What Makes Art A Good Investment?
Masterworks As you grow more confident with investing, chances are that you will start to expand your portfolio beyond standard stocks and shares.
If you are an art fan, then it makes a lot of sense to expand your investment to encompass something you are passionate about, and having knowledge in this area can be very useful.
The good news, however, is that even non-art experts can benefit from investing in art; this is a solid long-term option and one that is growing in popularity.
According to a report by Art Basel, 2018 saw global art market sales reach a value of over $67 billion.
So just why has art emerged as such a popular investment? There are a number of reasons, and we will explore some of these below:
Long-term Investment
One of the major appeals of investing in art is that it offers a long-term investment – you should not go into this expecting to make a profit overnight.
According to experts, you should allow around 10 years as a minimum for your investment to make a profit – this is not the option if you are looking for fast results.
In fact, many experienced investors will plan to include their artworks and sculpture in their estate planning, handing them down as assets to hand down to the next generation.
While this may seem frustrating, the long-term nature of the investment means that you are planning for the future, and this is a great way to establish some long-term security.
Separation Of Markets
Another major advantage of the art market is that it runs as a completely separate entity from the stock market, and so will not depend on the performance of this to succeed – if your stocks are down, you are likely to find that your art investment is still doing well.
For a diverse portfolio, able to withstand the economic storms, you should include some artwork.
How To Pick A Piece For Investment?
While there are advantages to investing in artwork, it is important to note that the venture is not entirely without risk; while not connected to the stock market, the art market will have its own unique ups and downs.
It is impossible to objectively ascertain the true value of an artwork – this will differ depending on the general economy, and the reputation of the artist – meaning that you must be prepared to assume some level of risk.
In order to secure a successful investment, you should take some time to research and consider the long-term influence of the artist, and any artwork that you are interested in.
In addition, there are a few things to check about the piece you are planning to invest in:
Condition
Take plenty of time to analyze the condition of the sculpture, drawing, or painting – this will play a large role in the value of the piece.
A piece in mint condition will always attract the highest value, so try and select high-quality materials, which are likely to stay in good shape and hold their value for longer.
Some materials will not age well, and any damage will reduce the value of the artwork, so do your homework and make sure that you are aware of any damage or flaws which could be an issue.
Authenticity
The other important aspect of investing is ensuring authenticity – if you are making a substantial investment, you must always ensure that you get the piece authenticated by an expert.
Ideally, you should purchase artwork that is signed or numbered by the artist – this helps to increase the authenticity.
Wherever possible, you should aim to review the provenance of the artwork you are buying – this is particularly important with regards to older artworks.
Not only will this help to boost the authenticity of the piece, but it can also be useful in offering both circumstantial and contextual information about the artwork, as well as offering information about the original production.
It is worth doing your homework in the early stages – this will save you time and stress when you come to sell the piece.
Speak To The Experts
If you are in doubt at any stage of the process, the best thing you can do is get in touch with an art agent, gallery, curator, or the artist themselves.
This can help to offer peace of mind and reassurance, and these figures are likely to have access to more extensive documentation surrounding the piece.
Where Do You Start?
Once you have decided to make your investment in art, the next step can be confusing, and the best place to begin is in increasing your knowledge of the art world.
You need to do plenty of research, and understand the way in which demand for artworks operates. Start with living artists, and go with what you like – what pieces are catching your eye and attention? Who is it by?
Do some research on the collections and pieces that the artist has produced, and then compare this to their contemporaries.
Spend some time looking at exhibitions and visiting galleries to get a feel for fashions and trends, and make a note of any names which seem to be cropping up time and again, gaining traction on social media sites, or becoming a more frequent sight at exhibitions – all of these means that their star is likely to be on the rise.
Build Your Network
A large element of your success in art investments depends on who you know – building your network is an important priority. Spend time at galleries, art fairs, and exhibitions, and make yourself known to curators, gallery owners, agents, and artists.
With a little time and effort, you will soon find yourself connected to the people who can introduce you to the new hottest tips, give you an insight into up-and-coming new artists, and will be able to let you know when something new and hot is on the horizon.
As the old saying goes: who you know is more useful than what you know, and this is particularly true of the art world.
Get An Appraisal
Once you think you have found a perfect piece, it is important to make sure that you get it appraised by an expert – this is particularly important if you are playing with larger budgets. Make sure that you consult an expert to authenticate and appraise the piece, or head to the digital tools on hand.
There are now a number of apps, including Magnus, designed to allow you to access up-to-date information.
All you need to do is snap and send a photo of the artwork in question, and they will let you know the details – you can then get this verified by a professional.
Decide How You Would Like To Buy
When you are ready to purchase an artwork, there are two main options – you can purchase the entire artwork yourself – often an expensive option – or you can purchase shares in a piece.
The former option means that you can continue to enjoy your piece while it gathers value but tends to be more costly. Buying shares allows you to enter the world of art investment, even if you have a lower budget.
Apps such as Maecenas also allow you to purchase shares in artworks, while Saatchi Art gives you the chance to browse and purchase art directly from the gallery.
Don’t Forget To Diversify
When building a stock portfolio, it is important to diversify, and the same is true when you are investing in art. Make sure that you are investing in a range of styles, artists, techniques, historical periods, mediums, and traditions rather than putting all your eggs in one basket.
Final Thoughts
If you are looking to diversify your portfolio, increase your investment potential, and find a new way to enjoy your finances, then investing in the art world could be one of the best decisions you make.
