Investing in stocks can be risky, even too risky for many investors who really can’t afford to lose and see their portfolios hit rock bottom. As an alternative, smart people turn their attention to wine investing. This form of investment has won a lot of ground lately, and right now increasingly more investors are recognizing that fine wine can be a reputable type of alternative asset class. Over the past few years, the price and quality of fine wine has increased dramatically. New groups of buyers have started acquiring more cases of Bordeaux wines strictly to invest. On top of that, Wall Street investors are also putting cash into a growing numbers of wind funds, which are similar to mutual funds. Why? Because they strongly believe that there’s great potential in investing in wine.
Top-quality wines – a worthy type of investment
Investors love top-quality Bordeaux, Burgundy and Champagne wines. These are not linked in any way to other asset classes; meaning that they feature prices that don’t increase or decrease once bonds or stocks are affected. Investors in wine are hunting for bond-like security with stock-like returns; and more people are investing in wine because this type of asset class is interesting too, not necessarily dangerous.
Some investors are not particularly interested in the actual product; they have no interest in drinking the wine in their portfolio because their goal is to keep it for as long as possible in a temperature-controlled, bonded storage facility. For a certain type of wine to appreciate and increase in value, it must be preserved in optimal conditions, thus ensuring its top-quality. To many investors, wine is not a product they would want to enjoy, but merely a form of investment.
The great potential of wine funds
Investors that are only interested in buying wine to invest usually choose to have their product stored in a fine wine investment fund. This ways they’re guaranteed that in a few years, their initial investment will pay off. New wine funds provide would-be investors with a unique opportunity – to purchase massively without having to invest a fortune in the beginning. Generally speaking, an initial investment in fine wine can start at $20,000. Most portfolios are predominantly made of Bordeaux wines, because they’re well-known for their top quality and consistent returns over the years.
Investors who choose to put cash into a wine investment fund usually get cash payment. However, other similar funds give investors a choice – they can either accept cash or wine. The Elevation Wine Fund for example, pays dividends in wine or cash. Investors can choose wines from a varied collection and make it part of their ROI (return on investment).
Know everything there is to know about en primeur wine
Investing in stocks can be particularly challenging. But this doesn’t mean that investing in wine is 100% safe. Prior to getting started, you are advised to get assistance from a certified wine merchant. Whether you’re a newbie investor or you’ve been doing this for many years, it is still recommended to seek assistance just to make sure you’re making sensible choices. En primeur wines for example, are extremely tempting. Also referred to as “futures”, these wines are bought at a lower price before being bottled (the wines are still kept in barrels).
Basically you’re placing an investment on a type of wine you don’t know whether it will increase in value or not. To minimize risk, investors are advised to stick to top varieties – Bordeaux and Burgundy, which have proven to render amazing returns over the years.
Rather than keep investing in stocks and not have the certainly that your initial investment will pay off, you should turn your attention to fine wine. The fine wine market has managed to prove that it can be extremely profitable; however only the smartest investors reap benefits. Stay away from unknown wines and stick to varieties with a proven track record. Last but not least, don’t invest on your own and stay as far as possible from people claiming to sell the best wines. They’re probably scammers looking to rip you off. Consult with a London wine investment company for more information, and you can be sure that your initial investment will someday see a return on investment.