Making The Jump Into Fine Wine Investment
Follow These Tips For Investing In Fine Wine
Wine investment is a comparatively low cost way of starting an investment portfolio. Providing you have around ten thousand pounds to spare you will be able to start your own wine portfolio. Wine investment is one of the best performing investment assets over the last two decades. This is mainly due to the limited supply of the premier wines and the level of demand which increases as availability decreases. Of course, there are risks with any investment and the following tips are designed to reduce these risks:
Investment Capital Is Crucial
As with any investment you should never invest more than you can justify losing. To create a successful portfolio you should have at least $10,000. You should never drink the wine you purchase as this can cost you heavily, although a return can never be guaranteed the wine market has been extremely buoyant recently and China’s interest in fine wines has served to purchase prices up.
Buy the Best and You’ll Witness the Greatest Returns
The premier wines, particularly the Grand-Cru’s are the safest bet when investing in wine. Providing they are a good vintage they are known to increase in value. Bordeaux, Burgundy, and Rhone wines have been excellent performers in recent years. These are the more expensive wines to purchase but they are almost always worth the investment.
Prices – Varied and Unpredictable
It may surprise you to learn that different merchants will charge different prices for the same wine. These prices can vary considerably; it is well worth shopping around to ensure you get the best deal. Prices can be checked online through a variety of websites. When looking to invest in wine you should look to keep your purchases for a minimum of five years. This is the ideal term to provide a reasonable return on your investment. Five years is long enough for a reasonable quantity of what was available to have been drunk, whilst the wine you are holding will have matured nicely.
Storage – what are the best conditions?
The best place to store your wine is a bonded warehouse. Not only will this provide security and the optimum conditions for wine storage; it will also ensure you are not tempted to drink it. It is also an excellent way of avoiding having to pay VAT as wine in a bonded warehouse is considered to be in transit. Wine stored in a bonded warehouse should be insured in your own name to ensure there are no complications if an accident happens.
En Primeur Wine – should you buy en primeur?
This is the term given to purchasing a wine when it is still in the barrel. This wine may be two or three years away from being bottled and can be bought at a considerably reduced price. However, you will be purchasing a product which is not fully matured and may not end up being as good as you, or others expect. This is actually a high risk strategy as the maturing process can significantly alter the taste and devalue the wine. If you decide this is the option for you then you should never purchase these wines before a price list is published.
Wine investment can offer a variety of tax benefits. It is one product which is exempt from capital gains tax as its expected lifespan is less than fifty years. This can significantly increase the amount of returns you can expect on your investment. Of course, tax is a complicated subject and it is essential to consult a tax advisor before making your investment to ensure you are doing everything you can to both reduce the tax implications and increase your return.
Fine wine investment can be a very lucrative part of any portfolio, providing you approach it with the right attitude. Don’t jump in and make sure to ask for advice before spending any money. Only a specialized consultant will know what you advise you, so before getting started talk about the pros and cons more in detail. Just like in any other form of investment, buying wine comes with a risk. Know them really well and you may have great success in this business.
About the Author
By William Taylor and WineInvestment.com!
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- Wine investment is one of the best performing investment assets over the last two decades.
- You should never drink the wine you purchase as this can cost you heavily, although a return can never be guaranteed the wine market has been extremely buoyant recently and China’s interest in fine wines has served to purchase prices up.
- When looking to invest in wine you should look to keep your purchases for a minimum of five years.
- Wine is one product which is exempt from capital gains tax as its expected lifespan is less than fifty years.