Investing in wine entails purchasing fine wine, preserving it, and reselling it for a profit later on.
Seasoned connoisseurs may spend upwards of several hundred dollars each bottle for top-tier wines from well-known châteaus. They do this because they are convinced that the vintages will provide a high return on investment owing to a dramatic rise in value over time.
The most excellent vintages from the most coveted regions may often skyrocket in value, appreciating even after their drink dates have passed. Some of the world’s most costly wines have sold for hundreds of thousands of dollars.
What Fine Wines Should You Buy?
Unsurprisingly, high-end Bordeaux dominates the fine wine market. Other wines, such as those from Burgundy, the Rhône Valley, Champagne, Tuscany, and California, as well as Port, can potentially be profitable, but the relatively smaller number of investment-grade wines from those regions, as well as their typically lower production, make their markets considerably less liquid; in other words, you may be able to buy them, but there are no guarantees you will be able to sell them as quickly as a Bordeaux.
How to Get Started with Fine Wine Investing
Suppose you are new to investing in fine wine. In that case, you should ideally seek the assistance and advice of a fine wine expert who can help you understand general market dynamics, select the best fine wines in line with your budget and goals, organise the necessary storage and insurance, and provide ongoing information and support to enjoy a rewarding fine wine collection. To get started, you must make the following critical decisions:
- How much money do you want to put into fine wine? You can change your mind later but having a set amount in mind makes it easier to plan your specific investing strategy. The cost of fine wines varies, but an initial investment of up to £10,000 is an excellent start to creating a genuinely valuable fine wine portfolio over time.
- How long do you intend to hold your investment? Remember that fine wine should be viewed as a medium to long-term investment to receive the best profits. A five to ten-year period is considered a decent holding period.
- Storage. Proper storage is essential for preserving the quality and value of your wine. Store it in a designated bonded storage facility to get the most out of your fine wine investment. This will guarantee that the proper temperature and humidity conditions are met to preserve the quality of your wine. Furthermore, a bonded warehouse provides protection and ‘off-shore tax treatment, which means that VAT or Duty payments will not be triggered unless the wine is withdrawn from a bond. A collector or investor can buy and sell their wine while it is in bonded storage.
- Insurance. Your fine wine investment is valuable, so be sure you have enough insurance in place to protect your wealth.
- Stay informed. When collecting fine wine for investment, remain up to speed on news and events that might affect the price of your fine wine and create opportunities to acquire at the optimal price point and maximise future profits.
- Time your exit point. You may have a specific period in mind for how long you want to retain your wine investment, but it is critical to watch market movements and fine wine prices to ensure that you sell your wine at the best price possible.
Start Your Fine Wine Investing Journey
Your compatibility with fine wine investment is determined by your position and portfolio objectives. If you already have an excellent portfolio of equities and bonds and have additional cash to invest, investing in wine may make sense. Exploring multiple asset classes as you learn how to diversify your portfolio beyond the fundamentals of stocks and bonds might be a method to increase portfolio growth while limiting overall risk. In general, experts advise that you restrict your exposure to alternative assets to no more than 20% of your whole investing portfolio.
If you’re looking to invest in fine wines in the UK get in touch with us today to see how we can help. We provide a wide range of vintage and fine wines from different countries that you can use for investment or collection.