Avoid Losing £100,000 On Your Wine Investment With These Tricks
- Wine investors are increasingly at risk of losing £1000s to scammers
- Latest Deals looks into the best ways to invest wisely and maximise profit potential
- They explain why spending £8k can prevent the risk of losing £8k, and why spending £240 on trade membership could be a good idea
Wine investment has been popular for decades now, but while this market has the potential for great returns if you’re able to wait it out and age your wine expertly, those who are beginning to explore the industry are becoming increasingly vulnerable to having their funds abused.
Tom Church, Co-Founder of money-saving community LatestDeals.co.uk, said: ‘Just a few weeks ago, an East London company which operated a wine investment scheme abused client funds worth more than £1.9 million, so if you’re considering venturing into this industry, how can you be sure you’re spending your money wisely and giving yourself the best chances of a return on your investment? The team at Latest Deals have looked into some of the best ways to invest in wine - while giving advice on what to avoid.’
Dodge £100,000 Scams - Go For £240 Market Membership
Before taking the first step into wine investment, it’s vitally important to research your potential sources. Those who want to buy bottles may choose to invest at auctions, through a broker, on wine stock exchanges, in speciality stores or in wineries. Don’t be hasty when you’re tempted by a wine, especially if you’ve been connected with a pushy sales advisor who is encouraging you to buy quickly. They may use lines such as ‘This wine is in demand’, ‘Several people are looking at this one’ and ‘This bottle could go quickly’. Worryingly, scammers will invest in professional resources to reel people in - one victim in 2017, residing in the Perthshire area, was given a glossy brochure and spent time on the phone with a sales representative who gained their trust - with the victim losing nearly £100,000 in the process.
So how can you find reputable sellers? One option is to check out the Liv-ex Fine Wine 100 Index. You can choose a trading membership, which allows you to pay monthly for access to fine wine prices, trading opportunities and a global network of trusted merchants from £240 a month. Online auctions are available from reputable destinations such as Spectrum Wine Auctions and WineCommune. You can also find a reputable wine broker who will tailor their advice to your needs and make transactions on your behalf.
Spend £8,000 To Avoid Losing £8,000
Weigh up professional cellar storage versus investing in your own wine cellar. If you’re ambitious and have a lot of disposable capital to invest, you may like to invest in your own cellar - which will pay for itself over time. According to the Wall Street Journal, it can cost between $10,000 and $15,000 (£8,000 and £12,000) for the right setup, which includes a cooling unit, racking, and construction and installation costs. Tom added: ‘Considering that a common recommendation for investing in an initial wine collection is $10,000 (£8,000), it makes sense to protect your purchase by spending another £8k on the right setup at home. Otherwise, you risk it spoiling and effectively losing that £8k you invested in the first place!’
Alternatively, some merchants will help beginners - or those who want to delegate the responsibility of storage - to manage their wine. This could be a good option if you want to avoid making rookie errors such as storing your wine incorrectly. That said, it will pay off to shop around. Consider the monthly or annual cost for storage, whether insurance is included and what the merchant charges on top - such as a selling commission or management fees.
Make £1000s By Gaining Access To Exclusive Mailing Lists
Getting on an exclusive access list is the best way to find out about hot new releases which are set to explode in value. Typically, these wine marketplaces will sell small amounts of a certain bottle, and the aftermarket will see a huge markup. For example, Vinfolio reports that mailing list Sine Qua Non has a waitlist of 4000 people, and Screaming Eagle wines will sell for $750 on average to mailing list members - only to go for thousands more aftermarket. As you may have guessed, it’s not as simple as typing your email address in online and getting amazing deals right to your inbox. You’ll need to have a history and relationship with the marketplace, indicating to them that you’re a committed buyer. Once you’ve built up the rapport, you can look into gaining access to the exclusive lists to begin saving on your investments.
Unlike other types of wine investment, buying exclusive picks from mailing list drops is a quick market. Once you’ve been put on the mailing list for a highly popular winery, you’ll want to be quick off the mark in order to make the most profit. Get purchasing the moment you receive news of a release, as you will want to rely on the bargain price offered to those with exclusive access. Sell on the wines quickly to get the quickest profit, as buyers will want to snap up a rare product as fast as they can.
Wait 10 Years For Optimum Maturity - 5 Years Results In Smaller Investments
Cellar Tracker is a great resource for finding high value wines that have potential for resell profit in the future. You’ll want to balance the customer reviews - in other words, how the wine tastes - with information about the community holdings. Generally speaking, the higher the percentage of wines held in cellars as opposed to those which have been consumed, the more buyers are potentially holding their bottles for future investment. It’s also worth looking at the tasting notes - you want as high a community score as possible. When looking at the reviews, consider that a balanced taste without particular strong notes will have more potential for a good ROI further down the line.
That’s not all you should consider, though. To find a wine which will both age well and have possibilities for becoming rare in the future, look at the quality of the producer and research when critics believe the wine will be ready to drink. It’s commonly held that vintages which mature in an average of five years will provide a quick investment return, but patience will pay off if you go for a young bottle which can be cellared for a decade or two. Generally speaking, you’ll be in this for the long haul - size up your bottles after a decade for selling on.
Spot The Signs Of Spoiling - Avoid £1000s Down The Drain
Any wine investor who is storing at home will need to know the signs of spoiling so they can avoid the tell-tale signs. For example, a dry cork means the wine will likely have lost its flavour. This is because air has been allowed to seep inside and oxidise the alcohol. Colour is also a factor - if your dark red wine has become brown, it’s most likely spoiled. Plus, an unopened wine which has small bubbles in the bottle should be discarded as it underwent fermentation during its creation which it shouldn’t have.
Each type of wine has its own specific conditions which it needs to be kept in. There are basics for most unopened bottles, such as keeping it away from light and storing it vertically to keep the cork in contact with the wine. However, full bodied red wine should be kept at around 18C, while light bodied red does best in around 14C. Dry white will age well in storage conditions at 10C, while sparkling and dessert wines are best kept between 5C and 8C. Tom added: ‘If you spend several thousand pounds on a vintage Right Bank Bordeaux Merlot with the intention of keeping it in storage for 15 to 20 years, only to discover after a few years that it’s turned the wrong colour or oxidised, all of your money has gone to waste! That’s why storing wine and taking care of it is so important - you have to protect your investment to have the best chance of earning a profit.’
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