Biggest Wine Investment Mistakes You Can Easily Avoid
Not everyone can invest in wine successfully. As promising as this market may appear, it does come with a lot of challenges. Unlike additional types of investments such as stocks and real estate, a fine wine investment comes with unexpected attributes investors must be aware of.
Otherwise, they risk making the worst choices and losing a lot of money. Not all investors in wine are drinkers; and yet they can still make a profit. Before starting an investment it is fundamental that you consult with a wine merchant or advisor. Here are some of top mistakes people make in this business that you should avoid.
Investing in cheap wine
As an asset fine wine has an intrinsic value, just like gold. Prices for fine wine are not influenced by politics or inflation like with additional assets such as stocks or real estate. Investing in wine doesn’t mean spending money on the cheapest bottles that you can find and waiting for these bottles to appreciate and increase in price.
This will never happen, especially if we’re talking about wine that comes from unknown brands with no track record. For your investment to appreciate you must invest in quality wine types like Bordeaux and Burgundies.
Focusing on investing short term
If your goal is to invest in wine for a limited amount of time, then you will definitely fail. The general condition of the wine market over the past couple of years and its unexpected fluctuations make it clear that wine is a valuable type of investment that demands at least 5 years to appreciate in value.
Good wines require time to mature and become profitable. Some of today’s best vintages are more than 20 years old. Patience and money are needed for your initial investment to pay off. Are you willing to wait at least 5 years before seeing any returns?
Investing without consulting a professional
Unless you’re a wine aficionado with a lot of experience in the wine business you are not advised to make decisions by yourself. Believe it or not, the wine market is extremely dangerous; it’s like a mine field where scammers cannot wait to rip off the wealthy.
This can trigger a lot of frustration, not to mention that you’ll be losing a lot of cash too. For an investor to become a wine guru he must have worked in the business for at least a couple of years. Mastering the tricks of the trade is easier said than done.
Ignoring storage conditions
Storing wine that you plan on drinking in a couple of weeks is easy. All you have to do is place it on a wine rack in your living room. However, investment wine has to be preserved in optimal conditions. Proper storage conditions are mandatory.
If you expose your wine to cold temperatures, it will start producing flaky, small crystals. If your product is exposed to really hot temperatures, it will mature a lot faster and you may not realize when it will reach optimum stability and flavor.
The best storing conditions are somewhere dark with recommended temperatures and humidity levels. Once again, if you’re not an expert, you might want to consult with a wine merchant for advice.
Not taking insurance seriously
Rookie investors can’t understand the value of having their wine insured. Because they’re new to the business, they’re inclined to assume that all wines appreciate in time. Wrong! Expensive vintages are like jewelry. They’re incredibly valuable and should be insured.
What if something happens and your wine is destroyed? And we’re particularly referring to natural disasters here, such as earthquakes, tornadoes and floods. Consult with a home insurance company and have your collection covered. This way you are sure that your investment is secure.
A bottle of 1787 Chateau Lafite is estimated at about $160,000. The wine can’t be drunk because it has materialized into a collectible. Some believe that it belonged to Sir. Thomas Jefferson. Basically, it’s a piece of history. What would happen if the owner’s home caught fire and the wine destroyed?
Wine Investment
Rather than have regrets, it’s always best to take precaution measures when investing in fine wine investment. The market is promising and there’s enough product for everyone. However, only a small percentage of want-to-be investors succeed. Most of them lack patience, while others lack the necessary knowledge for making wine profitable.
Category: Wine Investing
