Why is fine wine an increasingly popular investment?
If you’re always on the lookout for new investment opportunities, fine wine is an asset well worth considering. Over the past decade, it’s become an increasingly popular form of finance - but just what is it that attracts investors? Read my quick introduction to fine wine investment to find out.
The fine wine market
Fine wine investment is something that is increasing in popularity, largely thanks to the fact that it has been shown to offer reliable returns for investors.
That said, like any investment it’s definitely not without its risks, so it’s essential to do your research before deciding whether or not to invest.
So, what’s going on in the market at the moment? Well, 2012 has been described by industry commentators as a bit of a mixed bag for the wine trade, with harvests for the year expected to be small (I’m sure I won’t need to remind you that the weather last year wasn’t exactly ideal for a lot of wine producers!).
That said, in the final few months of the year the market did stabilise, which has left the industry optimistic about the prospects for 2013. If you want to find out more, Liv-ex is a good website to check out, since it’s the marketplace for professional buyers and sellers.
For instance, it predicts that over the next five years, the average return on investment year-on-year will rise to 17.6 per cent.
How fine wine is valued
OK, I’ll stop getting bogged down in the finer details of the market - especially considering you should get some professional advice before going ahead anyway - and start looking at the practicalities. A key factor in getting the best from either your existing or future wine collection is understanding how it’s valued. So, here are some of the main ways:
• The name and vintage of the wine
• The Ullage level
• If the wine has been professionally stored
• The condition of the labels
• The condition of the bottle caps
Ways to release the value of your fine wine
Typically, investors release the value of their wine by selling it on. Now, while that’s something you can certainly do, I’d like to highlight that’s not your only option.
For instance, if you’d like a short-term financial boost - perhaps to invest in some more wine, for instance - you could use an online personal asset loan provider (which is a bit like an online pawnbroker) to secure a loan.
An advantage of doing this is that you’ll be able to access additional funds for a period of around six months, then, provided you repay the loan and interest, you’ll be reunited with your wine. This could allow you to use your wine to invest in additional cases, without having to part with it permanently.
Plus, if you choose a reputable provider, your wine will be stored in climate-controlled conditions throughout the duration of the loan. I think it’s worth double checking this before you sign on the dotted line, though, just to make sure your collection will be well-cared for.
After all, you need to make sure its good condition is maintained in order to get the best price when you do decide to sell - and therefore the best return on your investment.
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