What does investing in liquid entail? Well, in essence, it can be boiled down to this simple concept – the quality and scarcity of fine wine increase over time – and therefore, so does its value. This is why fine wine is a great liquid investment!
Fine Wine As An Alternative Investment
Or in simpler terms:
You buy bottles of wine and store them to sell them at a higher price later on.
In some cases, you may not even physically possess the bottle of wine you bought. You can invest in wine and, without ever touching the bottle, store it for years and sell it at a higher price later on. You can have your wine bottles stored professionally in specialised facilities for years. This way your valuable wines are kept safely in perfect condition until you decide to sell them and turn a profit.
The simplest solution to the complexities of wine investment is for a wine investment company to buy and store your wines for you. This saves you from having to take on any of the headaches of having to build your own wine cellar.
Want to Learn How to Invest in Wine?
Investing in wine has its complications. And you might not have a nose for good wine like a sommelier or a wine critic.
But, the thing is, you don’t need to. Today, wine investing is no longer an elite pastime or something made unattainable for the average Joe.
There are wine stock exchanges, wine-specific investment funds, professional storage solutions to store your bottles as they age, and plenty of avenues to easily buy and sell your assets.
How to Start Investing in Fine Wine
If you are new to investing in fine wine, you should ideally seek the support and advice of a fine wine expert or wine investing consultant, to ensure your wine investment goals are understood and fulfilled. Learning the ropes when it comes to wine investing can take time and money, both of which most of us cannot afford to waste. Want to learn more about how the fine wine market works?
This is where experienced wine investment consultants really come into their own. They help you:
- Understand Market Dynamics
- Select the Right Wines
- Organise your storage and insurance
- Provide ongoing performance information
- Sell your wine at the optimum market price
8 Steps To A Legendary Liquid Alternative Investment
- Decide how much capital you want to invest
You can adjust how much capital you wish to invest over time, but it is a good idea to start out with a clear figure in mind. Talk to one of our consultants today if you want to discuss your ideal starting sum.
- Decide how long you want to hold your investment for
Bear in mind that to get optimum returns you need to view fine wine generally as a medium- to long-term investment and broadly speaking, a five to ten-year period is a good guide.
- Determine your wine investment goals
Discuss these with your fine wine expert as this will affect the choice of wines to be included in your portfolio. See our wine investment account options.
- Confirm the selection of your investment wines
Having agreed on your budget and investment goals, you may also have an interest in wines from a specific region and you’re fine wine expert will help you acquire wines with excellent provenance that offer the best possible returns for you over time.
- Select Your Storage
Correct storage is important for protecting the ongoing quality and value of your fine wine. To maximise your fine wine investment returns you should ideally store your wine at a dedicated bonded storage facility. This will ensure the correct temperature and humidity conditions to maintain the quality of your wine.
In addition, a bonded warehouse will provide security and the ‘off-shore’ tax treatment, which means that VAT or Duty payments will not be triggered unless the wine is removed from the bond. A collector or investor can choose to buy and sell their wine whilst it remains in bonded storage.
We at Vintage Associates offer secure bonded wine storage to all of our investors. Want to know more about bonded wine storage?
- Invest in Great Insurance
Your fine wine is valuable, and it is important to ensure that you have appropriate insurance in place to protect your capital. Insurance is included as part of the Vintage Associates’ management fees.
- Stay informed
Make sure you keep up to date on news and events that can influence the price of your fine wine and also provide opportunities to buy at the right price point for future growth. Your fine wine expert should help you with this.
- Time your exit
You may have a clear timeframe on how long you wish to keep your wine investment, but it is important to monitor market conditions and fine wine prices to ensure that you sell your wine at a time that offers the best possible returns.
A Great Investment to Gift to Your Children and Grandchildren
We all want the best for our children and grandchildren, so it’s our job to help them set up in life in the future. On the birth of a child or grandchild, it’s a very common thing to open a bank account for them and add a monthly amount, so by the time they go to university or want to buy a house, you’ll have accumulated enough on their behalf to help out. But with bank interest rates so low, is there something you can do that will get a far better return, but without too much of a risk? The simple answer is yes, and the best investment? Wines.
Looking at Fine Wine Investment in 2021?
The last year has been a very good one for fine wine investors, who enjoyed a 13% rise in the value of their assets, which by far exceeds other asset investments (luxury watches gained 5% and classic cars 4%). Indeed, the price of fine wine has risen by 119% over the past 10 years which, if you’re looking for an asset that will mature alongside your children or grandchildren, represents a very good investment indeed.
There are a number of reasons why investing in fine wines on behalf of your children and grandchildren is a good idea...
It’s a tax-free investment – wine is considered to be a ‘wasting asset’, i.e. it has a life expectancy of fewer than 50 years. As such, it is not subject to Capital Gains Tax. And whilst it is stored in bond, your wine is exempt from duty and VAT.
Fine wine is produced because it’s meant to be drunk. Humans have been making and drinking wine for thousands of years, and there are a growing number of fine wine enthusiasts around the world, so there will always be a market.
When it comes to the best wine investments, the longer they mature, the better – and therefore more valuable – they become. We recommend that all our investors hold on to their investment for at least five years in order to get decent returns, making it an excellent long-term investment.
Another aspect of fine wine investment is that the longer you hang on to your investment, the more valuable it can be. As the wine matures, other investors will sell their wine, meaning the same wine you bought as an investment for your children and grandchildren will gain in rarity value, adding even more to its worth.
Why Invest Through Vintage Associates?
We are members of Liv-ex, the global marketplace of the wine trade, which means we have access to the global market, accurate pricing data and market insights, as well as the organisation’s global logistics network, ensuring the safe transport of your investment and secure storage in bonded warehouses.
We store all our clients’ wines at London City Bond. Where it is stored in perfect conditions and regularly checked, will be kept secure and is fully insured. As an asset investment, your children or grandchildren will physically own their own wine and can even arrange a visit in order to see it for themselves. The costs of storage and insurance are included in our management fees.
Your children and grandchildren will be free to sell their investment at any time – there is no fee to sell through Vintage Associates. If they want, they can even opt to drink some of their wine, although this will, of course, devalue their investment.
If you would like to find out more about investing in fine wines, click here to download our guide, or contact us to make an appointment.