Investing in Passion Assets
More Singaporeans are seeking investments that generate not just returns, but also joy for their owners
While stocks, bonds and real estate may be bread and butter asset classes for most investors, there has been a growing number of Singaporeans who have turned their attention to so-called “passion investments” as they seek to diversify their portfolios or chase higher yield amid a low-interest rate environment.
Most people would be familiar with art as an alternative investment, but there has been rising interest in alternatives such as wine, luxury cars and even rare stamps!
Apart from the potential for profit, these passion investments also allow investors to indulge in something they enjoy; which means that even if these investments yield minimal returns, they are something you can enjoy anyway. Which brings us to the first rule of passion investing – invest in something you like and not only because it looks like a good bet.
Here are three such investments that have been gaining traction in Singapore: Wine, Whiskies and Watches. Be warned, though, these assets don’t come cheap, so make sure you have a healthy cashflow before taking the leap.
If you are a wine lover, there are two ways you can invest in your passion. The less risky way is to put your money in an investment fund made up of a portfolio of wines. One specialist investment manager in this asset class is Cult Wines, which started operations in Singapore in 2018.
The riskier, but far more enjoyable, path is to create your own portfolio of wines. This is usually done by purchasing cases of wines through a wine broker, who can also help you with the selection process, as we well as with storage and insurance services.
As with most passion investments, you won’t derive any income while you’re holding on to the wines. The returns only come when you sell your bottles at a (hopefully) higher price. Do take note of the costs involved in storing the wine. Experts estimate that this can go up to $10 per bottle.
Singapore is renowned for its watch collecting community. One of the most well-known collectors here, Dr Bernard Cheong, owns over 3,000 luxury timepieces. This zeal might come partly from the fact that the luxury watch market has grown by 66% over the past 10 years, according to the Knight Frank Luxury Investment Index.
While the mainstays of this asset class are dress pieces from top-notch Swiss brands, less formal models such as sports and military chronographs are become increasingly popular. If you want to play it safe, experts say there are five brands that have a proven track record of producing investment returns: Rolex, Patek Philippe, Cartier, Panerai and Jaeger-LeCoultre.
Rolex and Patek Philippe lead the pack, consistently generating returns of between 30% and 60%, respectively, over the past decade or so. In 2016, a rare 1941 Patek Philippe was sold for US$11 million, setting the record as the most expensive wristwatch sold at auction.
Yet, not all pieces from these marquee brands will guarantee returns. Investors must also take into account a watch’s heritage, exclusivity, and availability when determining its potential for upside.
A newer passion investment among Singaporeans is whiskies, usually single malts that hail from Scotland or Japan. It’s no surprise that there has been a spike in interest in this asset class; rare Scotch whiskey topped Knight Frank’s luxury index in 2018 after growing by 40% annually, beating cars, watches and even diamonds. You need to be patient, however, as whiskies take a long time to mature and grow in value.
Like wine, there are costs involved in collecting whiskeys, including transportation and storage. According to investment firm Whisky Corporation Singapore, you should have a war chest of at least S$50,000 before you think about dipping your toes in this golden liquid.
One tip to starting a collection is to buy bottles from a distillery that has recently closed, as this would mean supply from that distillery will be limited going forward.