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Bidders say: ‘Drink up’

By Judy Martel · Bankrate.com
Wednesday, February 5, 2014
Posted: 6 am ET

First wine -- and now whiskey -- are capturing the fancy of investors thirsty for the next big thing, with demand particularly strong among Asians. Sotheby's fueled the fire with its recent sale of the most expensive bottle of single-malt whiskey.

Wine and whisky are commanding top dollar from Asian investors.

Wine and whiskey are commanding top dollar from Asian investors.

The rare bottle of Macallan whiskey in a Lalique crystal decanter brought in a whopping $628,205 at the Hong Kong auction, well above the expected range of $258,000 to $516,000. The auction also marked the kickoff of the wine-selling season.

While there's a certain mystique to owning a first-class wine cellar or whiskey collection, Barry Taylor, Certified Financial Planner with Integral Financial Solutions in San Francisco, says investors need to remember that the costs of ownership could add up and, if tastes change, your investment could go down the drain.

"I do see it being more popular, partly because of where I live. The Asian interest started in Napa Valley at least 10 or 15 years ago. First Japanese, and now Chinese companies are buying out wineries. There's a huge demand for wine in China."

But demand has a way of shifting. "I have seen various grapes come and go," he says. "Right now pinots are hot; four or five years ago, it was merlot. Tastes do change."

Special collections, such as art or fine wines, are not for the average investor who doesn't know all the risks, he says. "If you have a lot of wealth, on a relative basis you can try to play these games. But for the average investor, I wouldn't advise collectibles," he adds.

Taylor says the value of wine and whiskey is often in the age and knowing when to sell it. But that requires special storage in the meantime and there's still no guarantee of a buyer down the road.

Big publicity from auction sales or charity sales shouldn't turn a potential investor's head, says Taylor. "It's a question of risk versus reward. You hear great stories, but are they the exception or the rule? I think they're the exception and, most of the time, you'll lose money."

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