Jan. 12, 2023 "Investing in art can hedge against inflation — and it's not just for the wealthy": Today I found this article on the Financial Post:
This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.
The current state of the economy has dealt some heavy hits to the everyday investor.
As of November, the inflation rate in Canada rose to 6.8 per cent, led by rising costs of food, housing and still high price of gas and other goods.
In response, the stock market has been rocky, but that doesn’t mean you should stop investing — you might just want to branch out.
This is where alternative investments come in.
Alternative investments — assets other than stocks —
can help
hedge against inflation,
protect your wealth from downside risk
and potentially enhance portfolio returns.
Thanks to one disruptive start-up, an alternative investment has finally been made accessible to everyday investors — fine art.
Consistent performance
You probably think of art as just some canvas that makes your living room look better, or something you’d see hanging at the National Gallery of Canada but art has quietly outperformed other asset classes for years.
Art is part of a $2.3 trillion asset class according to Deloitte, which is roughly half the size of venture and private equity.
Contemporary art has outperformed the S&P 500 by 131 per cent for the past 26 years, and it has a near zero correlation to stocks according to Citi.
Having a low correlation to stocks makes art a useful hedge against market volatility.
Masterworks, a platform with more than a $1 billion unicorn valuation, is revolutionizing art investing and bringing this asset class to everyday investors.
Becoming an art investor
Masterworks makes it possible for investors to access an asset that has previously been limited to the ultra-wealthy.
Instead of buying a single Monet or Banksy,
you can now invest in shares of individual works.
With this investment platform, all you have to do is select which shares you want to buy and Masterworks will handle the rest.
They do the work for you,
finding,
purchasing
and storing the artwork,
while you get the rewards.
Masterworks holds the piece until it appreciates in value.
When they sell it, you get a prorated portion of the profit.
It may take some time — Masterworks will sell the piece in 3-10 years — but they have a track record of 9-39 per cent net annualized returns on sold paintings.
If you don’t feel like waiting for that windfall, you have the option to sell your shares on their secondary market.
Still unsure? Take a cue from Forbes: “If you’re looking to diversify your portfolio without spending a fortune, Masterworks offers a compelling option.”
It only takes seconds to apply for Masterworks — they make it simple to invest in art and potentially rake in those colourful returns.
This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance.
Wise only partners with brands it trusts and believes may be helpful to the reader.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Investing in art can hedge against inflation | Financial Post
Mar. 31, 2023 "Vinovest review: Fine wine investing made easy for Canadians": Today I found this article by Kyle Trattner on the Financial Post:
This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.
As a seasoned investor, I’m always keeping an eye out for fresh and unique investing opportunities for Canadians.
I recently found Vinovest, an online platform that lets individuals invest in world-class wines.
Curious to learn more about this alternative asset, I gave it a try. So far, my experience has been as fine as the wine, and I wanted to share my honest thoughts with fellow investors.
Vinovest review: 4.5/5 stars
Vinovest is a very good choice for those who want to invest in an alternative asset like wine but don’t want to deal with
researching,
purchasing,
storing
and insuring it themselves.
You can get started in literally a few minutes by creating an account on Vinovest’s website. To get investing, you’ll need to deposit US$1,000, which can be done via a bank account transfer, debit or credit card, paper check or wire transfer.
Crypto users can also use popular ones such as Bitcoin and Doge to fund their accounts.
Vinovest supports multiple currencies, including Canadian dollars. It has no legal or operational limits for Canadian investors, but it is important to note that investment amounts are indicated in USD on their website.
Vinovest offers a range of investment options, including a fully-managed portfolio or a self-managed portfolio.
Once you invest, Vinovest stores your wine in a secure facility and assists with selling when you decide to liquidate.
There is an annual fee of 1.9 per cent to 2.5 per cent depending on the invested amount.
How Vinovest works
Three portfolios offer different risk tolerances and investing goals:
- Conservative: Optimized for the lowest volatility
- Moderate: Optimized to achieve the highest return with the lowest volatility
- Aggressive: Optimized for highest annual returns
Their portfolios are created through a combo of master sommeliers and AI-powered algorithms, with wines selected from various regions.
