Luxury wines appear to be the investment of the future. Economic turmoil rarely impacts this market, and the laws of supply and demand ensure this investment recovers more rapidly than stocks or cryptocurrencies following an economic downturn. In the past, only connoisseurs collected fine wines. Today, countless men and women stock their cellars to enjoy outstanding beverages while building their investment portfolio. Maybe it is time for you to do the same.
Why Invest in Wine?
Individuals often ask why they should put their hard-earned money in beverages rather than more traditional assets. Wine investments remain safe and stable. In addition, they outperform other assets, and the market remains open to new and experienced investors, thanks to many companies offering help with wine investment UK. Certain investors lost their entire portfolio over the past year because of the economic downturn associated with the global pandemic. This downturn highlights the importance of diversifying your portfolio, and nontraditional investments offer a great way to do so.
Stocks rise and fall at a whim. Individuals can watch their investment lose most of its value simply because a celebrity or politician tweets opposition to the company. Amazon lost $31 billion on its valuation a few years ago when President Trump made negative remarks about its tax arrangements. Wine investments consistently outperform other investment classes thanks to their unique characteristics. Stable growth remains a hallmark of this investment class.
In the event of an economic downturn, wine bounces back more rapidly than other investment classes. For instance, the 2008 recession took a hard toll on many investors. The FTSE dropped by over 47 percent and took five years to rebound to its pre-2008 levels. In contrast, wine prices dropped by 20 percent during this same time frame and rebounded within two years, allowing investors to recoup their money and make a profit much faster.
Supply and Demand
The global demand for fine wine continues to rise, as more individuals in developing countries develop a taste for it. Even as demand is on the rise, the supply remains limited. Winemakers produce limited runs, and the supply dwindles as men and women consume the product. This increases the price of the remaining bottles. The laws of supply and demand truly benefit the wine investor.
In addition, wine continues to improve with age, and the investor does little to see this happen. Store wine under the proper conditions and its value increases. You cannot say the same for many other investments. For example, real estate requires maintenance and trends change over time. Property owners must upgrade the property to ensure it remains profitable. This isn’t the case with wine. The investor ensures the wine remains in the optimum environment and watches for it to reach maturity. When the wine does so, its value increases. High returns on investment remain possible when investing in wine, although some investors choose to drink their own stock. They find they can do so without paying a premium, as they invested in the wine when the price remained within their reach.
For those looking to diversify, wine investment opportunities allow them to do so in a way that doesn’t correlate with financial markets. This allows the investor to balance their risk while minimizing the volatility seen with equities. The investor finds the inclusion of wine in their portfolio allows for maximum risk-adjusted returns.
Tax entities regard wine as a wasting asset. Therefore, they remain exempt from capital gains taxes in the United Kingdom. Individuals in Europe find they don’t pay VAT and duty on wines either, although an investor needs to speak to their tax lawyer to learn the particulars of their situation, as the capital gains tax exemption applies to UK residents.
Investing in Wine
Individuals want to know how they should go about investing in wine. Work with a reputable wine investment provider, one with an established track record. Research needs to be done at this time to ensure they select the right company. Remain wary of investment opportunities that sound too good to be true. The likelihood of them being legitimate is small. The reputable wine investment provider helps clients select which bottles to invest in and is certain of the wine’s provenance.
As more individuals choose to invest in wine, investors find they gain access to a growing body of information that will benefit them as they move forward with purchases. They connect with others who are searching for growth and value in a low-interest-rate environment. However, the investor must determine how much they wish to put into the asset class and know how long they plan to hold the investment. Wine doesn’t differ from other investments in terms of the steps taken when making a purchase. Furthermore, the investor needs to know their investment goals and research the market to find the best opportunities.
In addition, wine serves as a tangible asset, one with inherent physical value. This benefits investors in that they have something to share with a potential buyer in the future, something the individual can see and feel. Nevertheless, the investor must prepare a space to store the wine in order to protect its value and quality. In addition, they need to obtain insurance to protect their investment, as this is a tangible asset. Make certain everything is in place before purchasing the first bottle to safeguard the investment.
Many individuals wish to diversify their investment portfolios now. The global pandemic that swept the globe in 2020 leaves many wonderings what the future could hold. Nobody predicted this crisis, and future ones cannot be predicted either. Diversity in an investment portfolio helps protect investors from a major economic downturn. The pandemic isn’t the only thing leaving investors worried. They wonder how Brexit will impact the economy, what changes will be seen under the new United States president, and more. Investing in tangible, stable assets like wine helps protect their capital while minimizing their risk during these uncertain times and can do the same for you. Learn more today about wine investment opportunities and whether they are right for you.