When it comes to enjoying wine, you don’t have to spend a small fortune to find a good quality fine wine, but it is worth looking for the very best wines you can find when it comes to investing.
Those new to wine investing may need a few pointers to get started, so here’s our general guide to investing in fine wines for beginners.
WINE INVESTING FOR BEGINNERS
When investing in wine, the first considerations are how much investment capital you have, how long a period you can afford to invest and can you afford to take the risk that it may not appreciate at the rate anticipated or may even depreciate. However, that’s not likely if the right fines wines are chosen.
Could the portfolio of wines become your retirement plan, or is it a more short-term or mid-term investment of 5 to 15 years?
Knowing how you will answer these questions in advance will help you plan your wine portfolio accordingly. This is especially helpful if you plan to become a wine collector and will make speaking to a wine expert regarding your personal goals and circumstance much more efficient.
The other consideration is whether you will physically purchase wine as a tangible asset or if you will work with a fine wine merchandiser such as the Ideal Wine Company to help you collect and develop your portfolio.
Either path would benefit from research into the advantages of wine for investments to ensure you are setting yourself up for success. Immerse yourself into the world of fine wines so you can understand the producers, the market, the vintages, the appellations and which ones will yield an increasing return on investment.
If a hands-off approach is preferred, working with a fine wine broker will help you achieve your investment goals with much less involvement. The downside to this is, of course, the fees. Although, there are many costs to consider when investing in wine that need to be considered.
Whether you purchase single bottles of wine or cases of wine wines, the storage of your wine collection is vital for keeping it investment worthy. At the very least, you will need a temperature controlled storage unit, and if your wine collection is on a larger scale, a bonded warehouse is the ideal option to keep it secure and in the best condition.
HOW TO KNOW IF A WINE WILL INCREASE IN VALUE
A very small percentage of wines increase considerably in value each year. Some elements need to be considered to know what to look for.
- Which wine producing regions are making headlines?
- Is the producer known for consistently superior quality fine wines?
- Does the producer have a solid reputation?
- What is selling well at auctions?
- Consider supply and demand – if there is a great demand for a vintage but limited supply, this is likely to appreciate as the supply further diminishes.
Fine wine and vintage wines are showing consistent returns on investment with returns above the rate of inflation. So, becoming a wine investor for the short or long term gains could undoubtedly be advantageous.
While there is always a risk with all types of investing, wine investing for beginners isn’t as volatile as investing in less tangible assets. The wine market is generally insulated from the typical yo-yo of other types of financial assets. This makes fine wine an ideal mid to long term hedge.
Wine is unique as a tangible asset because, unlike other investments, it can be physically enjoyed. A fine vintage can bring great pleasure to those who appreciate drinking top level wines.
Because the finest and rarest wines are produced by only a select group of wineries in certain regions, this creates scarcity to begin with. Scarcity and luxury are two magical ingredients to create demand. All these unique elements keep the price of wine more consistent, and with each bottle drunk, the scarcity increases, so the value increases with it.
Even if inflation rises, wine as an investment holds up, which can be said with confidence because historical data tells us so. With the UK removing the costly red tape on wine imports and the US recently ending tariffs on EU wine imports, this should help increase the global demand and help investors enjoy healthy returns as well as some excellent fine wines.
The wine industry is experiencing a high time, and there has never been a better opportunity to become a collector and invest in fine wines.