Ride the storm with a fine wine

‘Tax-free profits and a booming market make fine wine investment the perfect tonic for investors in 2008,’ says Simon Jenkins, of Nouveau World Wines.

If you believe the experts, then 2008 is going to be a difficult year for investors.

Most experts are predicting problems in the stock market, problems in the housing market and more problems in the banking industry. So does mean that investors have to simply shut their eyes and hope for the best? Perhaps, but not necessarily. I would argue that now is the ideal time to investigate new areas for investment – markets that may offer a brighter outlook for 2008.

One such area is wine investment. As an analyst for a fine wine company, I’m passionate about this market and keen to spread the word. Fine wine investment isn’t just for the wealthy or wine connoisseurs, it’s for everyone. So if you’re looking to ride out the storm in 2008 – or simply want something new – here are five reasons I think you should consider fine wine.

• Stability – Fine wine is a tangible asset, the price you pay reflects the quality of the wine, its vintage and the reputation of the wine maker. As a result, its value is not dependent on other factors like the economy as a whole, interest rates or the performance of a particular company. The result, is that premium fine wines rarely, if ever, depreciates in value. Unlike stocks and shares values go up but almost never go down.

• Tax free – any profits you earn by trading fine wine is exempt from Capital Gains Tax. That’s right, you make a profit and you get to keep all that profit. The reason is that fine wine is classified by the government as a ‘wasting asset’ (any asset with a life of less than 50 years) and is therefore not liable for capital gains taxation. Also, if the wine is kept ‘in bond’ you generally avoid paying VAT and duty.

• Performance – most commentators would agree that the fine wine market is booming. Over the past 20 years, wine has outperformed most other assets. Some commentators put the average annual return at 15 – 20%. And that’s an average!

• An appreciating asset – premium fine wines are produced to improve with age. As the wine is cellared the wine matures and its quality improves – making it more desirable and ultimately more valuable. Also, as the wine is cellared the supply of the wine diminishes as some bottles are drunk, broken or even lost.

• Fixed supply – The supply of any given wine is finite, so that no matter how popular a wine becomes, it is impossible for more to be produced. It is this combination of falling supply and strong demand that leads to the increased value of a given wine.

• Its fun! – OK, so I said five reasons but the sixth one is a special bonus. Trading fine wine can be lots of fun, especially the research! What could be better than enjoying a truly magnificent bottle of wine knowing your wine portfolio is appreciating in quality and value as you sit back and enjoy it.

So that’s why, but what about how? The important thing is to speak to a reputable company and get as much information as you can. Most investment companies can help explain the market in more depth, offer advice on what to buy and when and help you sell your wines on. Portfolios can begin from as little as £3,000, so it’s not as expensive as you may think.

So if you’re investments are looking a little shaky in 2008 then why not make that call and find out more? Traditional markets aren’t necessarily the best markets – and now could be the time to find out.

For further information, ring 0207 887 6153 or visit www.nouveauworldwines.com

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