This article gives a brief about the tasty investment in your Portfolio – ‘Wine’. How worthwhile is it to invest in wines? How long before we can cash in? And when wine becomes an asset, can we drink it?
Investing in fine wines is an activity that has been around for centuries. Do you know that for the past 25 years, fine wines have proven to be one of the most consistently stable, high-yielding, and low-risk investments in the world?
With capital growth of over 300 per cent since 1992, wine as a commodity has outperformed the FTSE 100 index, Victorian art and gold.
In fact, fine wine as an investment has many advantages over other structured investments – such as unit trusts, bonds and equities – as it benefits from the following attributes:
· Tax free
· World-wide demand
· Increasing rarity
· Decreasing availability
· Low risk
· Customized portfolios
· Easily realizable
· Personal ownership of tangible asset
· No annual management fees
Once bottled, fine wines mature and improve with age. A limited amount is produced every year. Hence, investment-grade wine is an improving asset. As fine wines mature and come into their drinking window, some are consumed – making the remaining supply even more rare, which in turn adds yet more upward pressure to their prices.
Also consider these favorable factors:
· Firstly, fine wine has benefited from a dramatic increase in popularity and there is an established and thriving fine wine auction market. Therefore, it is quite unlikely that demand will diminish.
· Secondly, wine is a transferable asset – a liquid legacy.
· Thirdly, there is no limit to the amount you can invest in wine and as, technically, wine is a ‘perishable’ item, and it is not subject to capital gains tax.
· Lastly, returns aside, a good glass wine is a pleasure to the senses, a fine toast to your good taste.
So, just as the early bird gets the worm, early purchase of a good vintage will yield good returns as supply dwindles over time.
For those new to this form of investment, how should they get started?
Smart investing is only possible when you are armed with the right information. To help you, there are trained professionals in Europe and USA who can thoroughly study your wine portfolio and create for you the best exit strategy to maximize the returns for your investment.
As an investor in fine wines, there are some basic guidelines you should note in order to secure better benefits and gains.
For instance, less than one per cent of all the wines worldwide are of investment grade. In all fine wines, price is considered the principal gauge of quality.
However, prices are affected by more than just the quality of a wine. Scarcity usually increases the value of the wine as well. As wines age, they may increase in quality, or in scarcity, thus increasing its value either way.
These basic pointers should put you on the right path towards investment success:
· Focus on the top wines from the best vintages. Only a fraction of the wines produced worldwide will increase with value if kept.
· Store the wine correctly and, preferably, in professional temperature-controlled cellars.
· If purchasing in Europe, buy and store wines ‘under bond’ so sales taxes do not become payable.
· Take advice from established and reputable retailers and importers.
What are the costs and logistics involved?
It depends. Logistics cost is difficult to calculate as it depends on where the wine comes from, or whether you want it to be in Singapore or else where. There are many storages and warehouses in the world to keep wines. If the wine is for investment and profit only, then it is best to keep it near to where the potential buyers are, but if it turns out to be an investment-cum-collection, then many people may prefer to have it stored near them.
How long should I wait before realizing any returns?
The average return from investing in fine wine from good vintages is about 15%. To get the best returns, most wine investments should be regarded in the medium to long-term, with a minimum of five years. The best wine investment returns are to be had over a 10- to 15-year period.
Thus, the introduction to Wine investment.