The best places to invest a bonus
Date: 16/12/07 - Source: The Time Online
We asked where City high-flyers were investing their rewards, so you can profit, too Clare Francis THE City bonus season is upon us again, and while the Centre for Economics and Business Research believes the total handed out will be 16% lower this year at £7.4 billion, top staff are still expected to pocket seven-figure sums.
Goldman Sachs, the US investment bank, kicked things off last week when it announced its employees around the world would share a bonus pool of $18 billion (£8.8 billion), giving staff an average of about £300,000.
Last year, bankers invested the bulk of their money in property. Savills, an estate agency, estimated that about £5.5 billion of 2006’s £8.8 billion UK bonus round went into bricks and mortar. But with concerns that house prices may fall next year, they are expected to look elsewhere for a home for their money.
Raymond Sykes at Butterfield Private Bank said: “Given the current uncertainties, we are seeing a high number of clients holding cash as they wait for the outlook in the equity markets to become clearer.”
Fine wine
Fine wine prices have slipped 3% over the past three months, according to the Livex 100 index, as stock-market uncertainty has also unnerved wine investors - although prices are still up 42% over the past year.
Julian Lamden at Coutts, a private bank, said: “When times are tough, people cut back on luxuries like wine.”
However, Simon Staples at Berry Brothers & Rudd, a wine merchant, thinks it is still a good time to invest if you pick the right vintages and he believes fine wines will remain a popular choice for City workers. He said: “It’s a very clever place to put your money. The luxury wines are going to Russia and China – demand is still very strong and is unlikely to be affected by an economic downturn. Supply of the best wines is tight because only a certain amount has been produced.”
He rates the years 2005, 2003, 2000 and 1996 for bordeaux.
A case of 1982 Lafite Rothschild would set you back about £22,000, but you could get a case of the 2005 vintage for £7,200 and Staples believes its value could rise to around £20,000 within five years or so.
He also tips Château Margaux 2005 and said it is the best red wine he has ever tasted. That would also cost about £7,200 a case.
While white is not normally the best wine for investment, a case of 2001 Château d’Yquem would cost around £4,000 now but could be worth between £20,000 and £30,000 in 10 years’ time.
Next year could also be a good time to buy champagne as the 2000 vintage will be released for sale in 2008, but stick with the leading names: Dom Pérignon, Krug and Salon.
Gains from fine wine are not normally liable for capital-gains tax (CGT), and you can also buy it free from tax and duty as long as you keep it in a bonded warehouse. Berry Brothers & Rudd charges £9 a year per case for storage, including insurance.