Naked Wine Bond

Newbie2saving

So what do you savvy folks think to this one??? I use Naked Wines occasionally and have been pleased with the quality of their service and produce. What do you think as a little investment? Interested to know as I make it a rule to never look at wine investments, but this is slightly different...

http://www.nakedwines.com/content/bond/landing.htm?cid=uk&utm_campaign=bondlaunchemail_angels_sept2013&utm_source=emailCampaign&utm_medium=email#.UiRshE1wbcs

Linton

I would take the same view on all such non-standard investments. If you are serious about investing you should first put together a large portfolio of more traditional investments - shares/bonds. Then if you want to take say a <5% of your wealth punt on something a little different, why not? Especially if you have an interest in or even better an expert knowledge of the area.

dunstonh

100% loss of capital possible. No retail consumer protections exist. It is illiquid.

Why is the yield so high? Typically you see rates of 20x the base rate given to higher risk debt where the possibility or even probability of loss is higher. Why isnt the company trying to raise funds using cheaper sources of financing? Has they tried but been knocked back and are now looking to other means?

The following is not aimed at this company but in general about bonds. There has been a lot more promotion of these to retail consumers since interest rates have fallen. A lot of people have bought bonds thinking they were bonds like their fixed term deposits or have been "sold" into high yield promises without realising the level of risk that exists. These types of things are not meant for the average consumer.

Masomnia

Looks to me like it's aimed at the average consumer, which may be worrying!

Still I'm thinking about it. I do occasionally buy wine from them, and have some favourites I'd get again...

So bung a grand in, get £100 in my account per annum (and get some nice wines) and then fingers crossed I'll get the £1000 back after the three years. Whether I'd do it for 7% I'm not sure, or for more than a grand.

I don't think the rates are stingy, and three years isn't too long to be locked in.

Worth considering, I think.

Reaper

Masomnia wrote: »

So bung a grand in, get £100 in my account per annum

Actually only £80 as I believe you will have to pay at least basic rate tax on it. I'm not clear whether it can be part of an ISA/SIPP but I don't think so.

If you plan to use it to buy wine that you would buy anyway then I can see the temptation. Shame it is unsecured.

Masomnia

Reaper wrote: »

Actually only £80 as I believe you will have to pay at least basic rate tax on it. I'm not clear whether it can be part of an ISA/SIPP but I don't think so.

If you plan to use it to buy wine that you would buy anyway then I can see the temptation. Shame it is unsecured.

True, I'd have to check the tax situation.

That's precisely the temptation, I'm not sure I'd do it for the 7% cash. But then it's worth point out that there are no admin fees, or dealing fees, so you can invest £500 without getting stung on charges.

Hmm...

Masomnia

Had another look at the prospectus and it's kind of obvious why they're selling these. They have £12million in debt falling due this year (but only £142,000 on top of that) and £8million in assets. So lots to refinance, and the company owes a lot more than it has in assets...

It really depends on whether they can remain profitable.

So I'd say on the risky side of things! I love the idea of getting the 10% into my angel account and using it to buy wines at a discount. But I think the risks are just a bit too great for me.

Newbie2saving

Masomnia wrote: »

Had another look at the prospectus and it's kind of obvious why they're selling these. They have £12million in debt falling due this year (but only £142,000 on top of that) and £8million in assets. So lots to refinance, and the company owes a lot more than it has in assets...

It really depends on whether they can remain profitable.

So I'd say on the risky side of things! I love the idea of getting the 10% into my angel account and using it to buy wines at a discount. But I think the risks are just a bit too great for me.

Thanks for the sensible approach, 'free wine' from a company I use anyway (hence reputable in my mind) seemed a good opportunity, but when you delve a little deeper it is a big risk, thanks for digging a little deeper!

Ark_Welder

Reaper wrote: »

I'm not clear whether it can be part of an ISA/SIPP but I don't think so.

Definitely cannot be held in an ISA. If they could be held in a SIPP then it would likely have to be the full-blown variety only, i.e. not your usual self-select variety provided by HL, ATS, etc. The reason is that these are not the type of retail bond that are listed on the LSE (available through ORB, etc), they are a private loan that cannot be traded after the initial investment. As such, not ISA eligible.

markwilkinson

As soon as I saw the title I was thinking "steer clear". My reasoning is from personal experience with this company. I ordered something or other, online, and got a flyer in the package for this company offering a discount, free delivery or something with my first order. I tried but couldn't get my code to work.

I was advised to phone them but I never bothered - I wonder how many other, potential, new customers have the same experience?

It seems that at least 2 of you have had a positive experience though, so it may not be as widespread a problem.

Just my 2p's worth.

Freecall

dunstonh wrote: »

It is illiquid.

The wine I drink is always a liquid!