Investing in Wine
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Dearg Doom
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'Quite a good idea' in what context? Certainly not as sole investment strategy or a significant part of ones entire investments. Maybe as a small part for people with a passion and knowlege of fine wines...
Something this specialised should be treated very carefully. Personally I wouldn't invest in anything that didn't have a fluid market or something in which I didn't fully understand or information was readily available and where valuations weren't in some way quantifiable.
Something this specialised should be treated very carefully. Personally I wouldn't invest in anything that didn't have a fluid market or something in which I didn't fully understand or information was readily available and where valuations weren't in some way quantifiable.
Even the wine experts from two Dublin wine specialists on Newstalk 106's Down To Business last Saturday were reluctant to recommend wine as a pure investment and admitted that there were many chancers operating in this area and urged people to ignore those ads in the newspapers etc. which purport to help people earn €€€€€€€s from wine. They did recommend it as something for a wine buff who already had a well balanced portfolio and a bit of cash to spare to buy into primarily for their own enjoyment and with the slim chance that they could actually make money from it. So - less of an investment and more of a pastime/hobby. Just like all those other niche areas such as art, antiques etc. No offence Noor77 but based on what you've posted elsewhere about your financial situation to date I don't think that you fit this profile just yet.
Dearg Doom said:Personally I wouldn't invest in anything that didn't have a fluid market QUOTE]
Oh...but it does have a liquid market ..hahaha
Clubman, I wasn't thinking of it as an investment strategy or anything like that!
I would be just interested in buying a few bottles of good stuff, more for myself than anything else. I'm a rioja girl, and at the moment my favourite tipple is 'Faustino I' ...well, it has been for years actually, but I'm pretty sure it doesn't appreciate in value! - not after I drink it anyway
OK - so this is not an investment query at all after all? If you want to buy some "decent" wine for yourself then figure out what you like, read up a bit on it (I'm sure there's lots of info online) and then pop into one of the wine merchant/specialist stores in town and have a chat with them. I doubt that there's much to gain and potentially plenty to lose by buying through newspaper ads or other sources like that. Alternatively pick up a few bottles on the continent if/when you travel next as the choice is generally wider and the quality better.
A
Almendrito
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This is from The Irish Times:
INVESTING IN WINE
Pros:
1. The top wines from the best vintages have historically outperformed the stock market. For example, in 1991 Berry Bros & Rudd sold a 1990 Château Latour at £420 (€612) a case. Today, it would fetch £2,600 a case, an increase of more than 500 per cent.
2. Financial advisers frequently recommend that investors diversify their portfolio, and wine investment, as it is not affected by interest rate changes or stock market fluctuations, could prove a good alternative.
3. Investing in wine, like investing in fine art or first-edition books, may have a certain feel-good factor, making for more interesting conversation than the latest equity-linked managed fund or fixed-interest asset you poured money into.
4. The returns on wine are free of capital gains tax (CGT), which is charged at a rate of 20 per cent in the Republic, because wine is classed as a "wasting chattel" and thus not liable for CGT.
Cons:-
* You may need to spend a lot in order to catch a glimpse of the spectacular returns quoted, which may not include the cost of storage, insurance, the annual management fees charged by brokers (typically 1 per cent) or the sales commissions charged by merchants (about 10 per cent).
* The profits of the past may be of little relevance for today's investors. Sceptics argue that only the exceptions make the headlines, that comparisons to stock market indices are misleading because wine investors won't receive dividends, and that average returns haven't been quite so sparkling in recent years.
* To get fair market value for your wine, you may have to wait eight to 16 weeks for a broker to find a buyer.
* If investors need their money in an emergency, brokers may give them a spot price which could cost them 10-15 per cent of the market value.
* You may need a stiff drink if you discover that you have been the victim of a scam: there are several unscrupulous companies charging double or triple market prices.
© The Irish Times
INVESTING IN WINE
Pros:
1. The top wines from the best vintages have historically outperformed the stock market. For example, in 1991 Berry Bros & Rudd sold a 1990 Château Latour at £420 (€612) a case. Today, it would fetch £2,600 a case, an increase of more than 500 per cent.
2. Financial advisers frequently recommend that investors diversify their portfolio, and wine investment, as it is not affected by interest rate changes or stock market fluctuations, could prove a good alternative.
3. Investing in wine, like investing in fine art or first-edition books, may have a certain feel-good factor, making for more interesting conversation than the latest equity-linked managed fund or fixed-interest asset you poured money into.
