With the economy the way it is, it’s natural for savvy investors to look to diversify their portfolios. Stocks and bonds are the building blocks of most investment portfolios, but it’s moving into alternative investments in tangible assets that can really increase security.
Property, commodities, cask whisky, and rare antiques are all examples of alternative investments. While anyone can set themselves up to make the initial purchase, it’s being able to gauge the associated risk that makes the difference. To make this possible, you need to be able to tell if what you are being offered is legitimate.
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You need to verify that the asset you’re buying is legitimate
No one would buy a family home without first making several visits to the property and having it carefully examined by a surveyor, but too many of us approach investments differently. We are busy with other things, we believe the returns we’re sold on, and we assume that we’re smarter than the market. Unfortunately, there will always be untrustworthy individuals who look to capitalise on this.
Making sure you can verify the asset you’re buying exists and ensuring that its quality is as advertised is important. If an asset is consistently unavailable for you to view or visit, this is a warning sign that all may not be as it seems. If you are unable to view the asset, this is not a good sign for the legitimacy of the offer. A cask whisky investment is a prime example. You should expect a delivery order that verifies the existence of the cask, as well as the opportunity to visit the storage facility to see the cask with your own eyes.
Make sure you can meet the key contact
Let’s take cask whisky as an example. You want to be able to verify that the casks are as advertised, but you also want to meet with your key contact. Putting a face to a name and seeing that everything is legitimate on the ground is essential when carrying out due diligence on any alternative investment.
Companies like Hackstons — a whisky specialist that offers opportunities for both investment and consumption — are a prime example of how investors can get involved in every aspect of the process from day one. They guide their investors, adopt an approach based on 100% transparency, and are always available to answer questions. “One of the key questions that would-be investors shouldn’t be afraid to ask any company they’re looking to invest with is ‘Can I meet you? Can I spend some time with you and get to know who you are?’” — Alphie Valentine, Co-founder of Hackstons.
Your investment needs to be clearly defined
Knowing exactly what you are investing in is essential, and yet it’s something that is easy to overlook. Sticking with the cask whisky example: do you know whether you’re buying stock with naming rights or trade stock? Not all casks are created equal, and that means you need to have everything you’re investing in clearly outlined and then put in writing.
A Delivery Order provides comprehensive verification of the legitimacy of a cask whisky investment. It verifies that the cask exists, that it contains the whisky you have bought, and where it is stored. While these may sound like obvious steps as you sit there and read this, it’s important to remember that if you are investing in something you are passionate about, it is easy to get caught up in the moment.
Only do business with knowledgeable people
Investing in an asset that is owned by someone who has passion, experience, and a high degree of expert knowledge is a key step towards success. If you are investing in something that you expect to appreciate over time, you don’t want it to have been sourced or previously owned by someone who didn’t understand it.
Alternative investments that are handled and secured by experts will have been correctly treated, stored, and handled at all times. An example of this is the Hackstons YouTube channel, which provides educational information and guidance on how the whisky investment process works. They will also have clear provenance that can be easily demonstrated, allowing you to better understand the value of the investment.
Does it sound too good to be true?
Everyone wants to be able to invest in something that will double in value every single month. But is that actually realistic? If there were such an asset out there, would it actually be priced the way that the offer you’re considering is priced? Is there any track record or historical data that indicates the returns you’re being quoted are at all realistic? Are you being offered a ‘guaranteed’ return? Keep in mind that there is no such thing as a guaranteed return when it comes to investment, so no company worth its salt will make such promises.
Stepping back from the numbers and asking these key questions will allow you to see the bigger picture. It’s about making sure that you’re not swept up in the moment and don’t end up putting your hard-earned money into something that, with hindsight, was never going to play out the way you were told.
Taking your time to perform due diligence and carry out the key checks and balances outlined above is what will help you ensure your whisky investment is legitimate. The same process also applies to any other form of alternative investment. Once you do that, you will be in a much stronger position to diversify your portfolio as you look to secure your future.
