Risky Whisky!

If something sounds too good to be true, it probably is! This is a mantra that our investment team has always worked by, but sadly, several investment scams still draw people in and can ultimately cost them their life savings. 

Just last week, the BBC reported that several victims had been conned out of millions in a whisky barrel scam, including a terminal cancer victim who lost £76,000. These topical scams focus on popular markets, and with the rise in worldwide popularity of whisky, especially in Asia where Scottish single malts are viewed as the height of sophistication, the market appeal has increased tenfold. 

The whisky scam can involve making an investment into a cask of whisky when it is first produced, which will then take three years to become actual Scotch whisky. Investors are then recommended to hold for up to another ten years to maximise returns of up to 50%. Following the investment, you receive certificates outlining what you have bought, and to give further validity, you can even track how the whisky portfolio is doing via an online portal. 

It is the combination of a tangible detailed certificate, a so-called expert to speak to who operates out of an office, and a bespoke online offering that combine to bring an air of authenticity to the investment. Sadly though, when it comes to actually realising the investment and bagging the profits, many investors have found that the casks are not worth anywhere near what they thought they were, or in some cases, they don’t even exist. The offices of the company were also just rented spaces that were never used but gave credibility to the scam.  

It’s worth noting that there are several legitimate whisky cask brokers with a plethora of knowledge, but a lack of regulation means that performing due diligence should be the key starting point before committing any cash. 

Scam investments are not new, be it the Bernie Madoff Ponzi scheme, Enron’s fraudulent accounting practices, or more recently, the rise in cryptocurrency scams. With the development of the internet and AI, they can now sadly reach the homes of vulnerable people by using increasingly sophisticated methods. 

So why do we make these investment decisions? When it comes to more tangible assets such as wine or whisky, investors seem to have a passion for the product, and when that is fused with potential returns, our logic can go out of the window.  

I myself considered investing in a portfolio of rare sneakers (or trainers as we call them), which meant I could own a share of iconic items such as Michael Jordan’s Nike Air game-worn sneakers or a prototype of Nike’s Moon shoes! This definitely ticked the boxes for me as a) it’s an area I have an interest in, and b) surely, they can only go up as they are so rare! Thankfully, as I looked into it, I realised I didn’t fully understand how it worked in terms of the charges and how the assets (sneakers) were valued and how this would translate into a real return should I wish to realise any gains. After being in hundreds of client meetings over the years, this resonated with me as the Equilibrium party line when it comes to investing is that “if we don’t understand it, then we don’t invest in it.” 

When it comes to investments, we strongly recommend speaking with a financial planner before making any decisions. Our Cyber Security Masterclass provides awareness of the red flags to look out for should you receive a phishing email promising an unmissable investment opportunity. Age UK Cheshire also provides a valuable resource for people of all ages and experience with a free advice line to call on 0800 678 1602.