Calgary Investment Opportunities - Wine? You Want Me to Invest in Wine?

Calgary Investment Opportunities - Wine?? You Want Me To Invest in Wine??

"You must be drunk! Of all the investment opportunities you could offer, you come up with wine!"

I was recently presented with the idea of investing in wine as part of my investment portfolio. "Unthinkable"... that was my first reaction to the idea.

But when I started thinking about it, maybe there could be some potential...

Calgary has been a hotbed of new investments lately because of all the oil money in this town. Despite the economic downturn there are a lot of people here that have incomes double or triple what they would get paid elsewhere. Because of this, "Calgary investment opportunities" has been a hot topic among the "well-to-do" in this town.

Calgary investment opportunities include everything from stamps to art to biodiesel to... now, wine! This one really threw me for a loop. I never thought of wine as a serious investment but here I was, being asked to consider it as part of my portfolio. I guess they decided to market here because there is jut so much money in this town!

Here's what I learned about wine and its investment potential:

Wine is like many "collectables" where you have a small group of people who would do anything to own (in this case 'drink') specific products.

In fact, investing in wine is a lot better than other similar investment opportunities because the longer you wait, the more scare the wine becomes because people start drinking it all up!

Isn't that just perfect? You have a product that is in high demand but not enough of it is produced to satisfy that demand. High demand and low supply drives the price up. On top of that, as time goes on, the supply keeps decreasing due to consumption of the product. Decreasing supply means the price will go up even more. However, we're not done yet. The demand gets higher and higher because as a good wine ages, it becomes more desirable...especially to those who wanted it and couldn't get enough of it in the first place!

Wow! Now that's an investment! Can it get any better?

Actually, yes. Wine is considered a "wasting asset" by the tax department so it doesn't attract Capital Gains Tax. You can pocket any money you make on the wine because there is no tax on it (please, always check with your accountant on how to handle the tax implications of your investments).

How much can you make by investing in wine? History has shown that your investment can grow as much as 30% per year. That's 30% TAX FREE gain! Using the rule of 72 (72 divided by the interest rate = the number of years it takes to double your money) shows that you would double your money every 2.4 years.

So, if you invested $10,000 once, it would turn into $20,000 in approximately 2.5 years, $40,000 in 5 years, $80,000 in 7.5 years and $160,000 in 10 years. If you kept it invested for another 10 years, your $10,000 investment would turn into $2,560,000. Since all the gain is tax-free, you get to keep all that money.

That is simply amazing! So, why isn't everyone investing in wines? Why would anyone invest in anything else...especially the stock market where you can lose all your money overnight?

Good question. Let's look at the downside to investing in wines.

One of the secrets to investing successfully in wines is knowing which wines to invest in. There are so many factors that go into making a good wine. You can go with some of the well known brands, but even those can prove to be a dud if the weather didn't cooperate fully in a particular year.

Some wines just taste better than others. Taste is all important in the wine business. That is how its notoriety increases and the demand keeps going up for good wines.

Sometimes historical circumstances can make the price of wine go up. For example, wine from the Titanic is being sold for far more than other wine of the same year and brand.

One factor that can influence the demand of wine is which winery produced the wine. The same wine from different wineries can have a distinctly different taste. The average wine drinker would certainly not have the knowledge or expertise to differentiate taste to that level, but the experts know about it. When they give their reviews, the wine becomes more or less desirable to wine collectors around the world.

Another big factor in investing in wines is the supplier of the wine. Unfortunately, there are many suppliers who will mislead you in terms of the year, the crop and the winery the wine came from just to get your money. If you have the wrong supplier, there is no chance of you making any money.

Then you have to look at the logistics of actually purchasing the wine, physically. Where are you going to buy from? How is it going to be shipped? Better yet, where in the world are you going to keep thousands of dollars of wine so it doesn't spoil?

You can always pay a company to keep the wine in bonded warehouses that provide the right climate controls to store the wine for long periods of time. That costs you money. These specialized warehouses will freely give you a tour of their facilities and even let you take your wine home to drink if you wish.

Sounds like fun! But is it really a good way to invest?

I don't know about that.

Even if you are willing to go through all of the above hurdles you still need to consider that the value of wine "could" increase by "up to" 30%. That means if you are lucky, or VERY knowledgeable, you "may" see a decent return on investment.

For me, after looking at all the factors, I decided to stay with the reliable 10% investment return that I can get from my portfolio of Calgary investment opportunities. You would really have to be "into it" to make any decent money in wines, in my opinion. Here's the link if you want to know where I am investing: http://www.omniarchcapital.com