Rare Wine Price Increased 40 Percent in Five Years

Although the risks are very high in some asset classes, the returns can be historically high and some of the categories provide secure growth, even in, volatile politico-economic conditions. 

Some provide gains in the range of 50 to 100 percent in a decade, where stock market growth rates can below.  The Wealth Report 2019 reveals scotch as a leading asset with a surge of 40 percent in value in the last year to the end of 2018. 

The Knight Frank Luxury Investment Index found the value of hundred bottles of Scotch gained 582 percent in the last ten years to the end of 2018, and whiskey was one of the most successful, that substituted art as the top-performing passion buys.  

Wine market gains

The KFLII report finds - In comparison to FTSE that gained 18% in the last 5 years, and S&P that gained 68%, burgundy was 175% up.  FTSE 100 lost -13 percent and gold gained 4% in the last 12 months. 

The gains in the wine market were mostly seen with the three new world record auctions of rare Macallan 60-Year-Old that were sold in October for £848,750 (or £42,000 per dram or $1.5 million). 

The sale of such items increased in the Asian market where Scotch demand increased in India, Singapore, and China. The Asian buyers are essentially seeking malt whiskey as per the wealth report editor, and many believed the malts have taken over from wine. 

In 2018, coins had a 12 percent annual gain, and art and wine both had 9 percent, while, gold increased by 4 percent. A 1962 Ferrari 25 was sold for a record price of $48.4 million at the RM Sotheby sale in the last year that was one of the most expensive sales in the luxury cars section.

Why millennials are spending on alternatives?

The transactions in the alternative category are growing where the new high net worth young buyers are cautiously selecting passion items as they experienced the phase of recession at the start of their careers.

There are several advantages of investing in such asset classes. It provides anonymity where the buyer does not need to provide private information to the seller or intermediary to buy. 

The items are purchased directly from the seller without the approval of the intermediary government institution, and the regulations are investment-friendly and flexible to suit multiple requirements.

There are several options available for diversification and the new ideas can catch the attention of the buyer. These provide innovative methods to earn attractive returns on the invested capital.  

Most of these assets outperform stocks and bonds during inflation, and even in the case of a risk; diversification can protect the greater part of the portfolio. But one should be cautious in selecting the items as some can be offered at a higher price at auctions, and the sale may not get a bidder to pay the desired price.