Following on from our previous article on investing in fine wines, here we cover some more tips on making your investment work for you.
The Importance of Independent Valuations
Regardless of whether you hold wines directly in your own name or via a fund, they should be valued at regular intervals. You should receive a report after valuations, and any valuations should be conducted by an independent party. This ensures transparency throughout the process and puts your mind at rest that you are receiving up-to-date and reliable information on pricing.
Stay Up-to-Date with Costs
Any costs relating to your wine investment should be transparent right from the start of the investment process. While it is your responsibility to be aware of all costs, dealing with reputable firms will ensure you have easy access to any information you require. If your investments are not being managed efficiently, this could have a negative impact on your returns. You should also be aware of outside factors that might influence your costs and potential returns. The Financial Times, for example, highlights the impact of the UK’s EU referendum vote in June 2016, explaining that the referendum outcome saw the value of many wine holdings fall for British investors.
Choose the Right Wines to Iinvest in
Only wines that have sufficient liquidity or adequate supply and demand are worth investing in if you want to minimise your exposure to risk. You can research the wine market in a number of ways, including checking out the wares of reputable online wine merchants in Northern Ireland, such as http://thewinecompanyni.com/.
No matter how much research you undertake or how careful you are, accidents can still happen. Loss, theft or damage of assets can occur, so it’s vital all wines are insured at a suitable replacement value. You should be aware of who is insuring your investment wine, and how much the cover is worth.
Be Aware of Tax Obligations
While wine investments are regarded as “wasting assets” because they have a life expectancy of lower than 50 years, they are only exempt from capital gains tax (CGT) if certain requirements are met. The investment structure will have an impact, and wine investments are only free of CGT in conditions such as the investment structure being a limited partnership.