TSI #30: The most profitable investments of 2022

Hello Stoic Investors,

Today I want to focus on alternative investments. 

Building wealth does not mean you need to stick to standard investment vehicles. Sometimes it pays well to think outside the box.

Although 2022 was a tough year for traditional assets, at least one asset was still sparkling: investment-grade wine saw a 13.6% gain. To put things into perspective, the S&P 500 dropped 19.57%.

And if you’re thinking that was just a flash in the pan, think again – it’s up 44.6% over the past five years. Furthermore, it has outperformed the S&P 500 since 1988. Intoxicating.

How is that possible?

Wine has a way of pairing itself well with all kinds of market environments – even the really poor ones. 

You could even call it a recession-proof investment.

The secret behind the success is the supply-demand ratio.

Wine tends to increase in value as it ages because of the limited supply produced each year, which has to quench a growing global thirst.

If you’re anything like me, then this is your next question.

How can I find investable wine?

You could do it the “old-fashioned way”. 

You could simply buy wines listed in the Liv-ex Fine Wine 1000 index. 

For example: 

• Bartolo Mascarello, Barolo
• Bollinger, La Grande Annee
• Bouchard Pere et Fils, Montrachet Grand Cru
• Carruades de Lafite, Pauillac

However, be aware, you will have to organize the correct storage and insurance, and eventually find a buyer at an auction. 

But this seems very time-consuming.

Is there a better way?

Unfortunately, there is no wine-specific ETF to invest in.

Hopefully in the future. In the meantime, here are three possible solutions.

The Wine Investment Fund lets you invest specifically in Bordeaux wines.

And there’s the Vini Sileo Vineyard Fund, if you’d prefer partly owning vineyards in France, Portugal, and Italy.

Or you could use a wine-investing platform like VinoVest, which sends you a questionnaire that allows it to build a wine portfolio tailored for you, then stores and insures your wine for an annual fee that starts at 2.85%.

For transparency: I am not affiliate to any of these platforms and I don’t get commissions if you use it or not – I am simply sharing some tips for you.

But before you jump into this.

Make sure you know what you’re doing

Investing in wine funds can be a way for investors to gain exposure to the fine wine market and potentially generate returns. 

However, like any investment, investing in wine funds also comes with certain risks. Some of the main dangers include:

• Lack of regulation
• Illiquidity
• Hidden costs
• Counterfeiting
• Dependence on wine experts
• Quality risk
• Market risk

It's important for an investor to thoroughly understand the risks before investing in a wine fund and consider the investment as a long-term one.

However, if you have a passion for wine, why not. Cheers.

So, note down these points and start investing today:

• Investment-grade wine outperformed the S&P 500 since 1988
• Investing in Wine by buying bottles is difficult to manage
• Wine Investment Funds make it easy to invest in wine