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15.03.21

First Time Investors Guide: Where and How to Invest your First 5k

So you want to dip your toe into investing but you’re not sure where to start? The world of investments can seem daunting to newcomers, with baffling jargon, complicated rules and the fear that not understanding it all can mean that you’ll lose a lot of money. At a time when instability rules in the markets because of Covid and Brexit and political turmoil in the United States, investing money can seem like a risk.

Of course, risk is always a part of any investment strategy, but there’s still lots of ways of minimising your risk as a first time investor while still making sure you get a good return. Here’s our guide on how to invest your first 5k in Scotch whisky:

Investing During a Pandemic

For the foreseeable future, any investment has to be made in the context of the Covid-19 pandemic, even as vaccine roll-outs around the world hopefully bring life closer to normality. The global markets will continue to be affected by the restrictions that remain in place and the changes to our lifestyles, so many traditional forms of investment aren’t going to be safe bets.

This makes Scotch whisky an appealing investment because while production and exports were briefly affected by restrictions, there’s been no sign of any real impact on the value of whisky casks or bottles. Indeed, it’s continued to rise because it’s a safe port in a storm as it’s a commodity that gains value as it matures. Plus, it’s not just an investment option for seasoned investors, first time investors can reap the rewards also.

The world of stocks and shares comes with its own language, which can be off-putting to newcomers. There’s a lot you need to understand to be able to get started, never mind earning big returns on your investment, and it can be almost a full-time job monitoring the markets.

Investing in whisky casks with us is different. We’ll walk you through the process and make sure you’re comfortable with your investment and how it all works. And once you’ve invested, you can sit back and let your whisky grow in value, making it the perfect armchair investment.

Invest in a Growth Market

In the last decade, the value of whisky has shot up by 564% according to the Knight Frank Luxury Investments Index, which is remarkable compared to other alternative investments like classic cars, which went up by 194% or wine, which rose by 120%.

The latest stats also show that whisky’s popularity as a drink is on the rise around the world, with HMRC export figures for 2019 showing worldwide growth of 4.4%. The Scotch whisky industry is currently worth £4.91 billion a year and it saw growth in 106 global markets, making it an appealing investment because there are no signs of this growth slowing down.

Cask Investments Offer Real Returns for First Time Investors

Investing in rare whisky bottles can be incredibly lucrative, with rare vintage bottles of Macallan selling for more than £1m at auction in recent years. However, if you’re starting out, you can’t expect to make that kind of overnight profit from a 5k investment in bottles, so a wiser choice would be to invest in casks.

The kind of profits available in whisky casks have been shown by a recent report that showed that a $100,000 investment in July 2018 would have been worth $160,000 within the first two years.

Casks are a wise investment because they’re one of the safest assets, along with gold, because as the whisky matures inside them, it becomes smoother, richer and more valuable. A cask of Macallan 1989 was bought in Hong Kong for £441,000 at auction in 2019, setting a new world record.

Another reason why casks make an ideal investment for your first 5k is that each one is also unique and limited because of the nature of the process, with no two casks being the same. You can choose to bottle the whisky or leave it to mature, giving you the kind of options that are hugely appealing for new investors.

If you want to start off your whisky investment journey, casks represent a safe route to profit and things to look out for include rarity and collectability, (investing in popular brands like Macallan and Highland Park for example). Why not find out more about how to get started with cask investments?