Fine Wine as Investment

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Fine Wine as Investment

Post by Rock Private Office on Wed Jun 26, 2013 6:02 am

I like physical commodities and so have always been attracted to wine as investment. Fine Wine is a tangible asset. When investing in physical cases of wine you personally own the asset bought on your behalf and you could take delivery of your wine at any time should you wish. Whilst traditional markets have done well recently a great deal of uncertainty remains, what with the recent bank robbery bail-in in Cyprus, many investors are turning to real assets for wealth protection. Uncertainty fuels demand for real assets.

Here's an overview of the rationale behind investing in fine wine. This is not a recommendation to invest!

Fine Bordeaux wine prices are driven by supply and demand, not usually by the direction taken by the traditional investment markets. Bordeaux is unique and it is impossible to exceed current production levels as production is limited by geography, weather and regulation. Recent Historic Vintages make for attractive opportunities. The 2009 and 2010 vintages are stunning examples that will surely become legendary. When added to that of 2005 they jointly offer investors a great chance to benefit by buying these wines young and at the beginning of their growth potential. 

Demand for the world’s greatest wines continues to grow in emerging markets especially China, India and Brazil. Added to that recent buying opportunities have brought the traditionally strong US and European buyers back to the table. Despite two recent economic downturns, long term performance (20 years) has been a very reassuring 14% per year on average.

Fine Wine can be Tax efficient: The fine wine exchange LivEx ([You must be registered and logged in to see this link.]ex.com) is in London and this is the traditional market place for fine wine investment. Typically wine purchased for investment is stored in UK Government bonded warehouses. Legally the wine hasn't entered the country and so is not subject to UK capital gains or sales tax when sold (actually it is not subject to capital gains tax even if in the UK proper, as wine is considered a perishable commodity).

It’s FUN! Fine wine investors usually take great pleasure in owning something beautiful and enjoy talking about their investment... a lot!

In conclusion, fine wine investment is not driven by traditional markets, it can be a good hedge against inflation, and the stock market. It can be tax efficient and can be a lot of fun to own.... just be careful not to celebrate or drown your sorrows with your investment as prices move up and down!
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Rock Private Office
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