Fine wine is an attractive alternative investment option that has stood the test of time and withstood multiple instances of economic upheaval, including the ongoing COVID-19 crisis. It has emerged as a market winner, attracting both seasoned investors and first-timers to the investment wine market. The Liv-Ex Fine Wine 100 index, which tracks 100 of the most sought-after wines, has more than trebled since its launch in 2003 and is currently anticipating a strong 2021.
Fine wine investment has myriad benefits
Investing in fine wine sounds like a sophisticated, even elitist, pursuit but it’s open to any investor with the right knowledge and a minimum amount of money to invest. Consider some of the popular benefits and core features of wine investment:-
- Fine wine offers good potential for portfolio diversification
- It is a stable, low-risk investment with long-term growth
- Performance has a low correlation to volatile stock markets
- Fine wine has historically outperformed mainstream assets
- Being a perishable good, it is exempt from Capital Gains Tax
Investment-grade wine improves with age. These are artisanal products with limited supply and steady or rising demand, especially in emerging markets. This pushes up the value of the wine and makes some vintages rare and pricier as time goes by. This is how the medium-to-long prospects of the investment hold out.
Invest in fine wine within a budget
In the past, an average budget of £10,000.00 was needed to make initial investments in fine wine. With changing trends in portfolio management and the emergence of wine merchants who offer help and guidance, you can now dabble in fine wine investments with as little as £100 a month.
Some fine wine merchants offer investment plants for small periodic payments, while others offer guidance tailored to your goals, budget, and level of comfort. For example, Ideal Wine Company has discussions with customers about their needs and targets and then introduces them to wines from select brands and vintages in lieu of portfolio options that would suit their circumstances.
It makes sense to invest limited funds in wine, at least initially, because it is best to consider it a part of your overall portfolio. Strong investment portfolios are ones that are diversified. Since fine wine offers strong diversification potential, investment advisers now recommend that you only allocate portions of your funds into this asset and keep risk at bay. This makes fine wine investment an accessible option for those on a budget.
There are other ways to invest in wine without breaking the bank. Many people who do this as a passion project, both investors and collectors, will simply buy two cases of a wine they like- one to drink and the other to resell later just to cover the costs. The more serious alternative is to purchase at least three bottles to get going, so the returns can justify the cost of storing, insuring, and reselling the wine.
What to keep in mind while investing
If investing in fine wine through a third-party wine merchant, first thoroughly check their credentials. How extensive is their experience? Are they registered, audited, and GDPR compliant? What extra services do they provide? Be sure to pay attention to important details like where the wine is stored, how it is insured, and what are the costs involved in reselling.
Since wine is a tangible product, it will always be worth something as long as it is stored in a safe and controlled environment. In this, it differs from nebulous investments like shares and bonds. If it does not perform financially well, it can always be consumed and enjoyed. Therefore, you should have an appreciation for wine and knowledge of its nuances when investing in it. It is also recommended to have some general business administration skills.
Keep in mind that investing in wine isn’t the same as investing in stocks or ETFs. For example, depending on your budget, you might be able to buy a single bottle or an entire case. It is better to play it safe than overreach. However, never skimp on proper storage and always consider professional wine storage since it can make or break the value of the wine.
You can follow wine experts, industry analysts, and the global marketplace for wine trading to stay on top of the market and get more bang for your buck.
Fine wine is an attractive alternative investment option that has stood the test of time and withstood multiple instances of economic upheaval, including the ongoing COVID-19 crisis. It has emerged as a market winner, attracting both seasoned investors and first-timers to the investment wine market. The Liv-Ex Fine Wine 100 index, which tracks 100 of the most sought-after wines, has more than trebled since its launch in 2003 and is currently anticipating a strong 2021.
Fine wine investment has myriad benefits
Investing in fine wine sounds like a sophisticated, even elitist, pursuit but it’s open to any investor with the right knowledge and a minimum amount of money to invest. Consider some of the popular benefits and core features of wine investment:-
- Fine wine offers good potential for portfolio diversification
- It is a stable, low-risk investment with long-term growth
- Performance has a low correlation to volatile stock markets
- Fine wine has historically outperformed mainstream assets
- Being a perishable good, it is exempt from Capital Gains Tax
Investment-grade wine improves with age. These are artisanal products with limited supply and steady or rising demand, especially in emerging markets. This pushes up the value of the wine and makes some vintages rare and pricier as time goes by. This is how the medium-to-long prospects of the investment hold out.
Invest in fine wine within a budget
In the past, an average budget of £10,000.00 was needed to make initial investments in fine wine. With changing trends in portfolio management and the emergence of wine merchants who offer help and guidance, you can now dabble in fine wine investments with as little as £100 a month.
Some fine wine merchants offer investment plants for small periodic payments, while others offer guidance tailored to your goals, budget, and level of comfort. For example, Ideal Wine Company has discussions with customers about their needs and targets and then introduces them to wines from select brands and vintages in lieu of portfolio options that would suit their circumstances.
It makes sense to invest limited funds in wine, at least initially, because it is best to consider it a part of your overall portfolio. Strong investment portfolios are ones that are diversified. Since fine wine offers strong diversification potential, investment advisers now recommend that you only allocate portions of your funds into this asset and keep risk at bay. This makes fine wine investment an accessible option for those on a budget.
There are other ways to invest in wine without breaking the bank. Many people who do this as a passion project, both investors and collectors, will simply buy two cases of a wine they like- one to drink and the other to resell later just to cover the costs. The more serious alternative is to purchase at least three bottles to get going, so the returns can justify the cost of storing, insuring, and reselling the wine.
What to keep in mind while investing
If investing in fine wine through a third-party wine merchant, first thoroughly check their credentials. How extensive is their experience? Are they registered, audited, and GDPR compliant? What extra services do they provide? Be sure to pay attention to important details like where the wine is stored, how it is insured, and what are the costs involved in reselling.
Since wine is a tangible product, it will always be worth something as long as it is stored in a safe and controlled environment. In this, it differs from nebulous investments like shares and bonds. If it does not perform financially well, it can always be consumed and enjoyed. Therefore, you should have an appreciation for wine and knowledge of its nuances when investing in it. It is also recommended to have some general business administration skills.
Keep in mind that investing in wine isn’t the same as investing in stocks or ETFs. For example, depending on your budget, you might be able to buy a single bottle or an entire case. It is better to play it safe than overreach. However, never skimp on proper storage and always consider professional wine storage since it can make or break the value of the wine.
You can follow wine experts, industry analysts, and the global marketplace for wine trading to stay on top of the market and get more bang for your buck.
