Alternative Investing

Wine, Whiskey, and Watches: 3 Alternative Investments "Worth" Knowing

By Brandyce Stephenson | 6min read | Published on March 22nd

Summary: Warren Buffet once defined investing as “the process of laying out money now to receive money in the future,” if that's the case then an investment in one of these alternative assets might very well fit that definition to a T.

When it comes to investing your hard earned money you have more opportunities than you may know about. What if we told you that your love of wine could not only be good for your physical health, but your financial health too or that your infatuation with vintage watches has the potential to be more than just an expensive hobby but could boost your bottom line? 

Now that we have your attention, allow us to share with you three alternative investments that could diversify your portfolio while enjoying the things you already love. 

A quick Google search revealed 124,000,000 results for wine memes. From Rose All Day to Wine Down Wednesdays, there is no doubt people are passionate about their wine and this love affair could prove to be a very lucrative and sustainable investment option. In the United States alone, we consumed 966 million gallons of wine in 2018. While the stock market can fluctuates with the severity of whiplash, wine futures have remained an investment that almost seems to be immune to recession. 

Turns out that your passion for pinot could be good for your portfolio.

While investing in wine was once reserved for the ultra affluent and is still a fairly sophisticated option; access to information, technology, and online platforms have made wine investment accessible to almost anyone looking to expand their portfolio.

As an alternative asset class, wine investment offer a few benefits that make it worth considering:

  1. Supply and demand. Wine is a finite commodity. Production is limited, but global demand remains high. 
  2. Tasty and Tangible. Wine is a physical asset that you can still enjoy, even if financially your bottles don’t perform well. 
  3. Proven Performance. Over time, wine has continued to perform well even in a downturn, maybe it's because it's helping to soothe some sorrows, but one thing is clear even when traditional markets are having a bad day - wine time is still a good time. As a matter of fact, wine has outperformed the S&P for the past 30 years, including during downturns.

So the next time you’re mellowing out with a merlot or savoring a sauvignon blanc at the end of the day, maybe think about how much “richer” it would be if your favorite vino helped expand your portfolio

If wine is not your adult beverage of choice, perhaps you’re seeking something more spirited? 

If you don’t find wine to be a fine addition to your portfolio, then investing in whiskey might be a consideration. Similar to wine, investing in whiskey is not a new investment alternative, however it has seen a big surge in interest. The Knight Frank index reports rare whiskey has seen a 582% growth over the last decade. While once a very select niche, this is a trend that doesn’t show any signs of slowing down. 

Turning from whiskey enthusiasts to avid collectors, connoisseurs have started building collections, while auctions in 2018 saw rare bottles of Macallan fetching over seven figures. While million-dollar Macallans may be the exception, it’s not uncommon these days for releases from sought after brands such as Pappy Van Winkle, Buffalo Trace, or Glenmorangie to sell out in record time. 

If investing in whiskey piques your curiosity, there are three ways to invest in what some call “liquid gold”: 

  1. The ultimate bottle collection. While this takes some knowledge, research, dedication, and patience, starting your investment in valuable bottles of it is often the gateway. This can present some challenges, but provide a great ROI over time, and in the worst-case scenario, if you’ve selected whiskeys you would drink anyway, then if your choices don’t pay off financially, at least you have something to savor. 
  2. Casks might be better than bitcoin. There are reports that suggest investing in whiskey casks could be a better bet than gold or even bitcoin given the recent market swings. At a time when many are looking at ways to diversify their holdings to ensure longevity, whiskey casks could be a favorable investment option. Access to casks was once more difficult to come by with distilleries wanting to hold on to their assets, but these days you can find whiskey brokerages and auctions to help you grow your portfolio. 
  3. Invest direct into a distillery. There are a few ways to go about this. You might look into investing in companies that are already traded publicly or within ETFs.  Another option is to look at smaller or new distilleries looking for direct investment or the opportunity to combine buying a cask while supporting an up and coming business.  For example,  in Japan, the small distillery Nagahama, will set you up with your very own cask for the right price of course. Not only will you get your own cask without the need to worry for a lack of product, you also get to support a growing business in the process, something we at Worthy can really get behind. 

    Anytime is a good time to review your portfolio and look for opportunities to diversify. Speaking of time, it just might be the right time to invest in timepieces.

    Although we may be in the digital age with our Apple watches and devices, watches still seem to always be in style. From heirloom pieces passed down through generations to classics that never seem to lose their appeal selling for millions at auction, watches could be a purposeful and profitable addition to your portfolio.

    Collecting watches is not a new idea of course, however the luxury watch market for some could represent more stability in a volatile market then more traditional investment avenues. The possibility of obtaining a highly regarded Richard Mille or vintage Rolex can offer the chance of a greater ROI than the risk of investing in the stock market.

    In fact, during the onset of the pandemic last year, despite major watch manufacturers putting a hold on new releases, Sotheby’s went on to successfully break records in selling watches at their auctions, by creating a new format that allowed them to roll through inventory while many others took it slow creating gains for buyers and sellers alike. 

    When it comes to watch investing there are a few things to consider: 

    1. The name game. From the holy grail Paul Newman-model Rolex Daytona to Richard Mille’s worn by sports icons and celebs, these brands are not only worn by heavy hitters, but they have shown proven performance over time. Basically, when you buy a timepiece from a well-known and highly-regarded brand, you know what you’re getting with a higher probability of having that reputation serve you well in the future if and when you’re ready to sell. 
    2. Patience is a virtue. Just like any asset there are those rare gems that make headlines like the Paul Newman owned Paul Newman-model Rolex that sold for 17.75 million, driving a boom of similar watches during that time period. However, more often than not value on timepieces will increase steadily over time. Practice patience and enjoy your collection in the interim. 
    3. Do your homework. Take some time to familiarize yourself with the watch world. Study trends and auctions to see what brands and styles have performed over time, consistently. It’s not about the latest trends or what an influencer is wearing today. You’re in it for the long game with this investment. In this case, time is on your side. 

If Warren Buffet once defined investing as “the process of laying out money now to receive money in the future” then an investment in one of these alternative assets might very well fit that definition to a T. 

What all of these investments have in common, aside from being what some would consider luxurious, is they’re not overnight money makers, they each have their own limited supply thereby driving demand, and they hold their own unique value for each investor. Alternative assets have been taking on a greater role when it comes to long-term planning and investment strategy.  There is research that supports alternative investments perform better than traditional investments in the long run. 

Next time you sit down to review your current investment holdings it might be worth considering how wine, whiskey, or watches could add a little luxe to your portfolio.

Brandyce Stephenson

Brandyce is a writer, content creator and strategist for Worthy Financial.