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Wine and Wealth

Nov 17, 2023 | Kristi Owens


Building a personalized investment portfolio is a lot like selecting the right wine. Both require asking the right questions, understanding the basic characteristics of your choices, and asking for professional advice to ensure a successful outcome.

DL Estate Pinot

It is that time of year again. A time to gather with friends and family to nourish relationships and celebrate with each other. As we get together to raise a glass, we thought it would be appropriate to remind people the similarities between Wine and Wealth.

As a wealth management team, the tools that we use to build investment portfolios include Stocks, Bonds, and Cash. Each of these asset types have unique characteristics, but when applied in the right amount to the right situation, they help people build wealth and achieve the goals that they have set for themselves.

In the world of wine, there are three main product types: Red, White, and Bubbles. Let’s take a closer look at how the world of Wine and Wealth have many similarities between the components of each. We will start with every day needs.

Bubbles are good for any occasion. Whether you are popping the cork for brunch, or celebrating a special anniversary, bubbles are the drink of choice for many occasions, as well as a variety of foods. Bubbles go with almost all foods, including salads, cheeses, meats, and even deserts. When you do not know what to serve, bubbles are your best bet. They are versatile for every day drinking and will be a great choice for every day needs.

In the financial world, Cash works the same way. Cash is good for any occasion. Cash and bubbles are the go-to for someone who needs a versatile and dependable solution for today’s needs. Cash is a needed component in everyone’s portfolio. You do not want to be subjected to market volatility for unexpected expenses such as car repairs, a new air conditioner, or finding yourself on the wrong side of a layoff at your company.

As we move into White wine, we introduce many different flavor profiles, including light citrus Sauvignon Blancs up to big buttery Chardonnays. White wines seem to be better fit for warm outdoor weather, where cool crisp salads are being served. However, bolder white wines such as Chardonnay can offer more complexity and interest, even as the food becomes heavier and richer in the colder months. White wine requires more thought when pairing with the right food, however it goes with a variety of food options with more flavor and complexity.

White wine is similar to fixed income (bonds) in a financial portfolio. Bonds are meant to deliver more interest and flavor than cash, but still fits within a shorter time horizon where you desire some appreciation as well as ongoing consistency and interest. Bonds are not meant for long term appreciation as much as they are meant for consistency and income as needed for shorter term needs.

Red wine typically offers the best aging opportunities as well as the most complexity of flavor when paired correctly. Some of the most expensive wines in the world are red wines that have been aged over 50 years, therefore, delivering more appreciation when aged over time.

Stocks are the financial equivalent to red wine. Red wines come in all weights and flavor profiles, including lighter bodied Pinot Noir from France to a big bold Cab from Napa Valley. Pairing the right red wine is key to a successful food pairing. The characteristics can be drastic, and the outcomes depend on making the right selection.

Stocks are very similar. For people needing stability and income, dividend stocks provide stability to a portfolio with dampened volatility and more income. For people looking to maximize long term growth, adding more growth-oriented or smaller capitalization stocks where the companies re-invest their profits back into developing new products may provide more growth, but with more volatility in the short term.

Investment products as well as wine varietals can be categorized in a similar fashion. As an example, below are the categories that describe red wine and stock investments. As you can see, there are many different choices when selecting a stock or picking the best red wine for your upcoming occasion.

How to categorize Red Wine:

  1. Type – single vineyard, appellation specific, entire region
  2. Size – thin skinned vs. thick skinned
  3. Style – oak barrels vs. stainless tanks
  4. Varietals – grapes such as pinot noir, merlot, cabernet sauvignon…
  5. Location – new world vs. old world

How to categorize Stock Investments:

  1. Type – individual security, active mutual funds, exchanged traded funds (ETF)
  2. Size – small cap, mid-cap, large cap
  3. Style – growth vs. value
  4. Sector – industries such as healthcare, technology, staples, financials…
  5. Location – domestic vs. international

Whether you are building an investment portfolio of stocks, bonds, and cash, or you are selecting the best wine to serve at your next dinner party, there are many choices that require thoughtful consideration of your final selection. Wine is a tool for food pairings, just like stocks, bonds, and cash are tools we use to build portfolios for successful financial outcomes. Ask the right questions. Understand the core characteristics. And when in doubt, ask for professional guidance.

Wine Sommeliers are experts in helping you select the best wine for the food you are serving and/or eating. Similarly, Financial Advisors can help you build the best portfolio for the financial goals you have set. Seeking out expertise in assessing your choices and making personalized selections that best fit your specific needs will normally lead to a more successful experience, whether we are talking about Wine or Wealth.

By asking the right questions to determine the right tool for the job, we help families navigate the financial tools such as stocks, bonds, and cash to build personalized portfolios that help them meet their goals and achieve their needs, wants, and wishes. The best outcomes begin with the right tools.

Come join our family. We are impacting lives!



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