Scotch whisky is a thriving investment asset and could make for a great alternative investment to help diversify your portfolio. In this post we’ll look at the reasons for investing and how to invest to invest in whisky. We’ll also take a look at what Whisky Invest Direct is all about.
Reasons For Investing In Scotch Whisky
Traditional assets like cash, stocks and bonds make up most investment portfolios. However there are many more non-traditional types of assets to invest in. Also known as alternative assets, they include;
- Real estate.
- Private equity.
- And much more.
Discover more in this post on alternative investments.
Alternative assets can add greater diversification to an investment portfolio as their performance doesn’t always correlate to mainstream market movements. They can be classified as higher risk but also higher reward. One such alternative asset class is alcohol including wine and whisky. Scotch whisky in particular offers some great reasons to invest.
High Quality & Desirability
Scotch whisky is world renowned for it’s high quality and things that set it apart from other whiskies. Firstly it has exclusivity due to regulations in the way it is distilled and matured. It has a Protected Geographical Indicator status meaning it has to come from Scotland to be classified as Scotch. Exclusivity makes items more highly desired by consumers.
Scotch Whisky Industry Value & Returns
The scotch whisky industry is worth over £5 billion per year to the UK economy. This accounts for around 25% of UK food and drink exports. Scotch sales make up 4% of the global spirits market by volume but 12% by value. It continues to enjoy increasing growth due to it’s high status value to consumers.
Investments in Scotch whisky have historically produced consistent annualized returns. Between 2011-2020, returns on 8 year old scotch whisky were approximately 15.4% per year. This figure is net of any trading commission, storage fees or any other costs.
Of course there is no guarantee of future performance. But whisky prices are often less volatile than other assets like stocks. It may not offer the same excitement as cryptocurrency, but when left for the long term, whisky may offer good and steady growth.
How To Invest In Whisky
There are several ways how to invest in whisky of all varieties. In this post though we are focusing on investing in Scotch whisky, which is among the highest quality and most valuable.
One of the first things that may come to is simply buying and selling bottles of whisky. There is a thriving whisky collector market trading in old and rare whiskies. However this does have some drawbacks.
Firstly, unless you are a real whisky aficionado you likely won’t know enough about the market to make informed choices. How do you know what the most sought after whiskies are or which are likely to rise in value? Fraud is another issue. How do you ensure the bottles you purchase are authentic?
Then there are the costs to take into account. For starters some desirable bottles can easily sell for thousands of dollars each. Then there are other fees like hefty trading commissions, storage and insurance costs. So unless you have deep pockets there are high barriers to entry for most individuals.
Another option is to invest in shares directly of whisky producing companies such as Diageo. This is a more accessible way to invest. On the positive side you may benefit from both capital growth and potentially receive dividends.
But this also does have some drawbacks. You do not actually own any of the underlying product. Also the value of your shares is dependent on the financial performance of that particular company.
One of the most profitable ways to invest in scotch whisky is to invest directly in casks of whisky. Casks are the wooden barrels that the whisky is matured in. These wooden barrels help to give the whisky it’s flavor profile and characteristics.
Whisky casks are purchased for either personal use or as an investment. Many casks are purchased by trade buyers and large bottling companies to use in their products.
Compared to owning shares in a distillery or bottling company, with cask whisky you actually own a tangible commodity. The downside is that most companies selling casks require buyers to purchase a full cask rather than offering fractional ownership. This could be very expensive for an individual to purchase and store full casks of whisky.
Thankfully there is now a solution to this issue…
Whisky Invest Direct
Whisky Invest Direct is an online investment platform. It gives ordinary investors access to low cost investment into maturing Scotch whisky casks. It allows private investors to achieve good returns buying fractional ownership in whisky casks at wholesale prices.
How Whisky Invest Direct Works
Distillers produce the alcohol and leave it to mature in casks over many years. These casks are stored in bonded warehouses and then purchased by bottling companies to use in their products.
This process has traditionally been inaccessible to private investors until now. Through the Whisky Invest Direct platform, ordinary investors now have access to purchase this maturing whisky and benefit from the attractive long term returns.
The company operates a simple online trading platform where this whisky can be bought and sold. Instead of purchasing full casks, investors can purchase from as little as 1 LPA (Litre of Pure Alcohol) per trade. This makes it an incredibly accessible investment for any investor.
When it comes to selling your whisky you can sell through the platform to other investors. Or you may receive trade bids from companies in the industry who purchase large volumes of alcohol for production.
You can take a look here at how the Whisky Invest Direct platform works.
What Happens When I Buy Whisky On Whisky Invest Direct?
Remember the whisky you are buying through Whisky Invest Direct is a tangible product and is legally yours. It is securely stored in bonded warehouses in Scotland. Being held in a bonded warehouse means it is free from tax.
Taxes are only applicable on it leaving the warehouse. The only way you pay any taxes is if you decide you want to withdraw and bottle your own whisky. You can do this if you wish. No matter what happens to the company, the whisky is yours.
What Are The Costs?
You will pay a transaction fee on each trade which is 1.75% regardless of the amount you buy or sell. Storage fees are paid monthly and are based on the volume of alcohol you own rather than it’s value. This makes it easy to calculate and you’ll always know what the costs are.
Currently the fee is £0.175 per liter of pure alcohol per month which includes full insurance. So you can be confident your investment is protected for it’s full value.
Whisky Invest Direct is a UK based company but investors worldwide are able to use the platform for trading. Currency is usually displayed in GBP but can also be set to USD. If based outside the UK there may be an additional fee for withdrawals into other currencies which are detailed on the Whisky Invest Direct website.
Benefits of Investing In Scotch Whisky With Whisky Invest Direct
There are many benefits to using Whisky Invest Direct to invest in Scotch whisky including;
- Good long term investment growth potential.
- Quality in-demand product in a growing market.
- Order board open 24/7.
- Accessible online platform open to anybody worldwide.
- UK registered company.
- Whisky is securely stored in bonded warehouses.
- You are the legal owner of your whisky, it is still yours even if the company went bust.
- Free of taxes.
- Low cost transaction and storage fees.
- Able to invest small amounts from 1 LPA.
- Can withdraw and bottle your whisky if required.
How To Invest In Whisky Conclusion
Whisky is considered an alternative asset and could be considered as part of your wider investment portfolio. Scotch whisky in particular is highly regarded and in demand with growth expected to continue.
There are several ways to take part in this interesting alternative asset class. This includes buying bottled whisky and cask whisky. The trouble with these is that they can be quite costly and inaccessible for an individual investor with limited funds.
Whisky Invest Direct offers a great way for individuals to invest in maturing cask whisky on the same favourable terms as the large companies. Private investors can buy and sell whisky at wholesale prices that is securely stored in bonded warehouses in Scotland. With the order board open 24/7, investors around the globe can buy and sell their whisky holdings instantly.
Overall we feel Whisky Invest Direct has lots of benefits to the smaller investor including accessibility and low costs. This makes it an ideal way to begin with this great alternative asset. And no matter what happens you remain the legal owner of your whisky.
View our blog for more investment related posts you may be interested in including;
- What are shares and how do they work?
- 10 Investment ideas to build your wealth.
- Earn passive real estate income with REITs.
- What is Bitcoin?
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