When it comes to investing, most people do not try to break the mold and tend to stick with old reliables such as Stocks, ETFs, and Bonds. But is there any case to be made for investing some percentage of your wealth in non-traditional investments like Whiskey, horse syndicates, watches, and collectibles?
In this blog post, we will go through some of the realities of these alternative investments.
Buy a leg of a horse
It has become far more accessible for people now to be part of a horse syndicate in Ireland, with many businesses offering the service to punters online.
One such business is Pimlico Racing, which allows you to get anywhere between 2.5-10% of a share in a horse for the cost of €140-€560 upfront, followed by a monthly fee of €70-€280 for some of their mid to lower pedigree horses. It may seem like the fees are hefty, but your horse is in with a top-class trainer.
You could get lucky and your horse could end up winning some juicy prize money at some of the larger race meetings or end up being sold on for a big price. Pimlico had a €100k winner in 2021 which left the syndicate members in a pretty good position.
A racehorse can be described as a wasting asset – which is an asset with a predictable life not exceeding 50 years. Under Irish tax law, wasting assets are not subject to capital gains tax.
This is a very niche investment and probably more suited to those who have a genuine interest in horse racing.
Irish whiskey has long been a favorite for collectors, and in recent years it has become an attractive investment opportunity as well. The value of rare and collectible Irish whiskey has been steadily increasing, and some bottles can fetch tens of thousands of euros at auction. According to whiskeyinvestment.com, the average annual return on a cask of whiskey is 12%.
One positive of investing in Whiskey is its favourable tax treatment under Irish tax law, which also considers Whiskey to be also a wasting asset. Any profit that you make from the sale of Irish Whiskey will not be subject to any capital gains tax.
But a Whiskey cask or bottle will not provide you any regular recurring income, unlike other investments. Whiskey is also not a very liquid investment (pardon the pun), when it comes to casks, you won’t be able to cash in your investment until maturity.
Investing in whiskey can be a bit tricky. It’s important to do your research and make sure you’re buying from a reputable seller or distiller. But if you’re willing to put in the effort, investing in whiskey can be a fun and potentially lucrative alternative to more traditional investments.
Are luxury watches such as Rolex timeless investments? It has long been considered that watches hold their value very well in times of high inflation and can appreciate over time. However, we have seen the opposite over the past 12 months as the world gets to grips with the worst inflation crisis in a few decades.
The Subdial 50 Index tracks the market on the top 50 luxury watches and we can see that over the past 12 months the collective value of these watches has fell on average 30.8% which is well in excess of the inflation rates worldwide.
On the plus side, there are several reasons to still love watches as an investment asset. The wealthy particularly love that you can easily take a watch anywhere with you around the world without raising any eyebrows, and it can be easily sold to release its value. Again, a watch is also considered to be a wasting asset and therefore will not be subject to capital gains tax.
Whether it is Pokemon, vintage cars, comic books, or old coins, collectibles are another non-traditional asset that could end up giving you huge returns – if you get it right.
However, it’s important to keep in mind that collecting is not without risk.
The downside of this form of asset is that it can take time to offload it if you want to realise the value of the collectible. It will not be a case of just opening an app and selling your investment like it is for a stock. You will need to find a marketplace for willing buyers and there are not likely to be huge markets for this, which can mean the prices can vary considerably as the value of collectibles is very subjective.
Collecting will require specialised knowledge and expertise, as well as a willingness to invest time and money in research. As with any investment, it’s important to approach collectibles with caution and to do your due diligence before committing your resources.
Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.