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What Measures Should Be Taken to Stop the Fraudsters in Wine Investment?
Wine investment has been an excellent source of revenue for many people; in the past twenty years it has steadily provided good rates of return. However, the last few years have seen an explosion in the demand for high quality wines, despite the fact that only a fraction of the wines produced every year will go up in value. Unfortunately, this increase in interest in fine wine investment has attracted the attention of those who wish to defraud you; if considering investing in wine you should follow these tips:
Deal with reputable merchants
As with any investment venture you should know who you are dealing with. You should check the reputation of any merchant you are intending to deal with; this can be done via online reviews or talking to others in the business. It is essential to confirm the company is genuine, has experience in fine wines and a proven track record.
Assess the quality of the wine
Before parting with any pennies you must know which wine you are purchasing. It is essential to research and understand the fine wine market; this will ensure you purchase wines which will rise in value. Of equal importance is comparing processes between the various suppliers; you may be surprised at how much the price can fluctuate! It is worth noting that it is possible to buy wine ‘en primeur’. This is before it has been bottled and the price will be much lower than once it has been bottled. However, there is a risk that the wine will not be as good as expected and your investment may suffer. You should approach this aspect of wine investment with caution.
Caring for your investment
Wine must be stored in the right conditions; this includes temperature, humidity and security. Ideally you should store your wine in a bonded warehouse, this will ensure the right conditions are maintained and your wine will be certified. It will also decrease the opportunity for you to drink your investment! Before you commit your wine to any storage facility you should be certain of what service it is offering, at what price and what additional charges there may be.
It is also important to assess the documentation you will receive to confirm your purchase of the wine and the storage arrangement. You do not want to watch your wine grow in value only to struggle to prove ownership!
Select the best wines
The best wines are from the Burgundy, Bordeaux or Rhone regions of France, although there are now many other excellent wines on the market. These wines can sell for $10,000 a bottle but it is better to have one bottle of quality wine, which is almost guaranteed to rise in value than to have one hundred bottles of a wine that may or may not increase in value. This will also save on storage costs and maximize your potential profit.
Watch out for taxes
Wine is a commodity and may be subject to tax, however, it is also classed as a depreciating asset and there are certain tax reliefs which can be offset against any trade in wine. Additionally, keeping your wine in a bonded warehouse can avoid the need to pay import duty; this is because it is classed as still in transit. It is essential to speak to a tax specialist when considering wine investment and how it fits in with your portfolio; they will be able to advise you of the best possible route to take.
It is advisable to insure your wine, regardless of where you have it stored. Before you can do this you will need to be certain of where your wine is stored and that it is clearly labeled if stored within a warehouse with other wine. Different levels of cover are available and should be investigated to safeguard your investment.
The wine business is extremely risky nowadays. Scams and scammers are everywhere, and you should learn to stay protected. Never buy wine from someone directly, and never buy a single bottle. Good-quality wine for investment comes in special cases. Before spending any more, make sure to consult with a wine merchant just to be sure you’re making the right decision.
About the Author
By William Taylor and WineInvestment.com!