, it seems like everyone is looking for a way to make a bit more money. Whether it’s a seasoned professional investor or an everyday individual trying to squeeze out a few extra bucks, there are many ways to make a passive income. One of the hottest ways to get a return in recent years is investing in fine wines. While the investment threshold is much higher than other sources of passive income, buying rare wines is a lot more lucrative than many of these other traditional investments. Take for instance Cult Wines, a UK based wine portfolio manager. In 2016 alone, its index performance yielded a 26 percent return and has had an average annual return of thirteen percent since its inception.
At first glance, wine seems like a no-brainer, but there are many other aspects that come into play. As wines themselves are very unique and often require an innate knowledge, it is recommended that those who invest in wine hire a manager. In turn, these managers will act as a financial advisor to your wine investments by managing your risk level, suggesting purchases, and tracking your overall portfolio. More than that, they will ensure that your money is invested in wines from only trusted sources. These managers will also have a good background into the investment wine exchange, the London International Vinters Exchange. On this exchange, managers and investors alike can track the industry standard for luxury wines prices and research well-sought-after wines. With this knowledge, these managers can help clients balance their portfolios by select a variety of different wine from different regions of the world.
Beyond the exchange and general wine knowledge, managers will also know when to buy and sell wine and what is the best wine to buy. Many wine drinkers themselves and all managers know the most must-have wines come from France and the French Bordeaux region. At the top of the list are the first growth wines, also know as premier crus. These wines include Haut-Brion, Lafite-Rothschild, Latour, and Mouton Rothschild. In combination with knowing the wines, it is exponentially important to know when to buy or sell. According to Stephen Browett, chairman of Farr Vinters, “There’s a huge market for mature wine, from restaurant and drinkers. People want mature wine – they aren’t in the market for the wine when it’s first released.”
The customer demand for wine is approaching an all-time high, leaving investor in recent years with significant returns. Take for instance Sophie Skarbek-Borowska, who began investing with Cult Wines in 2014. She invested only a small sum compared to many other wine investors, but her portfolio has seen a 41 percent increase in the last four years alone. Sophie is just one such example of the promising rate of return, which can be seen more prolifically at a single wine level. Take for instance the wine Domaine de la Romaneé-Conti. A bottle of this wine was bought for just $8,510 in 2015 and is worth more than $15,000 today, an almost 100% increase over the last three years.