Lessons from Pappy Van Winkle

There is no finer bourbon in the world than Pappy Van Winkle. A quick Google search for their 23-year-old Kentucky bourbon will bring up bottles for sale in excess of $4,500, or roughly $225 a shot. (Not that anyone takes shots. This is a sipping bourbon.) It’s been described as “liquified, barrel-aged unobtanium” and “the finest bourbon in the world,” and the limited supply has driven shop owners to threaten sales reps with physical harm if they can’t get more “allocation.”

The man behind Pappy Van Winkle is Julian Van Winkle, and he has spent the last 40 years resuscitating the brand his grandfather birthed and that his father and aunt razed. Through a combination of hard work, persistence, and a bit of luck, he’s done it and then some. His bourbon, and by extension, he, are the biggest names in booze.

The bourbon-making process involves an immense amounts of time, expertise, and effort on the front end. The “mash bill” (or recipe, to the layperson) of the family’s original bourbon was something close to 72% corn, 20% wheat, and 8% barley, and only the very best of each was selected. The barrel staves, which give it its color and much of its flavor, are still made of the finest charred oak with careful attention being paid to how much is sapwood and how much is heartwood. Where the barrel is allowed to age matters, too. Too high in the storehouse and it will age too fast. Too low and the bourbon may not mature. Even the distance from a window can impact the taste. Finally, and as luck would have it, the water that is poured over the mash bill is some of the purest in the country thanks to the abundance of limestone that runs beneath Kentucky’s soil.

After the quality of the water, wood and grains are accounted for and provisions for 23 years of storage are made, 53 gallons go in each barrel, and then? Well, nothing. You work and work and work, and then you wait. And wait. And wait. And wait. For two-and-a-half decades. And when the plug is finally removed, you may only have 3 gallons left from the original 53. Twenty-three years of waiting and Julian has 15 bottles per barrel to sell. The rest has literally disappeared into the Kentucky air.

While the process of creating a financial plan doesn’t elicit the same nostalgia as, say, a sip of Pappy’s best bourbon, there are many similarities between bourbon-making and financial planning.

The beginning of the financial planning process involves a fair amount of work: You have to find a trustworthy financial planner, organize all your financial information, transfer accounts and implement his or her recommendations. But after that things get a lot easier as the plan you’ve created, ideally with generous amounts of flexibility, adjusts smoothly as your life and goals change.

The same kind of attention that Julian gives to the mash bill needs to be given to your investment portfolio; It’s only as good as the ingredients. Will fees dilute its purity? Will taxes cause your wealth to evaporate, just as the warm Kentucky air robs Julian of his product? How much will you invest in “corn” (US stocks), “wheat” (international stocks), and “barley” (bonds)?

If Julian stores his bourbon on the first floor, it might not fully mature; too high and it’ll over-age. The same can be said for savings. Save too much and you rob yourself of enjoyment and memories. Save too little and you end up having to work to a later age than you want.

The most important similarity between bourbon-making and successfully managing your investments is that both involve patience. Once Julian hammers the plug into place and sets down the wooden mallet, his work is done. As his grandfather used to say, “Fine bourbon ought to make itself with just a little help from mother nature and father time.” He’s been steeped in the discipline of patience from a very young age and so isn’t concerned with the weather next week, grumpy store owners or what kind of spiked seltzer will hit the shelves next year. We can all learn a lot from that. If we, as investors, can focus on the long game and tune out politics, trade wars, the Fed, dollar-strength, checking our portfolio values daily, we’ll be a lot more content and a lot more present to enjoy the things that really matter in life.

Wright Thompson is the author of “Pappyland: A Story of Family, Fine Bourbon, and Things That Last,” which was released a few weeks ago and inspired today’s brief. Towards the end of his book, he and Julian have just opened a bottle of the Van Winkle family’s best bourbon. With any good, old bourbon that’s hit by new, fresh oxygen, the flavor profile changes, and changes quickly:

“‘This starts to oxidize fast,’ he (Julian) said. ‘Matter of fact, it’s already gotten a bit funky.’

‘It’s been open for…’ I said.

‘…Ten to twenty minutes,’ he said.”

The satisfaction from a well-built financial plan isn’t so fleeting. In fact, it’s the opposite. You do the work. You add the right ingredients and create the proper environment. You let human nature (the drive to create value) and father time work their compounding magic on your investments. You ignore the weather or whatever political storm is brewing. You do all that and then you find peace that you’re doing the right things to secure your financial future and enjoy your present circumstances.

That’s something we can all raise a glass to.

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Ryan Smith
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Born and raised on the North Shore of Massachusetts, I moved to Raleigh in 2011 to marry my wife, Emily. We have two kids, Jack and Gwen, a golden retriever named Olly, and are members of Church of the Apostles. I have been a Financial Advisor since 2005 and earned a Master’s of Science in Financial Planning from Bentley University in 2007. I became a CFP® professional in 2009, a Retirement Income Certified Professional® in 2015, and a Certified Tax Specialist™ in 2023.