4. The returns on wine are free of capital gains tax (CGT), which is charged at a rate of 20 per cent in the Republic, because wine is classed as a "wasting chattel" and thus not liable for CGT.
Cons:-
* You may need to spend a lot in order to catch a glimpse of the spectacular returns quoted, which may not include the cost of storage, insurance, the annual management fees charged by brokers (typically 1 per cent) or the sales commissions charged by merchants (about 10 per cent).
* The profits of the past may be of little relevance for today's investors. Sceptics argue that only the exceptions make the headlines, that comparisons to stock market indices are misleading because wine investors won't receive dividends, and that average returns haven't been quite so sparkling in recent years.
* To get fair market value for your wine, you may have to wait eight to 16 weeks for a broker to find a buyer.
* If investors need their money in an emergency, brokers may give them a spot price which could cost them 10-15 per cent of the market value.
* You may need a stiff drink if you discover that you have been the victim of a scam: there are several unscrupulous companies charging double or triple market prices.
© The Irish Times
The experts on Newstalk mentioned that the average punter is unlikely to be able to lay their hands on the top of the range wines en primeur. Also, they said that wine merchants were under pressure from Revenue (due to excise or bonding rules or something) not to undertake to store large amounts of wine for punters so this would normally need to be done abroad. As I say (and the experts admitted) it's more for the hobbyist/aficionado with a bit of spare cash than the pure investor.
U
Unregistered
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ClubMan said:
Yes, but it is still nice to get all sides of the argument!
I would only be investing in wine on a very, very small basis..... maybe only €1,000 to €2,000. I'm considering selling my apartment - I have an offer of €310,000 and I have seen another apartment for €245,000. I bought my place 2 and half years ago for €243,000. After fees etc... and giving my parents €10,000, I will probably have about €30,000. I'm 27 and have no dependents etc... (nor do I want any!), so what I do with the money is more or less up to me.
Alba Longa
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Be careful of fake wines. Italy is full of them!
Z
z107
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That Irish Times article missed a very important con in investing in wine:
Coming home from the pub drunk, "Oh yeah, why not open that bottle I've got tucked away! - It'll go lovely with these chips"
On a more serious note, surely there will be a temptation to just drink the stuff?
Coming home from the pub drunk, "Oh yeah, why not open that bottle I've got tucked away! - It'll go lovely with these chips"
On a more serious note, surely there will be a temptation to just drink the stuff?
euroDilbert
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If you do decide to go ahead with this - for investing or drinking (!) I suggest you contact one of the following suppliers in Dublin - all of them highly reputable : Mitchell & Son, Searsons (Monkstown), [broken link removed].
All of these will handle 'en primeur' wine purchases and explain the technicalities to you.
All of these will handle 'en primeur' wine purchases and explain the technicalities to you.
One of both of these merchants were on the NewsTalk programme that I mentioned earlier and, in my opinion, expressed very balanced views on the idea of buying wine not so much as an investment per se but as a hobby with a slight possibility of making a few bob. It was refreshing to hear them being so pragmatic about this and not simply trying to do a hard sell on wine as some sort of alternative to shares, property, pensions etc... and pointing out the practical issues (and problems/caveats) involved.
ringledman
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Wine is not an investment in the true sense of the word.
Neither are antiques, collectables, etc.
Investment produce income in the form of dividends or rents. For long term investors this is what produces 80% of the long term return.
To buy something that produces no income in the hope that it will go up is 'speculation' and not really 'investing'.
Wine as collectables and antiques, relies on the belief that someone in the future will pay more for it. In an inflationary environment this is fine but in deflationary times not as good.
The only asset that produces no income but can be classed as an investment currently are precious metals.
The only reason being that they are replacing fiat worthless Western currencies in a zero interest world.
Wine has had a good run, I believe the Chinese have helped push up the price. Just bare in mind whether it is really an investment.
I don't believe so. If it is there are better investments out there that produce an income for anyone looking to hold for the long term.
Neither are antiques, collectables, etc.
Investment produce income in the form of dividends or rents. For long term investors this is what produces 80% of the long term return.
To buy something that produces no income in the hope that it will go up is 'speculation' and not really 'investing'.
Wine as collectables and antiques, relies on the belief that someone in the future will pay more for it. In an inflationary environment this is fine but in deflationary times not as good.
The only asset that produces no income but can be classed as an investment currently are precious metals.
The only reason being that they are replacing fiat worthless Western currencies in a zero interest world.
Wine has had a good run, I believe the Chinese have helped push up the price. Just bare in mind whether it is really an investment.
I don't believe so. If it is there are better investments out there that produce an income for anyone looking to hold for the long term.