Fun Stuff You Could Invest In: Wine
Beware, you can lose it / drink it all.
We are starting a new series on “Fun Stuff You Could Invest In” because when you have spare money to invest (and remember never to invest money you can’t afford to lose) why not have fun trading in a product you actually like? Not that the stocks and shares aren’t exciting, but you can’t drink them, they don’t have pretty labels and they’ll never give you an excuse to tour the chateaux of Burgundy on a tasting trip.
So here’s what you need to know to get started.
- Invest 10k or more
To benefit from this market you need to have upwards of £10,000 to play with. With a sum like this, you can expect some pretty reliable profits. Fine wine investment has produced absolute returns in almost every 5 year holding period since records began. When compared to private equities, it out-performs 98% of the time, according to experts.
- Think mid- to long-term
You need to say goodbye to that 10K for at least 5 years. Every market has its ups and downs, but over a few years these will always even out with wine investment, due to the product’s two magic qualities: over time, each bottle gets rarer (as others of its type are drunk) and better (as it matures).
- Don’t keep the bottles at home
And not only because you might be tempted to drink them. To maintain condition and to ensure security, wine investors pay about £15 per case per year to keep their bottles in a licensed bonded warehouse such as London City Bond. The good news is wine stored in this way is not liable for VAT or excise duty as it’s considered “in transit”.
- There are other tax benefits too...
Wine is considered by HMRC to be a “wasting asset” ie. something that goes off, so it’s exempt from capital gains tax. Yippee!
- DIY or professional trader?
It makes sense for a beginner to work with a wine investment company, simply because they have the expertise to know what’s best to buy. Plus they have notoriously long, boozy lunches with their clients… Look for a firm that carries the Wine Investment Association kitemark.
If you’re determined to go it alone, however, arm yourself with the knowledge that prices can fluctuate a lot from seller to seller, and check out wine-seller.com to cross-check the market value of a bottle.
Check out this list of the current top performers.