An alternative asset is anything that doesn’t fit into the traditional world of stocks, bonds, and investment funds. Examples of alternatives are real estate, collectibles, commodities, and distressed debt. In this guide, we’re going to be looking at one of the most popular options from the world of collectibles, namely, cask whisky.
Keep reading, and we will guide you through the key steps you need to take to make sure that you protect your capital the smart way while making investments.
Verify, verify, verify
Just because something is being offered and advertised doesn’t mean it is actually what you are going to be sold. This sobering fact is one that often gets in the way when an investor wants to take a position in something they are passionate about or have an interest in, but it is one that’s essential to bear in mind. Scams work by exploiting misplaced trust, and that means verifying the nature of the asset is always a key step you must take.
A Delivery Order provides comprehensive verification of the cask whisky, detailing what’s in the cask, where it is stored, and who now owns it. Without this vital piece of documentation, the investment should be seen as far too risky to consider.
Connect with the key contact
The company that is offering the investment should be readily contactable, easy to get answers from, and transparent in all of their dealings. If you find that they are reluctant to meet with you or that the information you have requested is not forthcoming, you should never be afraid to walk away. A lack of transparency or a deliberate attempt to keep back key details are red flags and signs that something is not right.
By connecting with the key contact, you not only build trust, but you can also gain far more insight into how the industry works. Exactly what you need when you want to be able to understand your options and ensure that your portfolio continues to evolve in a way that is aligned with your best interests.
Consider your future exit strategy
Your key contact should be able to give you an idea of the type of exit that other investors of your type typically make. You do not have to follow their advice to the letter, but it does help provide you with a better understanding of how things generally work.
“The market really works on long-term holds. You really want to be thinking 10 years or longer,” says Alphie Valentine, Co-founder of Hackstons, the whisky specialists who provide opportunities for investment and consumption. Having an expert by your side will never guarantee a return—nothing can—but it will help you better control the risk profile of your portfolio.
Ask about past performance
Past performance is never a guarantee of future performance, but it can serve as an insightful guide. If nothing else, seeing that your key contact is able and willing to provide you with case studies of similar investments will show you that they are someone you can trust. It is also important to consider in detail how they talk about returns and profits. If there are guarantees and large numbers that sound too good to be true, this is a definite sign that you need to walk away.
Step back to assess your exposure
Before making an investment, this step is absolutely crucial. The cask whisky world is one that many investors enter because they feel a connection with the asset, and they enjoy owning it. The problem is that if you allow your passion and enjoyment to take over, you will quickly find that you have over-exposed yourself or you have upset the overall balance of your portfolio. Stepping back, working through the numbers, and double-checking for any of the red flags highlighted above will help you come to an informed and balanced decision.
Always avoid unsolicited approaches
Last but by no means least, it’s really important to think about how you first heard of the offer. If it appeared out of the blue in your inbox, this is very different from having seen some professional marketing with responsible wording from a trusted name in the industry. You should always look for an established presence, such as Hackstons on LinkedIn, and never be afraid to ask questions.
If you are met with objections, deflection, or a sudden increase in urgency, this is a sign that all may not be as it seems. In cases like this, the best way to protect your capital is to walk away and look for another opportunity.
Andreas Worthingtonester has opinions about market trends and analysis. Informed ones, backed by real experience — but opinions nonetheless, and they doesn't try to disguise them as neutral observation. They thinks a lot of what gets written about Market Trends and Analysis, Expert Analysis, Personal Finance Tips is either too cautious to be useful or too confident to be credible, and they's work tends to sit deliberately in the space between those two failure modes.
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