Leveraging your cellar
A few weeks ago, I made a link between your mortgage and your wine collection (“Mortgage or future?”) observing that $6,000 a case for some 2005 Bordeaux futures ought to have some wine consumers wondering whether it was more important to have a roof over their heads or wines in their cellars. Now an English company has made the link between the financial foundation of your home and its wine cellar even closer.
Can your the value of your cellar pay off your mortgage? If it sounds too good to be true it probably is.
Premier Cru of England offers “investors” the opportunity to buy a collectible wine portfolio for investment purposes and then use expected growth to make principal repayments on your mortgage (more info). Although the details are not entirely clear, it seems that Premier Cru will take money you borrow as a mortgage at 7% and invest it with the dream of paying off that mortgage. (Ironic since the interest-only mortgage they recommend has risks–and paying off the mortgage seems old-fashioned according to this NYT business section article on re-refinancing.)
I am not a registered financial adviser but I can tell you that borrowing money to make money is not always prudent. This is like buying stocks on margin–except you could supposedly drink the stocks.
Yes, you may need a loan to buy Chateau Petrus futures at $2,400 a bottle (find this wine). But if that’s what it takes for you to buy it, then I’d recommend sticking with the cru bourgeois. At least you’ll be able to drink them–and there will be no whiff of principal or interest.
tags: wine | investments| mortgage
