People have been investing in fine wines for centuries. However, up to this day fine wine is still regarded by many as a collectible item for elite connoisseurs rather than a profitable investment alternative for the typical investor looking to diversify their investment portfolio. Recent growing wine consumption in developing countries and dismal returns from traditional investment options shift the spot light to fine wines as a wise investment alternative. However, despite earning consistent yields of 10-20%+ per annum and outperforming blue-chip stocks for the past 150 years, many potential investors still won’t give it the time of day. If you’re one of those investors who find investing in fine wines daunting, let’s set the record straight and make sure that you’re not put off by it due to the following false notions.
Myth # 1: You need a fortune to invest in fine wines
Due to the status symbol attached to owning fine wines and £100k +/ bottle sold in auctions getting the headlines, it’s easy to believe this myth. The truth is investment grade wines are among the least expensive investment opportunities around. Prices per case may cost from as little as a few hundred pounds. This is a far cry from the money you need to raise when buying other assets, like property, for example.
Myth # 2: You need to have a wine cellar
It’s true that proper storage of fine wines is an investment essential. Atmospheric pressure, temperature, moisture and light should be controlled. However, you don’t need to have your own wine cellar or build one to house your asset. A number of professional wine-storage establishments and wine merchants have professional facilities to store your wines. Besides saving you the trouble and the cost of maintaining your own wine cellar, wines that have a record of proper storage in established facilities are easier to sell than those that are not.
Myth # 3: Wine investment is only for wine experts
Forget the wine investor stereotype.This stopped many people dead in their tracks from benefiting from this lucrative opportunity. Although it sure helps if you’re landed gentry with a long tradition in wine collecting or are a degree holder in the subject, wine expertise is certainly not a pre-requisite to success in fine wine investing.
In fact, with a bit of research it is possible to realise gains and minimise risks, especially if you stick to blue-chip French red wines produced by Chateau from the Bordeauxregion of France. Having a reputable merchant offering you good advice about which wines accrue value over time can also work extremely well to your favour.
If you have little or no knowledge at all, using an investment company offering structured investments on fine wine or a consultancy firm may be a safe way to go. Bear in mind, however, that the fine wine investment market is not free of fraudsters so practice due diligence before entrusting your money to a company.
Myth #4: It’s risky speculation
No investment can exempt you 100% from loss. However, over 50 years of historical data show that investing in fine wines is a safe and stable medium to long-term investment, much less volatile than stocks. Although fine wine prices are not recession proof, they have performed a lot better than other assets during economic downturns. In fact, fine wines prices showed moderate and stable growth even during recent financial crises.
Myth #5: Fine Wines are difficult to liquidate
That’s just plain non-sense. Fine wines are as easy to trade as stocks and bonds. These days they actually have also become very easy to sell online.