Investing in wine can be an interesting pastime: one that not only teaches you to recognise a good quality vintage when you see it, but could also net you some tidy profits over time. It’s about playing the long game and creating a legacy to leave behind, as well as enjoying the present. Here are some things you need to know as you get started with wine investments.
Know Your Budget
The first thing you need to know is how much you are going to invest. Experts suggest that you need at least $10K on hand to make a good start in wine investing, but you should only spend what you can afford to lose. This is the same for any kind of investment, as it may not end up paying off. However, when you know how much you are willing to spend, you should buy the very best that you can afford. There’s no use in doing things by halves. The more money you spend and the better vintage you buy, the more profit you could be looking at in the future if all goes according to plan.
Before making a purchase, always carry out thorough research to see what the prices are like. You should also think about keeping an eye on price trends. If you had decided to ignore Bordeaux due to its recent market slump, for example, you might miss out on the Bordeaux 2015 En Primeur: a fine vintage year which has turned out to defy expectations. Don’t miss out on a good buy by getting complacent – always do your research and check what you need to know about the market before you invest, even when you’re more experienced in the game.
Wait a While
Statistics suggest that you should always invest in wine for a minimum term of five years. This has always produced a positive return in every five-year holding period since records began, so it’s a sure bet. The way it works is this: the more time passes, the more wine is drunk, and the less remains of the particular year that you purchased. As it becomes rarer, it becomes more expensive. Thus, the longer you wait, the higher the price will be when you sell it. Wine is a medium to long-term investment, and if you get twitchy fingers too early, you could be cheating yourself out of a lot of money.
Store Wines Carefully
Storing your wine incorrectly could result in a drop in value. Even the perception that you might have stored it incorrectly will cause the value to drop. That’s why it is important to make sure that your storage is well-documented as being correct. You should store your wines ‘in bond’ or IB, which means they stay in a duty-paid, bonded warehouse. These warehouses are set up to the optimum conditions, with all factors controlled carefully to ensure the wine is as high quality as it was when it was brought in. There’s another benefit, too: when wines are IB, they are considered to still be in transit, so there’s no VAT to pay on sales. You could sell your wines to another buyer who keeps them stored in the same warehouse and see a considerable tax benefit.
Wine investments can be very profitable and even enjoyable if you have an interest in wine. If you aren’t sure what you are doing, consider getting an advisor to help you out, at least until you feel that you have learned the ropes and can continue on your own.