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Wine Articles: Getting Started in Wine Investment (2)

3. Safe storage

For all investors, professional storage is an absolute essential. It might seem tempting to scurry home with the wine and put it on the mantelpiece, but that would be a grave mistake.

Instead, you must keep your wine stored in a bonded warehouse. It will be safe and sound there at a cost of between £7 and £20 per year. The price will also include insurance at replacement value.

Marcus Edwards at Albany Vintners explains: ‘You must keep your wine in professional storage because fine wine is extremely sensitive to temperature and bright light. Whatever you do, don’t take the wine home to the garage cupboard or a drawer next to the radiator. As well as providing the ideal storage conditions, professional storage will ensure the wine is kept ‘under bond’. If you take the wine out of this environment you will be liable to pay duty and VAT.’

Fine wine investing also has tax incentives, as wine is considered a ‘wasting asset’. Because it is ‘perishable’ – generally reaching peak maturity after 25 years before declining – wine bought as an investment is exempt from both income tax and capital gains tax. However, again your purchase must be stored in a bonded warehouse to qualify. A good option in this case is to leave your wine stored with the merchant. All the merchants listed above provide professional facilities.

4. Sell at a profit

With an excellent vintage, you can expect price growth to last at least ten years after bottling. So be prepared to invest for the medium or long-term.

Buying en primeur is also a valued option – as it is often the time that wines can be found at their lowest prices.

But because you are buying at such an early stage, this isn’t always the safest route.

Over the life of a wine the supply will inevitably dwindle as it is drunk. But this will happen more quickly when the wine reaches its prime. Therefore, it’s worth holding on to your investment until the wine is ready for drinking. Remember, though, just like any investment, wine prices can fall as well rise.

When you’re ready to sell, get back in touch with your merchant. They will quote you a buy-back price that they’re prepared to pay.

(Photo Credit)

This entry was published on September 18, 2012 at 2:49 pm. It’s filed under Wine Articles and tagged . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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