Most financial experts commonly advise potential investors to put their money on stocks, bonds, or business. But today, people no longer have to be limited to these traditional options. With the emergence of a new Asian market in the past years, investing in fine wine is definitely a nifty idea to score big cash.
What Makes Fine Wine a Better Investment?
With the rough economic conditions in the past years, many investors are looking for better alternatives that don’t experience the same market volatility and increased risk as the stock market.
And that’s where fine wine comes in. Though also affected by worldwide issues, the fine wine industry is not really greatly affected by them. In fact, in the recent years, it has shown strong market performance and steady growth.
Capital Gains Tax
When there was a planned increased in Capital Gains Tax in the UK back in 2010, investors were quick to set their sights on the fine wine industry. You see, almost all first class wines are considered a “wasting asset,” which has a life span of 50 years and beyond. Meaning, they’re relatively free from Capital Gains Tax.
Note: We strongly advise that you consult the proper financial institution in your area for further explanation.
Less Supply, Greater Demand
Before, the biggest buyers of the global fine wine Bordeaux classes are concentrated in Europe and the United States. But that has slowly changed as mainland China and Hong Kong became a major sweet spot for fine wine enthusiasts.
Unlike other products, wherein production is dictated by demand, the fine wine industry is strictly supervised. Dwindling supply and increased market demand don’t affect production. That’s what makes it very profitable. Since the supply is tight, prices of nearly all investment-grade wines have the possibility to shoot up.
Factors that Affect Wine Value
There are several factors that affect the value of fine wines. For one, there’s the wine scoring. What is it? Simply put, it’s how wine critics define the quality of a wine.
One of the figures who popularized the 100-point scoring is Robert Parker, one of the most respected wine consultants in the world. Critic from this connoisseur will determine whether a wine brand will face a happy or grim future.
For instance, a score of 95 and above means you have a winner in your hands. A score of 74 and below, however, means that it’s not worthy of your money.
As what was mentioned earlier, pricing of fine wines are affected by the law of supply and demand, which determine their “investment worthiness.” If there’s a big market but with limited supply, it’s expected that prices could quickly sky rocket.
What Types of Wines Should I Invest In?
Not all fines are worthy of your time and money. Remember that the term ‘fine wines’ could also include your average brands that sell cheap. If you’re an inexperience buyer, guard your investment by listening to only the best reputable sellers, like Berry Bros & Rudd.
Investors who want to make serious cash often look at Bordeaux wines for solution. Why are these so expensive? For decades, Bordeaux wines have already established a good reputation in the industry for their exemplary overall quality. And because of limited production, Bordeaux wines are valued as the year passes.
If you’re looking to buy affordable high-grade fine wines, it’s a wise move to buy them before they’re bottled. The selling price is low at this stage, but the value could quickly rise after. Of course, that’s not true to all.
Where to Find Investment Fine Wines?
There are different ways to get hold of investment level fine wines. Your first bet is through a retailer. Retailers are desirable because you can be assured of the provenance. Provenance is a term used to refer to the place of origin of a wine. Sometimes, if not most, too much trading can cause ownership vagueness, which opens the opportunity for fraudulent acts.
A second option would be online stores. But this doesn’t come with its own set of risks. Online sellers could push you into buying counterfeit or poorly handled wine. So always be wary.
Tired of frequent stock market fluctuations? Want to enjoy while earning? Then start exploring the world of fine wine investing today.