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10.09.20

Move away from Stocks & Shares?

Why Scotch whisky is tempting investors away from stocks and shares

It’s no exaggeration to say that the Covid-19 outbreak has changed our world in many, many ways. Lots of things that we took for granted have shifted, from working patterns to ways that we see friends and enjoy ourselves, whether because of the restrictions aimed to stop the spread or as a consequence of the effects of those restrictions, especially financially.

One of the areas where the impact of coronavirus can be seen most starkly is in the global stock markets, which is no surprise given that they rely on certainty, international trade and consumers being able to spend their money on goods and services. None of which has been free flowing since countries all around the world went into lockdown in the early months of the year.

Of course, there have been some areas where the markets have been strong in recent months, with stocks in tech companies rebounding quickly, while the easing of lockdown measures and President Trump’s economic impetus package also saw some confidence restored. However, these are still difficult times for investors looking to make a profit from stocks and shares and with no end yet in sight for the pandemic, that’s not going to change soon.

So what is a safer investment? Scotch whisky, that’s what.

Investing in Scotch Whisky

There’s a whole host of alternative investment opportunities out for investors looking for something other than stocks and shares that they can put their money into. These are often areas of passion or interest for them, and one of the fastest growing markets has been whisky.

According to the Knight Frank Luxury Investment Index, the value of investments into classic cars rose in value by 194% over the last ten years, while fine art rose by 141% and wine by 120%. All of these are impressive and would please anyone who had invested in them, but pale in comparison with whisky, which grew in value by an incredible 564%.

The even better news is that this growth didn’t come to a shuddering halt in the early months of 2020 when stock markets around the world were tumbling down. In fact, there are signs that investments in whisky were actually going up instead.

Why whisky is a good investment

So why, in the midst of a global pandemic, are investors trusting whisky more than many other potential areas of investment? There’s a number of reasons and none of them involve ‘drowning their sorrows’, no matter how high quality the whiskies being purchased are.

One of the main reasons whisky is a good investment is because of the nature of its production. Scotch whisky is made by Scottish distilleries and the best and most prized of these whiskies are aged, often for around 50 years.

This means that if you are looking to buy a 50-year-old whisky, there is only as much around right now as was made 50 years ago. Nobody can flood the market with brand new 50-year-old whisky and that finite amount means that the value can normally only go up, especially as that whisky gets older and rarer.

Investors can achieve annual returns of above 8% and as high as 54.5% a year, with average annual returns of 10% being achieved over five years and 20% after 10 years. There’s much less speculation or insider knowledge needed than in many other forms of investment, where investors need to gamble on whether value will go up or down.

There’s already talk of distilleries putting up whisky prices by around 20% in the near future, which will have its own knock-on effects on value of investments. This is due to the increasing demand from investors as well as the financial hits distilleries have had to take due to the impact of lockdowns and social distancing measures on their businesses and production schedules this year.

We can’t quite say that there’s never been a better time to start investing in whisky is right now, given how much the value has risen over the past ten years. However, it seems clear that if you want to start investing, there may never again be a better time than right now, especially with whisky prices set to rise soon.

Stocks and shares are going to be rising and tumbling over the next year as markets around the world continue to react to the impacts of a global pandemic, but the value of investments in whisky looks like it’s just going to keep on going up. So if you’re looking to invest money in these difficult times, Scotch whisky looks like your best bet.