Whisky Sour

The one saying that has stood the test of time is ‘if it seems too good to be true, it probably is’ and it is important to pay heed to this at a time where research shows that one person falls victim to a scam every 10 seconds in the UK.

At Crowe Financial Planning we have lots of exciting ‘opportunities’ come across our desk, ranging from Kenyan Cotton Farms (a personal favourite of mine) through to new hotel complexes, built in far flung beach resorts across the globe. One thing they typically have in common is a headline of ‘secure’ or ‘low risk’ returns, typically of 15% upwards.

In a world where a ‘low risk’ typically results in a return of around 2%-4%, it is clear there is nothing low risk about any investment purporting to offer such high returns.

One investment that has come to the fore in recent years is investing in casks of whisky which, on the face of it, might have appeal. The advertisements are usually very slick, using names that may sound like long-established distilleries from the Scottish Highlands which can appear both plausible and appealing.

At the end of March, a BBC investigation revealed hundreds of people had been duped into ploughing their life savings and pensions into casks that were overpriced or did not exist, with investments running into millions.

It takes three years for spirit to become Scotch whisky in a cask, and investors are encouraged to keep barrels for up to 10 years or more to maximise returns. Projected returns started at 12% and were forecast to increase to as much as 50% over time.

Certificates showed where casks were stored but when the warehouses were contacted, low and behold they weren't there, and many investors lost most or all their money.

Like investing in wine, you should really know where you are investing and understand the quality and reputation of the distillery or vineyard. It is easy to get caught up in the excitement of such an opportunity, and they do say that with wine, you should buy two cases at a time: one for drinking and one for laying down for future sale.

As with many scams, it is important to do your research and due diligence prior to making any investment in such ‘assets’, or to employ the services of a professional broker or wine merchant, as it really is a case of ‘buyer beware’ when it comes to these types of investments.

In conclusion, while the allure of high returns can be tempting, it is crucial to remain vigilant and sceptical of any investment that promises guaranteed or exceptionally high returns. Always remember to:

• verify the legitimacy of the investment and the entities involved
• consult with financial advisors or professionals before committing your money
• be wary of pressure tactics that urge you to invest quickly without thorough consideration.

By taking these precautions, you can better protect yourself from falling victim to scams and make more informed investment decisions. Remember, if something seems too good to be true, it probably is.