• Fees. As noted before, you’ll likely have to hire a wine manager to help you purchase, store and sell the wine you’ve chosen to invest in. This service comes with fees, often in the range of 15% to 20%.
• Fraud. In some circumstances, wines have been sold that are not actually the vintage represented on the label. Particularly in the secondary market for wine, there have been documented cases of fraud.
• Extended time horizon. Because high-demand wines typically increase in value over time, investors must be patient—and able to set aside money for a significant period without expecting a return. They should expect a holding period of at least 10 years to benefit from potential price appreciation, though it’s reasonable to plan on holding the investment even longer.
The potential market for wine could make it a worthwhile means of diversifying your portfolio, but getting into the wine market with the goal of earning a return requires an understanding of the full picture: opportunities, challenges and risks. This is why many wine investors seek the guidance of professional wine buyers. Working with someone experienced in the marketplace could allow your passion investment, just like a fine bottle of wine, to appreciate with age.
Liz Jacovino is a wealth strategist at RBC Wealth Management-U.S.