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How retirees can invest in fine wine safely


Jul 26, 2017 #Business, #Food & Drink

Wine investment is a great way to make your retirement nest egg that little bit larger. Yet it can also be risky business, especially for retirees who are vulnerable to investment scams.

Over £1.2 billion is lost every year from investment scams in the UK. However, The London Wine Cellar state that the process of valuing your investment wine should “be as comfortable and transparent as possible.” To do this they offer free valuations, and suggest people should demand that their wine merchants keep them in the loop.

As long as you learn how to spot the reputable companies from the fraudsters, fine wine can be a fun and profitable hobby. If you have a little excess capital, there a fewer more rewarding, interesting ways to invest, as long as you do it safely.

Pensioners are an investment scam target

One in four over-55s in the UK have fallen victim to an investment scam. Of all investment scams, wine and diamonds are the most prevalent. Last year, one 94-year-old paid more than £30,000 to a wine investment company that had no wine.

A sickening 80% of phone scams—known as ‘vishing’—involve victims over the age of 55. People of any age are vulnerable to investment scams, but as older people are more likely to have extra cash and are more likely to live alone, they are considered prime targets by scammers.

Why wine? Partly because people know that when done legitimately, wine can provide a solid additional revenue source to investors. Although this provides opportunities for investors, it opens the door to potential scammers as well. 40% of those surveyed by YouGov reported a sharp rise in so-called cold calls about prospective investments, said the Financial Conduct Authority (FCA).

Also, wine investment isn’t regulated by the FCA. 27% of over-55s who are victims of investment fraud put their money into unauthorised firms selling unregulated products.

How to find reputable wine merchants

Finding a professional, reputable wine investment company can not only help you avoid being ripped off, they can also provide the expertise and knowledge to help you in your investments.

Do your research. The Met Police recommend looking at the merchant’s trading history and expertise. Find out if the business is profitable, well-established, who the directors are and what experience they have in fine wines.

Action Fraud give further advice on preventing investment fraud. They urge people to never respond to cold calls, never sign over your wine to another party without first checking their authenticity, and only deal with a registered Authorised Payment Institution.

Wine investment can help you boost your pension

Yes, all this talk of investment scams may be enough to completely put you off. However, it is important to remember that there are many reputable and professional wine merchants. Not only could wine investment help you exercise greater freedom over how you withdraw and manage your pension, it can also be a very interesting hobby.

Wineinvestment.com suggests that “investors seek to restrict their holding in fine wine to no more
than 25% of their investment portfolio and view fine wine as a minimum 5 year
investment hold.” Experts also suggest you shouldn’t commit any less than £5,000.

That’s a large sum of money, and a long period of time; only people with that much available capital should seek to get involved in fine wine investment. You should know what you’re getting into, and never invest more than you can afford.

Age UK suggest a number of steps to take for those interested in wine investment but worried about being conned. Any business that cold-calls, pressures you into making a quick decision, downplays the risks of wine investment or promises unrealistic returns should be reported.

If you take these step and do your research, there is absolutely no reason fine wine investment can’t be an enjoyable endeavour. Remember, scams should make wine enthusiasts cautious, but not deter them from investing, in wine or anything else.

By Emily