Investors looking to diversify their portfolios beyond the standard equities, fixed income and precious metals markets are increasing looking at fine wine. There are more fine wine investment funds today than ever before, and even more people are trying their hand at collecting and investing in the physical commodity itself. Following are some essential tips for anyone who is considering making an investment in fine wine:
• If you are purchasing wine through an investment company, try to avoid paying prohibitively high up front commission fees. Also, avoid companies that use seemingly desperate, ‘hard sell’ tactics and know your prices before buying.
• Carefully examine the track record of any organization you do business with; checking Companies House documentation is an absolute must.
• Limit your search for fine wine to established merchants whenever possible.
• Use a professionally managed, customs-bonded warehouse for storage of fine wine. If you do pursue the physical commodity, learn how to store correctly and seek specialist advice, as correct storage is vital to preserving resale values. Remember that any wines stored duty-paid will generally not attract resale values as high as those stored customs-bonded.
• When buying on your own in an effort to achieve capital growth, consider opting for red Bordeaux from the best vintages. The vast majority of the current investment market is Bordeaux. Stray outside of this only if you have expert guidance and/or in-depth knowledge.
• Compare the prices for physical bottles/cases of fine wine. Investigate the various websites that are designed for this purpose, such as www.winesearcher.com.
• You will be better off buying a small number of expensive wines rather than a large number of cheaper wines. This will help to keep your storage costs down and ensures quality over quantity.
• Fine wines get better (and more expensive) with age, but keep in mind that some taxation departments consider wine to be a wasting asset and, as such, it can be ineligible for capital gains tax.
As a general rule, never invest more than you can afford to lose. Prices can fluctuate and while recent performance has been noteworthy, this is not an absolute guarantee of future performance.
Tags: Fine wine investment