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Saturday 10 December 2016

Way out punts may pay off amid chaos

With markets still tumbling, maybe it's time to put your money elsewhere, and buy fine wine and flash cars, says Louise McBride

Published 21/08/2011 | 05:00

PAINT POT: Gerard Dillon's 'Italian Washer Woman' was sold last year for €68,000, a 10-fold increase in value in 10 years
PAINT POT: Gerard Dillon's 'Italian Washer Woman' was sold last year for €68,000, a 10-fold increase in value in 10 years

STOCKMARKETS tanked again last week after a meeting between the German Chancellor Angela Merkel and French President Nicolas Sarkozy raised investor jitters. Merkel and Sarkozy ruled out increasing EU bailout funds and shot down the idea of introducing a euro bond -- two measures considered by many as necessary to resolve the European debt crisis.

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As the crisis is clearly going to rumble on for some time, you might still be wondering where to invest your savings. Perhaps the time has come to have a bit of fun with your investments -- but is it possible to do so without getting burned?

FINE WINE

If you've a few grand to spare, you could invest in some cases of good wine. By choosing your wine well and having a bit of luck, after 10 years, it could be worth as much as 10 times what you paid for it.

For example, in 2001, you would have paid about stg£2,000 (€2,270) for a case of Chateau Lafite-Rothschild 2000. Today you'll pay stg£20,000 (€22,700) for a case of the same wine, according to Joss Fowler, a salesman at wine merchants Berry Bros & Rudd.

Another good wine cited by Fowler is Chateau Lynch-Bages. You would have paid stg£480 (about €550) for a case of Chateau Lynch-Bages 2005 when it was released in 2006. Today, you'll pay about stg£1,200 (€1,365) a case.

"You can't expect all wines to do that well," says Fowler. "Neither can you expect your wine to increase in value on a gradual yearly basis -- the growth usually comes in spurts. Over five to 10 years, the top 30 or so wines should appreciate in value by about 15 per cent."

You can buy a good case of wine that will appreciate in value for between stg£500 (€570) and stg£1,000 (€1,140), according to Fowler. "The top 20 or 30 chateaux of Bordeaux have a history of appreciating in value," says Fowler.

If investing in wine, you will usually do so through a wine merchant or broker. "Buy from a reputable company which won't go bust," advises Fowler. "Research the wines you're buying and ensure you are buying the correct wine at the right price."

Fowler also advises wine investors to store their wine professionally. If you buy your wine through a broker, you will usually have to pay commission on any profit.

Another way to invest in wine is through an investment fund, such as the London-based Fine Wine Fund or Wine Investment Fund.

CLASSIC CARS

It goes without saying that you could have more fun with your money if you poured it into a Ford Mustang or Aston Martin instead of a share certificate or a plain old boring bank account.

Furthermore, if you can snap up a classic car with the right history and at the right price, you could make a few hundred thousand euro. Last month, a 1954 Aston Martin DB2/4 Cabriolet which was previously owned by Innes Ireland, the legendary British Grand Prix racing driver, sold for stg£606,500 (€690,000) at a Bonham's auction in England. A 1967 Lamborghini 400GT 2+2, once owned by Sir Paul McCartney, sold for stg£122,500 (€140,000) at the same auction.

"The right type of classic cars can be a good investment," said Bob Montgomery, curator with the Royal Irish Automobile Club (RIAC) archive. "Classic cars that usually hold their value include models such as Rolls-Royce, Bentley, Ferrari and Porsche. Cars that have a history, particularly a racing history, should hold their value. Old racing cars are fetching incredible prices."

Do your research before splashing out on a classic car, however. "The big danger is that the car isn't what its seller is making it out to be," said Montgomery.

If you own a top classic car, you will fetch a better price for it if you sell it outside Ireland, according to Myles O'Reilly of AXA. "The market for premium cars is outside this country because of the economic malaise here," said O'Reilly.

If considering dipping your toe into classic car investment, get the advice of car associations, such as the RIAC or Irish Veteran & Vintage Car Club.

RACE HORSES

A good racehorse could reap handsome dividends -- as long as luck and good judgement are on your side.

"You could spend a couple of hundred thousand euro on a good racehorse -- or you could pay between €2,000 and €20,000 for one," said Michael O'Hagan, chief executive of Irish Thoroughbred Marketing. "If you buy a good racehorse at a good price, you could double your money by winning two or more races. If you win one race, the prize money could be between €7,500 and €8,000."

Don't overlook the costs of owning a racehorse, however. "To keep a racehorse in training will cost between €15,000 and €20,000 a year," said O'Hagan. "If you're considering buying one, get advice from someone trusted in the industry."

It is also worth consulting Horse Racing Ireland's ownership guide (www.goracing.ie).

Aside from owning your own racehorse, you can also invest in racehorses through racehorse syndicates.

THE BIG SCREEN

Even if you don't find Pat Shortt remotely funny, his new Mattie series could still earn you a few bob. You can invest in film or TV programmes through the Section 481 scheme.

"A €16,600 investment for the year would give you a potential return of €3,900," said Ross Curran, managing director of the financial advisers, Curran Financial Services. "This involves using pre-structured bank debt so the risk is that bit higher. The likes of Raw and Mattie on RTE would be programmes that seek funding in this way."

Curran said that investment through the Section 481 scheme was only for people on the higher rate of income tax.

You can invest in Irish film through practices that specialise in film finance, such as Mazars. With Mazars, you could invest €50,000, of which €33,500 comes from a bank loan and €16,500 from yourself. You get an income tax refund of €20,500, leaving you with a profit of about €3,900 after the loan is repaid. If you don't need a bank loan and can put €29,500 of your own money into the investment, you could make a return of about €5,500.

If you invest in film and the film or series is not made or accepted by the film production company financing the film, you will be in trouble. If you have borrowed to invest, you will usually still have to repay this loan if the film is not made. You will also lose the tax break.

Therefore, only deal with reputable companies as well as production companies with good track records.

PAINTINGS

A high-quality painting could be a good long-term investment.

"The old masters, such as Jack B Yeats, Roderic O'Connor, John Lavery and Walter Osborne, are blue-chip painters who haven't come down in value over the years," said Ian Whyte, managing director of Whyte's.

Paul Henry and Gerard Dillon are also good bets.

Paul Henry's iconic Connemara Landscape sold for IR£38,000 in 1998. Last June, Adams sold it for €110,000. Another Paul Henry painting, Fisherman in a Currach, was bought in 1990 for £30,000. Last November, Whyte's sold the painting for €145,000. John Lavery's Portrait of Lady Parmoor went for £6,500 in December 1990. Adams sold it for €34,000 last December. In June 1990, Gerard Dillon's Italian Washer Woman sold for £6,500. Last December, Adams sold the painting for €68,000.

John de Vere White, managing director of de Vere's says that Martin Gale, Charles Tyrell, and Hughie O'Donoghue, are contemporary artists who are worth investing in for the long term.

Many of those who invested in art during the boom years are sitting on massive losses. "In the same way that property has come down, the more contemporary art has come down in price by between 40 and 50 per cent since 2006 and 2007," said Whyte.

The recession has given the works of Gerard Dillon, Dan O'Neill, Louis le Brocquy and George Campbell a bit of a knock, according to Whyte, so you could get good value if buying a work by one of those painters today.

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