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22 December 2021

Why you should make fine wine investment your New Year’s resolution

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Posted in: Wine Market News

Tagged: Wine Culture

Forget the usual diet fads and gym subscriptions – investing in fine wine is the only resolution you need in 2022.

January isn’t generally the most joyful month, with its drizzly grey weather and fast-fading memories of Christmas cheer – but it is a time for contemplation of the year ahead. The January lull is a great opportunity to consider your objectives for the coming months, professionally, personally and financially. And if you’re not yet sure what to put on your to-do list for 2022, here’s why investing in fine wine should be at the top of your agenda.

 

There’s money to be made

At its core, investment is about generating wealth. Fine wine has demonstrated its ability to deliver in this regard over different time frames.  

The Liv-ex 1000 index has appreciated 315% since the beginning of 2004 (through end of November 2021). Over the past five years, the index is up 40%, including a 16.5% jump in 2021 year-to-date. And as we discussed in our recent 2022 Outlook, we believe fine wine is poised for onward growth in 2022. 

The upshot? Invest in fine wine now and you could be looking at a good return this time next year, and even more lucrative returns over a five or 10-year investment timeframe.

 

It’s a no-stress pursuit

You don’t need a prior understanding of fine wine to invest (although half the fun is in learning about it), especially if you enlist the help of a firm like Cult Wines, which will take care of your portfolio for you. And because the fine wine market has shown its ability to withstand global shocks, investors can relax, knowing there is less concern with ‘timing the market’ or a need for constant intervention. 

 

It doesn’t matter how strange the news gets

If the last couple of years have been categorised by anything, it’s the seemingly relentless tirade of baffling headlines and news events, all of which can trigger volatility in traditional investment instruments. COVID, Brexit, the rise of cryptocurrency, climate concerns, or even an ill-timed Tweet… all can cause swings in global markets.

Fine wine is relatively detached from the daily news cycle and sentiment swings. And in instances where fine wine is affected, it has historically snapped back quickly. When the COVID-19 pandemic hit in early 2020, for example, fine wine’s downturn was both shorter and less severe than most 

At its 2020 low on 21 March, the Liv-ex 1000 – the broadest measure of the fine wine market – had only declined by 4% compared with double-digit losses in most equity markets.

The takeaway? If current events get even stranger in 2022 (and let’s not rule anything out), your fine wine portfolio should hold strong.

 

It’s an enjoyable pastime

One of the many joys of fine wine is that it’s both a lucrative investment and an enjoyable pursuit. The world of wine is full of enough human stories, history and rich culture to fascinate any budding anthropologist. And if that's not your thing, there’s the geographic elements of fine wine, the scientific properties, the culinary aspects, and, of course, the simple pleasures of enjoying a glass with loved ones. Wine on its own is a rich and satisfying pastime – its ability to grow your wealth reliably and safely is absolutely worth toasting to this New Year.