Whisky investment.

I've got an ad blocker on my pc but when using the phone I often click on some of the ads .
Just spotted one regarding investing in whisky casks, does it sound legit.
Or just a scam?

 

It is indeed possible to invest in whisky. Why you'd want to, that's a different matter. I mean, it could go up in value. But let's face it, the whisky companies know the final value and price that in. Then there'll be fees. Then in investing in commodities there's usually a 'spread', a difference between buying and selling price.

If I were to invest in whisky, I'd do so by going to the shop, buying a bottle of whisky, and then.... I'd have some whisky.

 

Yes you can invest in whisky barrels, just as you can in fine wine and vintage cars. However there have been a variety of scams in all of these, with things like the wine/whisky/car not being bought at all, not being as claimed, or the organisers just legging it with the money.
Unless you know what you are doing and have money to lose I'd avoid.
Personally with good wines and whisky I'd just enjoy them rather leave them to gather dust and benefit others after I've gone.
About 30 years ago I bought a bottle of whisky from a distillery that had shut down before the final casks had been bottled. This I kept for a special occasion that never happened; until last year I said blow it and shared some with a good friend one evening. Last time I looked some years ago it was selling for £500+ bottle if you can get one. It is really nice whisky though, still got some left for a few more birthdays etc.

 

Not many "Casks" around but are you investing in the cask or the whisky or the company

 

I know nothing of such investments. A very quick look on the 'net shows this from the Graun, which may give pointers:

Liquid gold? Here’s the sobering truth about investing in whisky

 

Yeah I thought it sounded dodgy I wasn't really thinking of getting involved but I do like to click on ads .

 

If you want to buy a cask of whisky you buy from the distillery, not through a middleman.
I love Ardbeg, and once got an offer of a new bottling. The first five bottles were to be signed by the distillery manager and the master distiller. When mine arrived it was a signed bottle, with all the paperwork. For a moment I thought, shoot, I wanted to drink it but common sense got the better of me so I opened it and enjoyed the lovely uisge-beatha.

 

I've just done some reading up on it.

Apparently it averages 12% increase in value per year, which sounds great. Except that the initial investment price is typically set at its 5 year value, meaning it will take 5 years before your investment value matches what you put in, then another year totalling 6 years to become technically profitable.

This was from a site that is promoting the idea of investing in whisky so they deliberately omitted a few key details. For example, they neglected to mention that if you were to sell after 6 years, you'd have only made 12% ROI. Inflation would completely erode that return. But even ignoring inflation, 12% ROI in a 6 year investment is less than you'd get from a fairly normal savings account, where you have the added security of knowing that your money is protected upto 85k per bank/building society.

So an investment period of less than 6 years is throwing your money away. 6 years to kind of come close to breaking even, if we ignore fees. But it might be worth it if you can invest for significantly longer than 6 years.

I haven't looked into all the legal structure of it. It would be necessary to do so before making a decision. I invest in stocks and shares in the form of index funds through a properly regulated broker (Vanguard). I'm not going to recommend them, I'm perfectly happy with them but I'm just not going to pretend to be a financial advisor. I mention it as an example to the legal structure point. The big question is who is the legal owner of the assets you invest in. With a company like Vanguard, they buy the assets on their clients behalf and register them in a separate trust company which is also regulated. The reason this practice happens is to protect the investor (me, and millions like me). It means that if the broker goes bust, any creditors don't get to claim your assets because they're not owned by the broker. Before investing in whisky or anything else, I'd want to know who legally owns the assets, and what happens if the broker or distillery goes bust owing lots of money to anyone.

If I was a bit richer, I'd probably take a punt. Some investors have strategies where they put most of their investment money in relatively safe index funds, and some small percentage into higher risk assets like commodities. I'm not rich enough to do that. For me, investing 5% of my monthly investing money into something more obscure would amount to about a tenner a month. I think most brokers would just laugh if I tried to do that.

 

The money would just be resting in your account