How Does Fine Wine Compare to Stocks and Bonds?

Stocks and bonds carry a timeless appeal for investors as the core of most portfolios. These asset classes are both liquid and growth-oriented, helping investors generate remarkable stock returns alongside the broader market while hedging with the safer bet of bonds as needed.

However, the investment universe is much broader than these core asset classes. One often-overlooked vehicle is fine wine, which has surged in popularity as a complementary asset class in recent years. Unlike stocks and bonds, though, wine may offer some measure of stability and inflation resistance, as well as the distinction of being a tangible and finite asset. Traditionally reserved for high-net-worth investors, fine wine’s growing appeal has begun to draw in a wider pool of potential investors.

Investing in Fine Wine

Among tangible investment vehicles—items such as precious metals, jewels, and commodities—wine stands apart as both a collectible and an investment. A key element of its appeal in both areas is its potential to appreciate in quality (and thus value) over time. 

Price Stability

Wine prices have tended to rise over the long term. The global average retail price (GARP) is a measure of the retail cost of bottles of wine, and the average GARP of the top 10 most expensive wines in the world more than tripled in the 10 years from 2014 to 2024, with only a fraction of that price increase driven by inflation.

Another benefit of wine as an investment vehicle is its finite supply, which helps to drive demand among collectors and aficionados. This is, of course, true in the case of certain wines more than others, so expertise is essential before committing to an investment. 

Finally, wine may not be subject to taxes under certain conditions—for example, if it is classified as a “wasting asset” with a projected lifespan of under 50 years—or in particular regions.

Risks and Challenges

On the other hand, there are risks and challenges to investing in wine that have helped to make it the target of primarily high-net-worth investors for many years. 

First, wine can be a highly illiquid asset, and the market to buy and sell wine may be difficult to navigate in many areas. Beyond that, wine is a perishable good, and it’s therefore essential to have significant expertise and adequate storage facilities before buying or storing any bottles. In addition to that, concerns about authenticity, environmental factors leading to vintage variation, the risks of fire or drought, and drawbacks add up considerably. 

Despite its potential to grow in value over time, wine also has a disadvantage compared with assets that pay interest or dividends. Many investors find that it only makes sense to buy wine as an investment asset when they already have ample storage space, adequate tools and equipment, and the money to invest in a large volume of wine—this leaves out most investors except those with substantial capital reserves on hand.

Investing in Stocks and Bonds

By comparison, experts view stocks and bonds as essential building blocks of portfolios. These vehicles are much more liquid than wine, allowing investors an easier and less expensive way of reallocating their portfolio or accessing cash. They also provide a compelling balance of the potential for significant gains (through stock investments) and income generation (through bonds).

At the same time, stocks and bonds also have risks and downsides. One major drawback of stocks is their volatility, resulting from their susceptibility to broader market and economic trends. Economic cycles can jolt the prices of many stocks periodically and in unexpected ways. Finally, the tax obligations for these investments threaten to cut into an investor’s gains if they don’t have a complete understanding of how to best minimize their tax implications.

Comparing Fine Wine and Stocks/Bonds

For investors unsure whether to allocate a specific portion of their investment capital toward fine wine or stocks and bonds, comparing these asset classes directly across multiple variables may be helpful.

• Liquidity: Stocks and bonds can be traded quickly, while wine sales take time.
• Risk and volatility: Stocks fluctuate with markets; bonds offer stability but are interest-rate sensitive; wine prices tend to hold steady with low volatility, but wine carries risks associated with perishability.
• Returns: Wine has historically delivered strong risk-adjusted returns, but stocks can generate outsized gains.
• Inflation resistance: Wine holds value well in inflationary environments; bonds may lose real value.
• Tangibility: Wine is a physical, collectible asset; stocks and bonds are paper/market assets.
• Time horizon: Wine works best long-term, while stocks and bonds can fit both short- and long-term strategies.

Which One To Choose?

Ultimately, the decision to invest in fine wines will depend upon an investor’s risk tolerance, goals, and investment timeframe. For growth-oriented investors, stocks are likely a better bet. Those seeking stability may prefer wine, on the other hand. 

Investors with a passion for wine may be more likely to bring their expertise to bear in an investment in this area, while stocks and bonds reward liquidity and growth seekers. Finally, wine investments are best for investors with a longer investment horizon, while stocks and bonds may allow quicker moves.

Taylor Gang, CFP, AIF, managing director, partner & wealth manager of Evensky & Katz/Foldes Wealth Management—and proprietor and winemaker for Gang Family Cellars—acknowledged that “liquidity is not guaranteed and selling one’s wine is rarely simple,” adding that there are legal considerations to reselling alcohol without a license in many states. While “private sales, selling through online and traditional auction houses, and consignment” are options, these may require added time and transaction costs or discounts.

Gang added that “wine markets are less standardized and are not regulated in the same manner as traditional market exchanges,” making them likely to be less efficient. “Counterfeiting is a legitimate issue,” Gang said, putting unwitting or inexperienced investors at risk of buying a fraudulent bottle.

The post-pandemic period has also been challenging for wines, Gang said, citing the Liv-ex Fine Wine 1000 index’s lagging performance in recent years. Still, the index is up nearly 315% between 2004 and 2024 and withstood economic stressors like the 2008-2009 financial crisis and the COVID-19 crisis more successfully than the market more broadly.

Despite these factors, Gang attributed wine’s “low correlation to traditional stocks and bonds,” its lower “overall volatility in times of stress,” and its potential attractive returns as factors that may convince skeptical investors to approach this asset class.

Alternative Investment Models

There are options representing a middle ground for investors interested in exploring the potential of fine wine as an investment but not keen on selecting wines, purchasing bottles, and arranging for storage and maintenance. 

Michael Hansen, MS and CFP, of Monvia Financial LP, suggested an investment in Vinovest, which he likened to a mutual fund or exchange-traded fund (ETF). Hansen said that a service like this represents a “diversified approach” including wine as well as whiskey, and one with “no headaches with regard to buying/selling or storage” for investors. 

Still, Hansen acknowledged that typically investors will have to hold wines for at least seven to ten years. For investors ready to go it alone without the aid of a service like Vinovest, Hansen said, “the tricky part comes to selling, both with regards to when and where.” 

He added that investors should “take a very strict and narrow road with regard to the wines that you buy,” adding that premier Deuxième Cru wines from Bordeaux and top Napa Valley wines are good choices.

The Bottom Line

Fine wine is growing in popularity as an alternative asset class to stocks and bonds. Its benefits include a low correlation to the broader market, the potential for price stability during volatile periods, the possibility of price appreciation over time, and high demand due to limited supply. 

However, investors should keep in mind that wines are also perishable goods that must be stored properly; they do not pay out dividends or interest, bottles are typically highly illiquid and selling can be difficult for many reasons, and there are risks of counterfeiting, environmental factors, and much more.