Whisky Investment Partners review – that will be the topic of today’s mini review.
Consider if whisky investment is among the best investing options for American expats.
If you have been proposed this investment and want a second opinion, you can email me (advice@adamfayed.com) or contact me here.
We can sometimes offer discounts, and other benefits, compared to many other providers, or introduce alternatives which might be better for your situation.
What are the basic elements of the investment?
Traditionally, it wasn’t easy, or cheap, to invest in whisky.
You would need to buy, insure and store it.
Whisky Investment Partners seek to make the process easier.
Clients can purchase casks of whisky from specialist distilleries. This is then placed into HMRC approved warehouses and held for three years or more.
After that time has elapsed and the whisky has matured, it can be sold on (hopefully) for a higher price.
What are the positives associated with this kind of investment
- Whisky, and alcohol more generally, can be recession-proof. Certain types of whisky have appreciated by incredible amounts in the last decade.
- It is tax-exempt from UK capital-gains taxes and no VAT is due.
- Fully insured. You are also protected if an individual distillery goes bust.
- The cost of a decade worth of storage and protection is included in the purchasing price.
- It is a non-correlated asset, meaning it can go up or down in the opposite direction to the stock and real estate market
- The investment comes with title deed.
- Minimum investment is starting from 2,100GBP
- Investments like this have achieved an ROI of 10%-15% per year in the past, but past returns are no guarantee of future ones.
What are the negatives?
The main negatives are:
- These are illiquid assets, which means it isn’t always easy to sell. You certainly can’t assume a quick sale.
- There are some hidden risks that people don’t consider.
- You are dependent on your advisor (these are usually advisor-led solutions) to make a good plan for you, which goes beyond this investment.
- Needles to say, not everybody wants to invest in the alcohol industry due to ethical concerns.
- There are alternative investments which could give you the same or better returns, for potentially lower risk. There are also some shorter-term alternative investments.
- Investing into whisky isn’t linked to innovation. The price might have increased recently, but there is only so much people will spend on alcohol. In comparison, investing into innovative companies doesn’t have any such drawback. There is nothing stopping a tech start-up, or even an index like the Nasdaq, “scaling to infinity” over the decades. In comparison, the fast growth in whisky prices in the last decade or two was fueled by a trend which is unlikely to continue (the massive increase in the middle-classes in Asia).
- Sometimes you can invest into alternative assets such as whisky through more liquid funds, where you can buy and sell easily.
- Trends can come and go. Gin was big for a few years as well. It is unclear if specific brands of whisky will hold their value for decades.
Conclusion
These kinds of schemes are innovative in that they make it easier for the average investor to purchase alternative assets without the traditional hassles associated with storage, insurance and so on.
This kind of investment can work for a small percentage of your entire net worth.
There are hidden risks associated with this kind of investment and lower-risk clients shouldn’t invest in it
What is more, the recent growth in whisky prices is also not assured long-term.
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Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.
