The Italian wine industry has been performing better than ever before in recent years, with statistics suggesting that the industry is slowly eclipsing the French industry in certain areas and a renewed expansion into the Asian market looking increasingly likely.
With all of that in mind, there may be no better time to invest in an Italian wine company that right now. Making an investment can be a little intimidating for people who have never tried their hand in the stock market before, or those with limited experience in the world of fine wine, so keep all of the following pointers in mind so that you can use your money as wisely as possible and find the greatest chance for a return on your investment.
Understand What You Have to Spend
Before you consider any sort of investment opportunity, regardless of the industry, you need to create a budget that you can feel comfortable investing. Never head into an investment using money or capital that is going to prove vital to your way of life, as the risk of losing it all is far too great. Instead, make sure to set aside what you can spare, rather than what you need, and make use of that as the basis of your investment.
Once you know what you have to spend, you can create a shortlist of investment opportunities that will prove affordable to you. This will also ensure that you avoid the disappointment of considering an investment only to find out that you don’t have the capital that you need.
Always Go For The Best
Once you know what you have to spend, you need to decide what you are going to do with the money. If it is your first time investing in the industry, this will mean putting in a lot of legwork and doing all of the necessary research so that you can find out about each wine company that you consider investing in and how their future prospects look.
A good red wine company is usually a safe bet, especially considering the fact that the ever-expanding Chinese market tends to heavily favour red wine due to the fact that it is linked to luck and prosperity. However, you may also consider the longer game and invest with the thought that as the Chinese market becomes more educated about white wines, they are also going to start buying more of them, leading to an excellent return thanks to higher demand. Whatever you decide to do, make sure that you back it up with plenty of research so that the risk attached to the investment is as minimal as possible.
Always Shop Around
If you are investing in single bottles of wine with a view to potentially selling them on at a later date, you should never accept the first price that you are offered. Different suppliers will charge a different amount depending on their location and the demand for their products, so always take the time to check out as many different sources as you can to find the cheapest one.
With prices varying by as much as 20% between some vendors, it can actually be considered irresponsible not to shop around. While you may have a preferred vendor or supplier, the point of making an investment is to see the highest possible return, so there is no point in paying more than you need to if there are better options available to you.
Go For Smaller Batches
A good rule of thumb when it comes to investing in fine wine is to purchase bottles that are part of a fairly limited vintage. After all, if there is a lot of supply it only stands to reason that demand is going to be fairly low.
Shop around and find out about some of the higher quality wines being produced that aren’t going to be widely available. Those produced in quantities between 10 and 30,000 are often very good bets, assuming that they are good enough for people to actually want to drink them. You then need to play the long game a little bit. Ideally, you should keep hold of one of these bottles for at least five years, after which time much of the supply will already be consumed and the value of the bottle begins to increase as a result. It is then that you will often find the greatest opportunities to sell and actually turn a profit.
Be Wary of Wine Futures
When you invest in a bottle of wine, you will already know the product and will often have the benefit of independent reviews of the vintage to back up any decisions that you make. This is not the case with buying wine ‘en primeur’. Often referred to as ‘wine futures,’ this is when you invest in the wine while it is still in the barrel and being produced.
Now while this will often cost you less than purchasing the wine when it is fully-matured, you also have to deal with the possibility that the wine may not turn out as well as you had hoped. Remember that you are purchasing the wine at its least mature state. As such, you need to do as much research as possible and consider the reputation of the winemaker you invest in. You will also need to consider additional factors, such as the quality of the harvest that produced the grapes for the wine you’re investing in.
Always Understand Tax Issues
Investing in fine wine has built up something of a reputation for being ‘tax free.’ However, this is not an entirely accurate description and you need to make sure that you do the research so that you understand the various tax issues that will surround any purchases that you make.
Remember that different countries and states will have varying degrees of legislation in place when it comes to wine investment. Take the time to do your research and consider consulting with a tax advisor who may be able to offer you a little more detail on the best practices to follow.
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