by Giles Cadman
Emma Wall in the Telegraph has an interesting piece on wine investment, titled “Wine is not like shares or cash”.
When Sunday Telegraph reader Chris Unwin was promised an annual return of 13pc from the wine investment company DS Vintners, he immediately called his bank to look into freeing up the funds.
The pensioner from Surrey was fed up with the paltry return he was being offered in cash, and, not surprisingly, was attracted to such inflation-busting returns.
Though the scheme normally requires a minimum investment of £15,000, Mr Unwin (right) was offered a deal that would allow him access these potential returns for the smaller deposit of £5,000.
“I don’t have very much to invest and, in contrast to the marginal return you can get on cash at the moment, 13pc sounded very attractive,” the former loans clerk said. “I use my cash Isa allowance but have no hope of ever earning that substantial amount from a savings account.”
Luckily for him, the cashier at Lloyds was a touch more cautious and advised Mr Unwin to delve a little deeper before signing up, so he held off and contacted The Sunday Telegraph.
Ms Wall explains that this is not an example of wine fraud, but does have concerns about the risks of investing in wine.
Mr Unwin’s tale is not one of fraud – DS Vintner know their wines – but a warning to investors not to turn a blind eye to the risks involved in chasing such high returns.
It’s not hard to see why these offers are now so tempting: before the credit crisis those in retirement could have earned 6pc plus on a high street bank account without taking undue risks with their capital. Today, the best they can hope for in a cash Isa – where the amount you can save is severely limited – is just 3pc.
Regardless of the rate of return offered, the risks associated with an alternative investment like wine means that wine is not for all investors. It is best as a part of a balanced portfolio for sophisticated investors or high net worth individuals, and for those who can afford to hold their investment over the medium term. Small scale investors who may need to realise their investment quickly will probably not find wine investment a wise option.
