Investing in Collectibles: What You Need to Know Before You Start

Economic uncertainty, new online tools, and an increase in distrust of major institutions are just some of the factors that are changing the way many of us think about the investment world. Gone are the days when investors would choose between a small selection of shares and bonds when they wanted to put their money to work. Today, passion projects and investments that provide a level of interest that extends beyond numbers on a portfolio’s balance sheet have become increasingly popular. In this guide, we’re going to look at why this is and what you need to know to follow this path. 

Passion can lead to financial diversification 

Making your money work for you is now about more than simply trying to secure the quality of life you want for you and your family. If you have a passion for a particular type or set of collectibles, building them into a wider portfolio of investments quickly becomes an attractive proposition. It’s about reducing the overall risk profile of your portfolio by putting some of your capital into long-term holdings that also give you a degree of pleasure and enjoyment. The key is to make sure that you strike the right balance between following your heart and making the numbers work for you. 

Certain tangible assets are proven to appreciate in value 

First things first, we need to be clear that there is no such thing as a guaranteed return. Just because an asset class is proven to appreciate in value doesn’t mean that your investment will definitely follow suit. The point is that certain collectibles, such as cask whisky, can appreciate when approached the right way, while other types of collectibles, while they bring enjoyment, don’t have anything like the same type of track record. Finding something that you are passionate about, but that also has data and case studies that highlight positive past performance, will help you diversify your portfolio the right way. 

Verifying collectibles is an essential step 

A share in a company is identical to every other share, and a government bond is exactly the same as every other government bond of the same type. The tangible nature of collectibles means that such assumptions cannot be made. Two nominally identical collections of cask whisky could be different in terms of what’s actually inside the barrel, how it has been stored, and so on. Verification is something that needs to be performed meticulously when investing in collectibles, and in the case of a cask whisky investment, requesting a Delivery Order is the way to do so. This vital document proves ownership and confirms that what is being offered is actually what is present.   

Your key contact should always be open and available

Being able to put a name to a face and to get the answers to the questions that are on your mind is essential in the world of collectibles. Look for someone who is always available to guide you through everything you want to know. “We actively encourage people to come to our office or Knightsbridge store to meet us. Any company that shies away from meeting face-to-face should be met with a good degree of caution,” says Alphie Valentine, Co-founder of Hackstons, a whisky specialist that offers opportunities for both investment and consumption. 

A transparent approach like this is what will allow you to get quick and easy access to key resources, such as case studies that will talk you through the past performance of similar collectibles. If you find it hard to get the answers you want, or if you feel that your contact is attempting to be evasive, this is a definite red flag that something is not right. 

Collectibility and opportunity need to be combined with reality   

You have a passion for cask whisky, and you want to learn more about the industry during the course of your investment journey. There’s certainly nothing wrong with this approach, and during the course of your background reading, you find that you have struck gold because you have been offered the chance to invest in one of the rarest varieties in the world. While what you’re being offered is a highly collectible asset and potentially the opportunity of a lifetime, does it sound like a realistic proposition?

The reality is that if something sounds too good to be true, it almost certainly will be. Unsolicited approaches from new entities and incredible offers may feel like a massive stroke of luck, but they should be seen as red flags and signs that you need to walk away. By contrast, if you look at companies with an established presence, such as Hackstons on LinkedIn, you will see that they adopt an approach that welcomes due diligence and that is pitched at pragmatic investors. 

By working through these key points, you will be able to enjoy investing in a class of collectibles you have a real passion for while at the same time making sure that your money is working for you the right way.