Why You Should Dump Your Stock Portfolio and Buy Wine Instead
The Knight Frank Luxury Investment Index shows that wine has been the most lucrative collectable of the wealthy in the past year.
Looking to plan for your retirement? Forget picking out a good mutual fund; find a good liquor store instead! According to the Knight Frank Luxury Investment Index, which tracks the value of the collectibles of the rich (and possibly famous), in the past year, wine has outpaced all other luxury assets when it comes to increase in value.
In the past 12 months, collectable fine wines have seen their value grow 25 percent—an amazing investment even by boring investment standards—outperforming other top categories like art, jewelry, cars, watches, antique furniture and, for the dorkiest of wealthy people, coins and stamps. In fact, of all the categories published by CNBC, art had the second highest luxury asset price growth over the same period at a mere 7 percent increase, making wine by far the best collectible recently.
So what's driving wine's surge? Fine wines suffered a major boom and bust during the 2008 financial crisis, but the current strong global economy has driven up collectible wine prices 61 percent over the past five years, with China playing a major role.
"After the crisis, the Chinese buyers were buying high-value wines not because they liked them, but because they perceived those wines to be the ones to buy," Andrew Shirley, who was behind the report, was quoted as saying. "We saw that bubble pop. Now the Chinese wine buyers are more connoisseurs."
The classic fine wine regions of Bordeaux, Burgundy and Northern Italy have been especially sought after during this boom, according to Knight Frank.
However, Shirley also suggested that though art may be trailing pretty far back in second right now, that category could see some immediate growth over wine.
"Art buyers have become more selective," he said. "But I wouldn't be surprised to see art end the year on top." Another advantage to investing in art over wine: You're never going to pull a painting down off the wall and drink it just to impress some business associates.