I have read a few articles about using Scotch whisky as an investment, not a primary source of investment though. I was wondering what your thoughts on this would be and if you know of any articles that might help point me in the right direction to start investing wisely. Unfortunately I don’t have the deep pockets to spend thousands of dollars on a bottle.
This email came into my inbox just a couple days after Reader Antoine shared this news item in our Facebook group. The summary is that a recent auction for the 2014 Balvenie 50 year old sold at a £11,400 loss to retail value, that’s a big loss in a single year.
But that’s collectibles for you.
And that’s why I don’t invest in whisky. Or art. Or any other collectible for a financial return.
Whisky falls under the category of a collectible. Collectibles are fun but they all share two things in common that make them terrible investments for me.
First, there is a limited market which makes the illiquid. Real estate is illiquid too, think about how long it takes to sell a house, but at least there is a large market for it.
Second, because they are so illiquid, they are volatile when they do move.
It’s not like the stock market where a particular stock’s price is set by multiple buyers and sellers. This is a single item usually the only one being sold and so the price is affected by a variety of factors independent of the item itself. You could get lucky or unlucky very easily.
I view investing in collectibles a lot like gambling. It’s more about entertainment than it is about making money. No one ever sits down to a blackjack table in Vegas thinking they’ll walk away a richer person. You do it because it’s fun. If it weren’t fun, you wouldn’t do it because you’re probably going to lose money too!
If I haven’t dissuaded you yet… I found this pretty good article that’ll teach you a little bit so you don’t lose all of it!
Do you invest in whisky or other collectibles? Tell us about it. I may not like doing it myself but I love hearing about it. 🙂
Would like to see other comments on this as well. I buy to enjoy. I think those who buy as collectibles are welcome to do so. Seems to take all the fun out. Plus I know I couldn’t afford the “collectible” bottles.
We can’t afford to collect anything as an investment. When we buy scotch, it’s to drink. Even if we win the lottery, we’d buy scotch to drink. Unlike other collectibles that are meant to sit on a shelf and be stared at, I don’t think crafters of scotch honed their craft and trained their palates for the product of their hard work to sit around gathering dust. The joy (for us) in acquiring scotch is to imbib.
I only collect if I see that the price is very affordable compared to what it may be worth someday. For example, last week I spotted an original edition of Compass Box – The Spice Tree, a blended malt, for $69.99 which I gladly paid. This is a highly desirable bottle in that, for those of you who may not be in the know, the Scotch Whisky Association ruled that Compass Box had to cease production because of its non-traditional method of inserting staves in the casks during the maturation period. Compass Box has altered its production method for the current edition of The Spice Tree which, BTW, is excellent. For a wonderful education about The Spice Tree story, check out Ralfy’s discussion:
A couple years ago, I had an opportunity to enjoy part of a bottle of Ardbeg Supernova 2010 a few of us went in on. It was $360. On its release in 2010, it sold for much less. It is now over $500 – if you can find it.
I wish I had bought a second bottle.
From that lesson, I now buy at least two of something I know or think I’ll truly enjoy. For example, I just purchased two bottles of Ardbeg’s 200 year release, Perpetuum. Last year, after finishing off my initial purchase, I bought two bottles of the 2013 Laphroaig Cairdeas Portwood. Fantastic Scotch. I have a bottle of PC7 Sin an doigh Ileach that I plan on purchasing two more of. Unbelievably tasty.
So, am I a collector? An investor? I’m not sure yet. I suspect that as I grow my inventory of bottles, an expression here or there may be worth more in five or ten years than what I paid for it.
What I don’t know yet is: Am I willing to sell of a bottle of something I KNOW I really enjoyed? Likely not. The investment is more to get and have on hand a bottle of something that may be worth more than I’m able to pay in the future.
If I had an original 2010 Supernova, would I sell it off at $500? Probably not. It’s Supernova.
Me, I’m more a collector for personal reasons and not likely investing for profit. But, who knows what the future holds.
BTW, great articles.