Vinovest makes it possible to invest in wine without being uber-rich. What I mean by that is they take care of all the logistics that are involved in wine investing, things that would normally cost you money just to operate. You don’t need to have your own dedicated storage facility, 24/7 chilling, or insurance for all your wine bottles. They do all that for you and more.
Plus, they’ve got in-house experts that help to curate wine to make sure the product you’re investing in is worth it. For all that, you pay a cost. Whether the cost is worth it depends on how your wine investment performs.
Let’s take an honest look at Vinovest and what makes them a good choice for certain investors and a bad choice for others.
- What is Vinovest?
- Who should invest in Vinovest?
- How much is the minimum to invest in Vinovest?
- What are the returns you can expect investing in wine with Vinovest?
- How much does it cost to invest with Vinovest?
- What are the cons with investing with Vinovest?
- Is Vinovest legit?
- In conclusion: Do we recommend Vinovest?
What is Vinovest?
Vinovest was founded in 2019 by Anthony Zhang. He is a University of Southern California dropout, but he’s got two businesses under his belt that he’s successfully sold, with Vinovest being his third business venture.
You may have heard of people investing in wine. Perhaps it’s a foreign concept to you. Don’t worry, it’s generally a foreign concept to a lot of people. The first thing people think of when investing is usually stocks, bonds, or real estate.
Ultimately, Vinovest is a platform that helps to make wine investing easier and more accessible to people who don’t have tens of thousands to necessarily invest. Perhaps you just want to participate in some profits through wine investing, but want to keep your money diversified among other things. No problem, Vinovest can help you with that.
The value that Vinovest provides is that you can be quite hands off with it, and still get double-digit returns. By charging a management fee, all you have to do is invest a minimum amount and they will do all the work for you.
Who should invest in Vinovest?
Keep in mind that Vinovest is considered an alternative investment. There’s nothing wrong with alternative investments per se, it’s just that as a responsible investor, you should be maxing out your tax-advantaged accounts. If you’ve done that, then and only then should you consider Vinovest.
In fact, if you’re interested in other types of alternative investments, there are plenty to go around. Over the past decade, many fintech companies have made alternative investments very accessible to the masses. These include:
- Agridime (cattle investing)
- Vint (wine and alcohol investing)
- Masterworks (art investing)
- OurCrowd (investing in professionally vetted startups)
How much is the minimum to invest in Vinovest?
You can start investing in Vinovest with as little as $1,000.
What are the returns you can expect investing in wine with Vinovest?
Here’s where things get a little dicey. If you’ve ever come across Vinovest, you probably did so through one of their ads served right at you. In one of the ads I’ve been served, Vinovest claims that if I invested $100 in fine wine in 1952, I’d have $420K in my bank account right now.
That’s basically a $420K increase in roughly 70 years. However, as investors generally know, past performance does not indicate future performance. Plus, it’s quite hard to substantiate the claim. Vinovest is a relatively new company that claims they can beat the S&P 500.
The best actual numbers I could get were from a Vinovest investor online who claimed they had several cases of wine back in 2020 that grew by 20% in value over one year. However, one thing to note is that they were able to invest in auction-only wines as well as some rarer wines due to his $50K+ investment with Vinovest.
It’s very possible that those numbers were only attainable because of access to better investment-grade wines, and that someone simply putting in $2K or so wouldn’t get the same results.
However, what is important to note is that during the same period, the S&P 500 was up by over 30%, beating out the aforementioned Vinovest investment.
If we get more info in terms of return on investment with Vinovest for smaller investors who don’t have $50K+ to put in, we’ll be sure to update this post.
How much does it cost to invest with Vinovest?
Vinovest charges a 2.25 – 2.85% annual management fee that is paid on a monthly basis. The tiers are as follows:
- Standard Tier (invest up to $9,999): 2.85%
- Plus Tier (invest $10K+): 2.75%
- Premier Tier (invest $50K+): 2.5%
- Grand Cru Tier (invest $250K+): 2.25%
These aren’t cheap management fees. The numbers may sound quite harmless, but they are anything but that. To truly get ahead, you’ve got to make spectacular returns just to offset that cost.
Vanguard gives an example of what happens when you invest $100K and make $330K on top of it. You end up with a total of $430K from the investment. However, if you are paying an annual fee of just 2%, you actually end up with only $260K of it to yourself. The remaining $170K goes to whoever is charging the fee. And that’s with 2%. Remember, Vinovest charges up to 2.85%.
What are the cons with investing with Vinovest?
There are several reasons why it may not be worth it to invest with Vinovest. The downsides of investing with Vinovest include:
- Riskier asset class to invest in
- Not a long track record to substantiate
- You don’t get to choose your individual investments within Vinovest as a smaller investor, although this may be a good thing overall
- Somewhat illiquid investment depending on your preferred timeframe of investing (you get the best returns starting around year 5 of your wine investment)
- High Vinovest management fees (in comparison to stock ETFs which have expense ratios as low as 0.03%)
Is Vinovest legit?
Vinovest is a legit company that plays by the rules. They securitize their assets as per SEC regulations and legitimately store and take care of your wine for you. They even have the proper insurance on it all in case things go south for any reason.
Vinovest isn’t a scam by any means. Although their management fee is certainly high, it’s a risk you take, as you wine certainly can produce potentially outsized returns if you’re lucky.
In conclusion: Do we recommend Vinovest?
All in all, Vinovest is certainly an interesting concept, quite revolutionary in fact. And if one were to get into wine investing, you could certainly trust Vinovest to help you get into it in a very professional capacity. Still, it is an alternative investment for a reason; make sure you’re maxing out your tax-advantaged accounts before delving into something like this.
That being said, we do think the management fee is quite high. In order for us to truly recommend Vinovest, or wine investing in general, we’d have to see a longer track record specific to the company itself, and since Vinovest has only been around since 2019, there’s not a lot to go by yet.
We’ll be keeping an eye on Vinovest’s performance and updating this article accordingly. For now, it’s a wait and watch for us.