Whisky may be the best investment for your money

Financial planning is possibly not the most exhilarating of subjects for most people, with deposit accounts, ISAs and pensions usually featuring among their top priorities.

There of course those who are looking for a little more excitement, and who want to explore the deeper reaches of the investment market, and there are undoubtedly more exotic opportunities available.

The latest Knight Frank luxury investment index has featured whisky for the first time, with the famous beverage attracting an increasing number of interested investors, and the price of Scotch rising as a result of growing global demand. According to the index, the top Scottish whiskies has risen in value by 40% in the last year with investors apparently achieving returns of up to 600% over ten years.

All very impressive, and certainly for those who can spare a few hundred or even a few thousand pounds, it can prove to be a useful addition to their portfolio. That said, for many of those individuals, it’s as much a hobby as an investment, with of course the added benefit of being to enjoy a small dram or two when you choose.

However, investing in areas such as rare whisky could never be described as a sure thing. For a start, unlike the investments offered by the well-known financial services firms they are not regulated and the old adage that the value of your investment could go up and down can certainly be applied to whisky.

That said, even if whisky is stretching your investment appetite, there are many other ways in which you can invest in products and services which could provide better returns than your everyday savings account but are covered by the appropriate regulation.

Investing isn’t an exact science and even the most experienced investor can lose money. Designing an investment portfolio requires careful planning and needs to consider a number of factors, not least the tax implications, your attitude to risk and your income and aspirations.

It cannot be emphasised enough that, when planning ahead, it’s important to think about your short, medium and longer terms needs, as well as taking into consideration any possible life changes, such as having a family.

One of the most effective ways to manage investment risk is to spread your money across a range of asset classes that, historically have tended to perform differently in the same circumstances. This is otherwise known as diversification.

Investments can include everything from standard bank or building society deposit accounts to ISAs, directly investing in stocks and shares and of course pensions. Achieving effective diversification across and within different asset classes, regions and currencies is probably beyond most individual investors and as such some people choose to invest in professionally managed funds.

Ultimately, deciding where to put your money can be time consuming and complex, but taking professional, independent advice would always be a very good starting point.