Investing in Wine
Wine is an alternative investment that remains popular. One of the reasons for its popularity has been that returns are perceived to be good, while many people hold an interest in wine as a subject.
How much should I invest?
This will very much be a question that depends upon you as an individual. It is obviously possible to buy wine for a relatively small amount of money, but a £5 bottle of wine purchased at a supermarket is unlikely to be a sensible investment - although it may taste great!
In reality, the sorts of wine that are traded will tend to be of a high value, meaning that you're likely to have to spend considerably more on building up your wine portfolio.
One company specialising in this sector suggest that a minimum investment of £5,000 is required if you are looking for a serious concern.
How do I know what to buy?
There are a variety of different approaches that investors take to buying wine. As a general rule, many look to purchase the best wines (vintages) from the best established vineyards. Vineyards that already have a good reputation may well be expected to produce the best wines in the future, although there can be no guarantees.
Bordeaux wines are viewed by many as offering the most solid investments but there are plenty of opportunities elsewhere. If you're interested in buying wines as an investment then it's essential that you know exactly what you will be buying.
Is storage important?
Not all wine investors will actually end up with wine racks full of vintage wines. It is possible to invest in other ways.
One of the reasons that wine has produced such a vibrant investment market is that it's a product that is highly transferrable. By failing to keep the wine correctly you could, however, be in danger of wasting your investment.
As with any area of investment, doing your research is vital. Make sure that you have the necessary knowledge on which wines to buy and how wine is best stored before considering putting money into this kind of investment.
What else should you know?
Wine prices are liable to fluctuation, just as is the case with stocks and shares. Prices could go down, as well as up.
In the period from 1996 to 2004, one leading index suggested that wine prices rose by just 14% in total. You will see some companies and brokers predicting higher returns, but it's important that you carry out the research yourself and make an informed decision.