Top Tips for Investing

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Horse Racing
As the old saying goes, ‘a bank is a place that will lend you money if you can prove that you don’t need it.’ If you’re looking to sidestep the more common investment options, and have a little fun in the process, then here are our top tips

‘I know nothing about racing and any money I put on a horse is a sort of insurance policy to prevent it winning.’
Frank Richardson

Owning a racehorse has long been the dream of many a spectator fond of a little flutter, and certainly there’s not much to beat the thrill of watching your horse come in first past the post. Clearly, owning a racehorse is not the route to making a quick buck. However, alternative investments are not only about making an investment, but also the pleasure you gain from doing so, and what could bring more pleasure than a day at the races, cheering on your own horse? Legendary jockey and trainer Jonjo O’Neill, who for many years was based in Cumbria, runs Jonjo O’Neill Racing, which offers the opportunity of turning your dreams of owning a racehorse into reality. According to Jonjo’s guide for prospective buyers, there are a number of ways to become a racehorse owner. The first, and undoubtedly the most glamorous, is sole ownership. While you will enjoy all of the prize money that your horse wins, you are responsible for the purchase and all other costs involved. So should Great Aunt Mildred die and leave you a rather unexpected sum of money for someone whose estate appeared to mostly consist of cats, now’s your chance! Obviously, the aim is to offset some of the costs by winning prize money, but ultimately, as Jonjo’s team are keen to point out, having a runner, not winning money, is the major thrill of racehorse ownership.

‘Wine is constant proof that God loves us and loves to see us happy.’
Benjamin Franklin

Actually, the phrase ‘bottoms up’ doesn’t quite give the whole picture here; there is no point in laying down a valuable wine cellar if you can’t help drinking most of it! Obviously, this may not be the best investment option for someone who can’t tell their Lambrini from their Laurent Perrier, and as always, expert advice is a must. However, says Andrew della Casa, Director of the Wine Investment Fund, now may be the best time to enter the wine market since 2009. According to Andrew, since 1988, the fine wine market has generated an annualised return of 12.1 percent. Investments are about risk as well as return, and historically fine wine has proved to be a low risk asset. Writing in the FT Adviser, he explains the reasons behind this: ‘Bordeaux – and we consider only fine wine from Bordeaux for investment purposes – is a finite geographical area in France with a finite number of wine producers, so the wine produced each year is also finite. Over time the quantity of each wine can only decrease as the wine is drunk. Therefore, supply naturally falls.’  Add this to the fact that as wines mature they improve in quality and therefore become more sought after, and that the market is now global, and it’s easy to see why so many consider wine to be a strong investment option.

‘He who has the gold makes the rules.’ 
Tyler Perry

The traditional investment in times of trouble, gold has never really gone away. However, thanks to the continuing recession, its popularity has been on the rise again, with many people eschewing traditional investments in favour of the shiny stuff. There’s no need to head off into the sunset, pan in hand, and unfortunately it doesn’t mean that you can just treat yourself to a few pieces of 24 carat Cartier. In the current financial climate, many are suggesting that we should consider selling our shares and bonds, and invest in Swag instead. The term refers to silver, wine, art and gold, and was coined because these four assets have outperformed shares and bonds in recent years. The idea is that while governments can increase the amount of money at will by printing more, no one can wave a magic wand and conjure up more gold or Van Goghs. Writing in a national newspaper, Charles Morris of HSBC suggested that this is the single most useful indicator in investing, as when it’s low it means shares are cheap relative to gold, so it’s time to sell your gold and buy shares. A high ratio means you should sell shares to buy gold. A secure, convenient way to buy gold is through a ‘physically backed’ exchange-traded fund, but clearly investing in gold is rather more complicated than it might first appear, and expert advice is crucial if you’re to have the best chance of safeguarding your investment rather than simply having something shiny to show off.   

Published in: December 2013

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