What are the Risks of Whisky Investing and How Can You Protect Yourself?

Investing and trading in whisky has become incredibly popular in recent years. It is even called liquid gold and there's a reason for that. But, is whisky a risky investment?

Investing in whisky is something that is increasingly common. On one hand, it can be done in bottles that are rare or will become rare. On the other hand, it is possible to invest money in whisky barrels. A question that beginner investors often ask is whether whisky ever loses its value.

To answer that question, we look at what kind of investment whisky actually is, why its value might decrease and how to invest in whisky safely.

With an investment always come certain risks. This applies to investing in crypto, buying shares and when saving or collecting items like LEGO. The latter are called passion investments and whisky is counted among them.

Passion investments are always tangible and are, as the name suggests, collected predominantly out of passion. Unlike cryptocurrencies and stocks where theoretically you're investing into thin air, you can physically store a bottle of whisky in your cabinet and grasp it whenever you want.

If you wait a few days and then pick the whisky up again, it should still be exactly the same; 0.7 liters of a spirit that has aged for a number of years and has been safely bottled. Its value may have changed, but the whisky remains in the bottle, unchanged.

If the crypto market crashes, your money is gone, and you literally have nothing left, whereas you can still consume whisky. In this regard, whisky is therefore a safer investment.

A physical investment like a rare bottle of whisky may not disappear, but there are certainly risks involved. Anything physical can break. This applies to both a bottle and a barrel.

When storing a bottle of whisky, it is important to do it properly. However, careful you may be, accidents can still happen. If you drop that purchased bottle of whisky, it may break and suddenly all you are left with are shards of glass.

The risk associated with a whisky barrel is slightly more nuanced. A barrel is made of solid wood and is usually stored safely. Nevertheless, a barrel could leak or the storage could experience unforeseen circumstances.

For instance, the temperature might prove unfavorable, causing you to experience more angel's share. This means your investment is literally evaporating a little every day.

The value of a whisky bottle is determined by supply and demand. This market can fluctuate. Your whisky may be worth more one day than the next. Luckily, the secondary whisky market doesn't fluctuate as dramatically as cryptocurrencies.

Take, for instance, the Japanese whiskys from Karuizawa. They have seen a decline over the past few years, causing the brand’s whisky to decrease a bit in value. This decline was relatively slow compared to the crash cryptocurrencies sometimes undergo.

On the other hand, cryptocurrencies can also become immensely valuable very quickly, while this is usually not the case with whisky. Occasionally, there are scarce whiskys which see a rapid increase in value. These tend to be limited edition or very old whisky. Furthermore, these bottles often come from a well-known distillery.

Although investing in whisky carries risks, solutions have been devised. Just like with a car or your possessions, you can insure your investment, such as a bottle or whisky barrel.

The insurance for a bottle might require a separate policy that could be quite costly. Depending on the kind of whisky you have at home, you will need to pay a monthly premium to the insurance company.

A whisky barrel sometimes comes with insurance for a certain period included at the point of purchase. You will have to think about this carefully and check what exactly is covered by the insurance.

At Spiritfilled in Scotland, you can buy whisky barrels and you can be assured that these barrels are standardly provided with insurance. Each purchased barrel includes standard three years of storage and comprehensive insurance.

This insurance is arranged through Aviva. The company insures your whisky barrel against common mishaps, such as theft, fire, flood, and accidental damage. Although this is a very comprehensive insurance, you can be assured that you are unlikely to need it with Spiritfilled.

The Braeside Bond warehouse in Scotland is extremely modern and equipped with the latest technology. The building includes an optimum climate, comprehensive fire protection, burglary protection and more.

Furthermore, Spiritfilled staff are well equipped with the necessary knowledge, ensuring that they can safely look after your barrel and provide you with crucial information during your investment.

Also read our other articles on investing in the nectar of the gods.