We all know that investing is meant to be the path to riches. The idea is that you make your money work for you so that you can get even more money.
People invest in property with the dual aim of collecting a rental income and selling the property on for more money later. People invest in stocks in the hope that the stock price will rise afterwards so that they can sell at a profit.
And people invest in wine for similar reasons.
However, investing in wine isn’t as “simple” as investing in stocks or properties. That’s because there are so many different factors that can affect a wine’s price.
Quality is the most obvious one. However, a vintage with an interesting history behind it can also become extremely valuable over time. High quality wines produced in very limited amounts tend to skyrocket in value. In many cases, even the producer can have an effect on the value of an Italian wine as an investment.
There’s a lot of information to parse through and there’s no foolproof strategy for investing in Italian wine.
What we’re going to do here is offer up a few tips that may help you along.
Tip #1 – Always, Always, Always Do Your Research
It’s no secret that there’s a lot of money to be made from wine. And when there’s money to be made, there will always be unsavoury sorts who let greed control them to deal with.
This can hurt you in several ways. For one, you may meet sellers who try to inflate the value of their wines in an effort to get you to pay more. That means you should never take a seller’s sales speak at face value. Research every claim that a seller makes about the wine they want you to invest in. This will ensure you’re not making an uninformed purchase that ends up costing you more than it should.
The other issue is counterfeiting, which is a major problem in both the Italian wine industry and the global industry. Counterfeiters often target extremely valuable wines and make fakes in an effort to dupe investors out of their hard-earned money. Ideally, any bottle of wine that you invest in will be checked repeatedly by experts to ensure it’s not counterfeit. If that’s not the case, your research is going to play a big role here too. Be wary of any seller who doesn’t want you to look into the wine or take a closer look at the label or bottle.
Tip #2 – Be Ready to Manage the Risk
There aren’t as many safeguards available for wine investing as there are for other forms of investment.
That means you’re taking on a lot more risk than you might with other types of investing. The market is also flexible to the whims of the buying public. If a wine falls out of favour, for whatever reason, your investment might actually lose money.
That means you have to pay attention to the trends and be prepared to sell if trends move away from particular types of wine.
Finally, be wary of you decide to invest in wine through an investment firm. Any that guarantee returns are not to bet trusted. They can’t possibly make those guarantees in good faith as the industry is far to flexible.
Tip #3 – Invest with the Long-Term in Mind
Wine is not an investment that you can get rich quick from. It doesn’t work in the same way as flipping an investment property might.
You have to go into the investment with your eyes open to the fact that you may have to wait several years to make a return. Many investors recommend buying with the five-year cycle in mind, though some investments may only pay off after ten years or more.
Tip #4 – Take Care of the Wine While You Hold It
We’ve spoken at length about the proper ways to store wine in the past. This information becomes even more important when you’re buying a bottle of wine as an investment.
Condition lays a huge role in the wine’s value. That doesn’t just mean the condition of the wine itself either. Things like the condition of the label can also have an effect on a wine’s value.
Make sure you have a suitable storage space set aside for your investment. A good wine cellar is ideal, but that may require you to work with a third party. Ensure they understand the importance of the wine and how it needs to be stored.
Tip #5 – Avoid Cold Callers
If someone contacts you out of the blue about investing in a bottle of wine, there should be some immediate red flags.
Cold calling for wine investment is actually illegal in some countries, and with good reason. It’s one of the main techniques that counterfeiters use. They’ll present you with an “opportunity” that you “can’t afford to miss”. You buy and then they disappear.
Only purchase your wines from reputable sellers. They won’t use cold calling as it’s considered bad form in the industry.
Tip #6 – Visit the Office
If you’re going to work with a wine investment company, it’s crucial that they have a physical office address. Any who have virtual offices of use P.O. boxes should immediately set off more red flags.
In an ideal world, you’ll find the time to visit the physical office so that you can meet you representatives face to face and discuss strategy. At the very least, there needs to be an office so that you have the option of visiting at any time.
Put it like this. You wouldn’t trust someone you don’t know to handle your money. The same should go for an investment company that may be hard to trace if things go wrong.
The Final Word
This is by no means a comprehensive list of tips for investing in Italian wine. However, it covers some of the most pertinent issues that new investors have to deal with.
Follow these tips to avoid the scammers and ensure that you make the most out of any investments that you make.