Luxury investments have long been an attractive way to expand a portfolio. For those who want to diversify beyond the stock market, investing in art, luxury handbags or even classic cars has many benefits. But which luxury investment is most attractive at the moment?
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What’s top of the luxury investments list?
According to Visual Capitalist, the best return on luxury investments is on rare whiskey, with a whopping 478% growth in asset value over a period of 10 years. Next is classic cars, where the last decade has seen growth of 193%.
While these are certainly impressive returns, both require equally impressive investments. Rare whiskeys, like those produced by The Macallan brand, can sell for over a million dollars a bottle. And collectable cars aren’t much cheaper.
For more affordable luxury goods, art, jewellery, and handbags are a much better buy. But according to the latest Knight Frank Luxury Investment Index, for investments that won’t break the bank, you cannot beat wine.
How did wine become king?
For years, luxury handbags like Hermès have been the top luxury investment. In 2016, a report published in The Guardian confirmed that Hermès £150,000 Birkin bag led the list on best investments. Since 1980, the bag has had an average yearly return of 14.2%. That’s higher than gold and some of the most popular index investments, including the S&P 500.
Things have finally changed this year. According to Knight Frank’s luxury investment index, investment-grade wine rose 13% this year, with potentially more growth to come. In the past 10 years, wine has been a growth of 119%. In 2021, watches (5%) and cars (4%) have continued to grow, but they still trail far behind wine.
One of the biggest incentives for collectors of wine is affordability. According to the luxury index, vintages like 1996 and 2000 Bordeauxs offer great growth value but remains more accessible than investments like art or jewellery.
How can you give wine investments a try?
If you are interested in giving wine investments a try, platforms like Cult Wine Investment are a good place to start. Building a wine portfolio isn’t cheap, though. You’ll need at least £10,000 to get started, but that will get you advice on what to buy based on your investment objectives and risk appetite.
Even better, places like Cult Wine Investment are a great choice if you don’t want to worry about storage. The company will store any wine you invest in at their London City Bond warehouse.
If that’s out of your reach, you can always buy single bottles of wine through websites like WineBid or even auction houses.
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What about other luxury investments?
Also known as “passion investments,” luxury investments give you a chance to focus on things you are already passionate about. Do you love classic cars? Or know everything about rare whiskeys and luxury handbags? This is your chance to have fun researching and shopping for exactly those things.
Once you’ve decided what luxury investments you’re interested in, you need to spend time studying the market. This includes how to spot fakes and which items have true value.
Always keep in mind that luxury goods should always be part of a well-diversified portfolio that includes things like cash, stocks and shares.
