The Hackstons Safety Guide for Alternative Investments

Creating a diverse portfolio that has the potential to improve your financial position is something that many of us are focused on, and there are many ways to approach such a problem. In fact, the range of choice is actually one of the problems, not least of all because it means we can be quickly introduced to a variety of markets we are not experts in. With safety in mind, we’ve created a guide that you can use to navigate the world of alternative investments. 

There are no such things as guarantees

“Anyone who says to you that the market is completely guaranteed is an extreme red flag,” says Alphie Valentine, Co-founder of Hackstons, whisky specialists who provide opportunities for both investment and consumption. These wise words are designed to highlight the fact that there is a difference between a legitimate opportunity from a trusted company and false promises being made by someone running a scam. 

Regardless of how sophisticated your approach is or how much expertise you are able to call on, you will never 100% guarantee a return. This is true in every single type of investment, as there are always intangibles, and anyone making claims to the contrary will not have your best interests at heart. 

Liquidity considerations need to be made 

Many investors are used to stocks and shares being highly liquid, as there is seemingly always a line of buyers and sellers ready to enter and exit the market. The same is not necessarily true of alternative investors because the supply and demand curves play out in a variety of different ways. Real estate, for example, takes much longer to sell than stock in a company because of the level of complexity of the deal and the nature of the asset that is being sold. 

If we look at the cask whisky investments Hackstons offer, we see that they tend to work best for long-term holds. This means that investors will generally be advised to keep their investments for around a decade or more. Cask whisky will generally experience appreciation at a slower and steadier pace than stocks in tech startups will, meaning that the liquidity profile of the investment is very different. 

Verification of the asset is essential 

A Delivery Order is a document that will describe the nature of the asset, detail where the cask whisky has been stored, and state who now owns it. Essentially, it is the ultimate proof of ownership when it comes to cask whisky. This type of documentation is needed to verify that you are buying exactly what has been advertised. If you find that such documentation is not forthcoming, you are encouraged to take this as a warning sign and to walk away. There will always be a legitimate investment opportunity being offered by someone else. 

Past performance is only a guide 

Case studies and testimonials from previous investors that state the level of return they achieved can build your trust, but that doesn’t mean that there are guarantees. Nothing is certain in the world of investments, whether they are alternative investments or not, and this means that past performance can only ever serve as a guide. Use it to gauge the potential of an investment, but remember that potential and real-world achievement are not the same thing. 

Transparency must be present at all levels 

If you look at Hackstons on Instagram, you will see that they are clear and transparent about what they are offering, and if you contact a member of their team, you will find that they are forthcoming with key information. The point here is that someone offering an investment opportunity needs to be working in line with your best interests, and that means they need to be willing to show you the full picture at every stage. Without transparency, you will not be able to make an informed decision that protects you from unnecessary risk. 

Fee structures need to be clearly outlined  

Although this point could come under the previous one about transparency, it’s so important that we’ve chosen to finish on it. Opaque, unclear, and confusing fee structures are a clear red flag that something isn’t right about the way the investment has been structured. You need to know exactly how much it is going to cost you to adopt and then maintain a position, as well as how much it will cost you to conduct an exit strategy when you feel the time is right. 

By working to keep you and your capital safe with a pragmatic and measured approach, you can protect yourself against undue risk exposure. In a world in which anyone can make promises online and produce eye-catching marketing, this has never been more important.