Wine investment is an emerging strategy around the globe to diversify your portfolio and earn more money. This exciting, growing industry is full of possibilities. Like any potential investment, wine as an investment comes with its own set of pros and cons, risks and rewards, potential benefits and pitfalls to watch out for. Here is your guide to wine as investment.
First let’s look at some of the benefits to investing in wine:
• Wine is generally classified as a wasting asset, which means profits you make from your wine investment will typically be tax free.
• Wine is also an improving asset, means that it goes up in value over time.
• Wine as investment is a smart strategy, because there is a limited, fixed supply that can never be duplicated. As times goes on, that original supply will dwindle smaller still, raising the value of your investment wines.
• Investing in wines is not tied to the stock markets. This means that just because the stock market is doing badly, there is no necessary correlation to your wine investment doing poorly as well. Additionally, there are less ups and downs with wine as investment. Overall, if you know what you’re doing, wine as investment is much less risky than the stock market or other investment strategies.
• Wine as investment is fun, exciting, unique and a way to expand your knowledge of the subject, while also expanding your collection of wines you can plan to drink in the future.
• Investing in wines, when properly performed, will yield higher average returns than investing in stocks.
Those are just a sampling of the many benefits to investing in wine; now let’s look at some of the risks and downsides to wine as investment:
• There are many scams when it comes to wine as investment. Many companies will sell you imposter bottles which have no value. Other companies purposely inflate prices to drive up their own profits will eliminating yours. There are a variety of scams that you need to watch out for.
• Additionally, a wine brokerage if not handled properly can go bankrupt, ruining your investment. Unlike an insured bank investment, for example, there are typically no guarantees against this sort of downfall.
• Investment wines may gradually go up in price, however the real increases occur over short bursts of time. Therefore it is imperative to stay on top of the market and any changes to it. You have to be able to take advantage of quick changes that can skyrocket, or tumble, your wine as investment profits.
• Not all wines are investment wines, and not all investment wines are winners. There is just a tiny percentage of global wine varieties and labels that can be considered as true investment wines. These fine wines need to have consistency, a long drinking window, worldwide recognition and of course a highly sought after vintage and taste. Even among these, not all are guaranteed to turn a profit.