Once you’ve made your deposit, Vinovest takes about two to three weeks to purchase the wine below the retail price.
Then they’ll authenticate, ship and store it securely for you.
Vinovest doesn’t allow you to view a list of all the wines available, but its algorithm sorts through numerous vintages from different wine regions.
Following a sale, your earnings are reinvested in the portfolio,
and Vinovest rebalances the portfolio automatically, similar to many robo-advisors.
Vinovest plans and pricing
Vinovest’s Starter plan charges an annual management fee of 2.5 per cent, which decreases to 1.9 per cent, per year for the Grand Cru plan. Which plan is yours? It depends on how much money you deposit.
Annual fee:
- Starter: 2.5 per cent
- Plus: 2.35 per cent
- Premium: 2.15 per cent
- Grand Cru: 1.9 per cent
Vinovest also takes a 1.5 per cent cut of sales, but doesn’t charge for listing your items for sale.
Vinovest benefits
Low investing minimum
To get started, you only need a minimum investment of US$1,000, which is pretty low compared to other alternative asset investing platforms. Invest more to reach the higher tiers.
There you’ll have lower annual fees and investors can manually select wines to add to their portfolios.
Low volatility and impressive returns
If the time doesn’t deter you, wine’s low volatility can offer a stable investment and help to diversify your portfolio. From 2014 to 2021, wine saw an average annual return of just over 6 per cent.
Assets such as gold and Bitcoin had a higher combined return but also faced more volatility.
During an interview with Moneywise Anthony Zhang, CEO and co-founder of Vinovest, Zhang said that Vinovest outperformed the stock market and some other commodities (like gold) in 2022.
According to Vinovest’s website, most investment-grade wine will take 10 to 15 years to mature.
Additionally, wine’s value also relies on rarity.
As more time passes, a certain vintage may become more rare, adding to its value.
Vinovest serves up wine futures
Besides a portfolio of international wines and a marketplace, Vinovest also has wine futures trading for its Premium and Grand Cru clients.
Futures contracts allow investors to buy an asset for a set price and sell it for a certain amount on a specific date.
Vinovest curates these offerings and periodically offers them up exclusively for top-tier investors.
Insurance and storage
Vinovest stores wine in secure storage facilities throughout multiple countries, including France and Denmark. The facilities are bonded, which eliminates extra taxes and tariffs on the wine during storage.
You have full ownership and access to your wine if Vinovest ever goes out of business.
There’s also a third-party insurance policy included. So if your wine is mishandled or damaged in a natural disaster, you’ll be reimbursed at the market value.
Since Vinovest doesn’t sell stocks, it is not regulated by the Securities and Exchange Commission or the Canadian Securities Administrators. However, it undergoes multiple audits a year from insurance providers and a third-party auditor, as it says on its website.
Customer support
Vinovest has a customer support team that can be reached by emailing hello@vinovest.co or by calling 213-410-4546.
Where Vinovest could improve
While Vinovest has a very user-friendly investing platform, you should consider some shortcomings before you invest.
- Annual management fees for Vinovest portfolios range from 1.9 per cent to 2.5 per cent, in addition to trading and storage fees
- There are penalties for selling wine within three years of buying
- The Vinovest marketplace presently offers less than 100 types of wine, which may not be enough for investors who want a varied collection
- Fees for buying (2.5 per cent), selling (1 per cent) and storing (1.5 per cent)
- Need to invest at least US$50,000 if you want to customize your portfolio
- Prices on website are in USD, which is important to remember when trading
Bottom line
Vinovest has a strong track record and is a leading platform for investing in fine wines.
However, investors should keep in mind that investing with Vinovest is a long-term strategy since wine can take years to appreciate in value.
If you’re patient as you diversify your portfolio, Vinovest can offer a stable investment choice for Canadian investors.
This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Vinovest review: Fine wine investing made easy | Financial Post
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