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Finance for Humans

How To Start Your Own Whisky Fund for $1500

Turns out it’s a better investment than wine—as long as you really like drinking it.

Whisky, it's not just for drinking anymore.

In the past decade, the market for high-end whisky has exploded. The value of Rare Whisky 101's index of 100 iconic collectors' bottles has jumped 226% since November 2008, an increase that makes recent gains in the fine-wine market look downright pedestrian by comparison.

Consider these examples. In 2010, a special bottle of 64-year-old Macallan in a Lalique Cire Perdue crystal decanter sold for nearly half a million dollars, while a single bottle of the Dalmore 62 went for almost $170,000. Last August, investors purchased a bottle of 1960 Karuizawa (whisky from Japan’s smallest distillery) for nearly $100,000. And then last month, the Platinum Whisky Investment Fund—a hedge fund promising a 17% annual return through the buying and selling of old and rare single-malt whiskies—announced its first dividend payment. They’d been buying and selling whisky (and whiskey) for less than two years, and already they were doling out profits. (A bit about terminology: Generally, it's "whiskey" if it's distilled in Ireland or the United States, and it's "whisky" if it's produced in Scotland, Canada, Australia, Japan, or Europe.)

You don’t need to have a hundred grand to drop on a fifth—or $250,000 to meet the minimum buy-in (!) for the Platinum Whisky fund—in order to invest in fine whisky. Nicholas Pollacchi, the chief executive officer of the New York City–based whisky consultancy and event company the Whisky Dog, says it's possible to see a large return on bottles in the $300 to $1,000 range. "It's not about spending a lot of money," he told us over the phone. "It's about knowing what's worth collecting."

Of course, a caveat: Speculating in whisky isn’t the smartest way to take care of your future self, but it’s not a bad way to entertain yourself if you have the means and like the way whisky tastes.

A little bit about what makes a quality whisky: There’s an old saying, "Beware expensive whisky in beautiful decanters." OK, that's not actually a saying, but don't assume that a stunning crystal chalice holds a quality product. It might be great; it might be shite. Making whisky is a little bit of science and a lot of art, so there's no concrete way to find top-notch distillers. In general, "small batch"—a loose term that can apply to runs of up to 100 barrels but usually means significantly a smaller production than that—yields higher-quality spirits than industrial productions. (The relative scarcity also means a small-batch whisky is more likely to increase in value...if you can resist drinking it.) A barrel aged for 20 years will likely be superior to one aged for a decade and will feature more-complex flavors. Ultimately, the skill of the distiller is the single best signifier of quality.

But the best way to know whether whisky is good or not is to try some! Because the most important (and fun) thing to do when you’re starting out is enjoy it and discover what you like. Three excellent Canadian whisky bars where you can do this are the Lunar Rogue in Fredericton, NB; the Caledonian in Toronto; and the Dam Pub in Thornbury, ON. While you're in Thornbury, try Canada's own Crown Royal's Northern Harvest Rye, which Jim Murray’s Whisky Bible named the 2016 World Whisky of the Year. And check out the wares from Ontario's Forty Creek or Still Waters Distillery, too.

When it comes time to choose actual bottles, Pollacchi advises people to consider three factors:

Rarity: Look for limited editions, which will ensure that demand stays high. You can't sell your whisky in five years if you can't find a buyer.

Collectibility: Whisky is driven by brand names, with Macallan being the biggest and best known. Also focus on brands like Brora, Highland Park, Glenmorangie, and Ardbeg.

Collectible range: Distilleries will release a series of special editions each year, in consecutive years. If you own each bottle in the series, that can multiply the value of the bottles if you sell them together. For instance, Pollacchi thinks he’s one of probably only 100 people in the world who own the Glenrothes 1968, 1969, and 1970 Extraordinary Cask series.

Then check out places like Whisky Intelligence for information about upcoming releases. Develop a relationship with the person behind the counter at the best whisky shop in your town. Peruse online options for pricing information. You never know when you might see a great deal—Pollacchi and other whisky experts all have stories about stumbling upon a rare bottle at a low price simply by frequenting liquor stores and checking out the shelves. When you buy, feel free to display the whisky with pride. Unlike wine, you don’t have to keep it in a cellar, and the bottles are pretty.

Four Bottles That Spiked

1.Highland Park Thor Limited Edition. Priced at $350 in 2012. Sells for $750 now.

2.Balvenie Tun 1401 Batch 1 through 9. Priced at $350 in 2012. Sells for $1,500 now.

3.Glenmorangie Sonnalta PX. Priced at $90 in 2009. Sells for $400-plus now.

4.Macallan Masters of Photography Rankin Edition. Priced at $2,000 in 2009. Sells for $4,500-plus now.

Four to Buy This Year

1.Balvenie Tun 1509 ($360). While not as highly regarded as Tun 1401, the Balvenie name and quality make this a smart investment.

2.Highland Park Odin ($350). The latest in the series that includes gods Thor, Loki, and Freya, this 111.6-proof, 16-year-old single malt is potent.

3.Yamazaki Sherry Cask ($300). Jim Murray said the 2013 version was the best whisky in the world, and this release of 5,000 bottles will certainly appreciate over time.

4.William Grant & Sons Rare Cask Reserves: Ghosted Reserve 26 Year Old ($400). There are just 4,000 of these bottles, so you might have trouble finding one at retail price. Snap it up if you do.

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"MY UNDERGRADUATE ADVISER TOLD ME I SHOULD JUST FORGET ABOUT THE WHOLE WRITING THING. ‘YOU SHOULD FIND A GOOD MAN AND GET MARRIED,’ HE TOLD ME."

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