A good bottle of wine may be the answer to investment blues

Posted by: samy October 14, 2011 No Comments

by Erin

In these shaky economic times, you just may find the cure to your financial woes at the bottom of  a bottle.
Well, likely more at the top.
As more and more of us watch idly by while our carefully planned RSP’s and hard-earned saving melt away like ice in a Manhattan cocktail, many of us are looking for alternative ways to solidify our financial futures.  
That was the topic of conversation recently when a friend and I met for several glasses of wine.  Not one to sit on the side lines, she explained she is actively exploring other investment options.
Now I can’t stress enough how I am not a financial advisor, nor do I pretend to be, and ever since I made a serious error adding up some finances Courtney handles all the math, but I had to tell my friend about the possibility of buying fine wine as an investment option. 
A recent article in Decanter magazine revealed a study that shows buying top-notch wines may show better returns than traditional investing in equities.  In fact, the story reads that since 2005, top performing US companies have only seen returns of 50%, whereas top growths in top vintages have returned 500%.
UK-based wineinvestment.org backs up the sentiment, stating 2008 Lafite Rothschild, purchased for 1,900 pounds in July 2009 is now worth 11,500 pounds — a 505% growth rate!
Unfortunately, this is not the case for all wines.  You can’t run out to the LCBO & expect the $12 bottle of Cab Sauv you just picked up for bonus Air Miles — no matter how tasty it is — to really be worth much more than its current value a few years down the line.  In fact it will probably be worth less. 
What I’m really talking about is top performers — specifically first growths from peak vintages from reputable Chateaux in Bordeaux.  And, as the world drinks these bottles away, the ones that remain, well, the owners of these rare bottles get to enjoy the upside of supply and demand.  But even if you manage to join the 1855 club and get your hands on one of these elite bottles, there is no golden egg.  A December 2008 Decanter article notes wine prices in that year fell 13% — however the rest of the market plummeted 30%.
In short, as I told my friend, there is no magic bullet to making a quick buck; but if you do your homework, find a reputable merchant, and don’t invest more than you can afford to lose, buying fine wine for future sale may be very profitable indeed.   
And if the bottom falls out of the market, you can always say bottoms up to your investment and drown your financial sorrows in a well preserved collection.

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