Investors looking to expand their portfolios and unlock potential returns from an investment they are passionate about often turn to the world of alternative investments. Tangible assets, such as whisky, art and antiques, are often put forward as ways in which investors can go on a journey through learning about and tracking their investments in a way they don’t generally do with things like stocks and shares.
On the surface, this sounds like an attractive proposition, but what do finance experts have to say? We’ll take a closer look so you can understand the bigger picture.
Encouraging diversification
Every financial expert will highlight the need for an investment portfolio to be diversified so that it is not overly dependent on the performance of a single market. If we take whiskey casks as an example, the historical value performance of most casks tends to show that they behave differently than stocks and bonds. This means that the value of your whiskey-in-a-barrel investment will be affected by changes in the economy in a different way, reducing the volatility of the overall portfolio.
Potential inflation hedge
Simply put, higher inflation means higher costs when it comes to goods and services, which means that the value of tangible assets may rise at the same time. Of course, there can never be a guarantee that investing in whiskey barrels will achieve a specific return, but some investors prefer to look at this market as a long-term hedge against inflation. However, it is important to note that alternative investments of this type will generally accumulate in value gradually as the market is relatively stable, if they do rise in value.
Opportunity for a passion project
If you’re investing with the goal of making a return, but also want to go on a journey that immerses you in a world you’re passionate about, alternative investing may be able to offer both. However, the key point to note is that you need to keep your passion in check by being practical when it comes to verifying the details of the investment opportunity.
“We strongly encourage people to come into our office or Knightsbridge store to meet us,” says Alfie Valentine, co-founder of Knightsbridge. “Any company that avoids a face-to-face meeting should be met with a good degree of caution.” Haxtonsa whiskey specialist that provides investment and consumption opportunities. Through transparency and openness, Hackstons helps its clients verify the nature of the opportunity by providing things like delivery orders (the ultimate proof of cask ownership) and expertise on casks that have the potential to perform well.
Potential tax advantages
CAsk Whiskey has become an increasingly popular investment in recent years because it is exempt from capital gains tax as long as the whiskey matures in the barrel. This is because it is a wasting asset because some of the liquid evaporates every year, which is known as the “king’s share.” Haxtons It has a specialist warehouse partner in Scotland that is fully bonded and HMRC approved, with visits available for investors if they wish to see their casks and learn more about how they are looked after. If you decide to bottle whiskey as part of an exit strategy, it is important to know that the investment will then be subject to VAT, duties and possibly capital gains tax.
The need for transparency
Critics of the world of alternative investments will highlight high-profile scams and scams that have made headlines over the years. While these things certainly continue, potential investors can take control of their portfolios by only dealing with companies that provide full transparency from the beginning.
In the case of a whiskey barrel, look at Hackstons on Trustpilot It will provide a high degree of social proof and provide plenty of evidence that the company has an established profile. This is in contrast to the opportunities you may have, where you receive an unsolicited approach from a service provider with little or no online presence. These tactics are red flags and initial warning signs, especially if you call later to find that the full details you need to conduct your due diligence are not readily available.
The importance of time frames
Investing in a whiskey barrel will behave very differently to investing in shares of a technology company, for example. The latter may be suitable for intraday trading and large volumes, while the relative stability of the whiskey cask market means that investments tend to work best when held for a long period of time.
It is important to understand that although there are never guarantees of return, alternative investments such as whiskey casks tend to work better in the long term. Rather than being seen as a contributor to illiquidity, financial experts say this makes such investments valuable components of strong, diversified investment portfolios.
