December 31, 2014 (www.investorideas.com newswire) Investors who want to enter fine wine market should know that the industry can be extremely profitable. The secret is to play it safe and not take unnecessary risks. Official wine blogs claim that wine investments have the power of outperforming traditional investments like real estate, stocks, and bonds. The smarter you are when you’re investing, the higher chances you have to see substantial returns. Fine wine has a critical role in people’s social lives; the product is an illiquid, consumable asset that could yield tremendous returns. Here are some crucial advantages of fine wine investment:

Fine wine is a stable investment

In today’s climate of financial downturn and economic concern, general prices for fine wine have remained the same. As opposite to property market and the stock market, the wine investment market doesn’t depend on interest rates or economic conditions. How can that be? First of all, you can’t put a price on quality. The recession can’t affect the wine business because there will always be people interested in purchasing good quality wine. Whether we’re talking about celebrities, wealthy entrepreneurs or investors looking to trade fine wine, it’s really important to keep in mind that wine is a stable investment due to a constant demand.

Outstanding returns

We’re currently looking at a booming wine industry. Blue-chips wines are constantly outperforming conventional assets and it has been doing that for the past 20 years. As for average annual returns, the numbers are looking pretty good 5% — 15%. As opposite to some other types of investment, fine wine doesn’t feature price volatility. Hence, it doesn’t fluctuate. Furthermore, researchers and wine experts claim that the wine industry can recover a lot faster than other industries.

Tax free investment

Investing in fine wine is 100% free. What does this mean exactly? Essentially, investors are not susceptible to capital gains, inheritance or income tax. Better yet, the profit that you make from investing in good-quality wine is also tax free. If you keep your investment in a bonded warehouse, you won’t be forced to pay valued added tax (VAT) either.

Demand & Supply

Fine wine is a consumable, finite type of investment and that’s one of the best advantages of the industry. If the demand is high, this means people are buying; the more they buy the higher chances you have to see substantial returns. Prices will increase and people will be willing to pay more money just to enjoy good wine, or keep investing. Also, investors have a hedge adjacent to some other financial securities. By definition, a hedge is an investment whose purpose is to diminish the risk you’re taking with another investment. If your portfolio has commodities, equities, properties or bonds, by including fine wine you’re better insured and your returns are risk-adjusted.

Personal ownership

Fine wine is a transportable, tangible asset. Payment receipts, invoices and bonded warehouse accounts prove that the investor is the exclusive owner of the product in questioning. The process is somehow related to owning real estate; you are the investor as a consequence you have full ownership of the product in questioning. Fine wine is additionally regarded as a luxury product that is not susceptible to market fluctuations. Luxury wine bottles and wine cases that provide investment demand and value will always be preserved, even if the market destabilizes.

High yielding, low risks

Believe it or not, investing in fine wine doesn’t have to be a risky business idea. Provided that you’re being careful, any type of investor can witness returns. The secret is to know the market and not take unnecessary risks. Before spending any money, consult with a reputable merchant. Talk about your investment budget, storage conditions and types of wines.

If you’re 100% sure that you’re ready to invest, make sure your investment process is clearly defined. Never deal with rookies or merchants who don’t know what they’re talking about. Whether you invest for money or pleasure, always remember that there’s a slight chance you might fail. Investing in wine comes with a certain level of risk, so you must be rational. Last but not least, patience in this industry is paramount; you will be compelled to wait at least 5 years before seeing any returns.

www.wineinvestment.com/ which offers leading edge service solutions to the fine wine market. You can also find Jason on Twitter and Google+.

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