When you think about investments, you may think about stocks and bonds, real estate or an old-fashioned savings account. But did you know that art can be a great thing to invest in and collect?
Although it may seem lofty as we imagine galleries of fine art with Picassos or Monets, even a smaller investment in art can be worth it over the long term, especially if it’s something that brings you joy in your home. According to Artelier.com, one of the main reasons a piece of art can be a worthy investment is because it typically holds value over time.
“Unlike stocks or other investments, art does not tend togo up and down in value based on market fluctuations,”said Artelier.com. “This was especially true during the 2020 pandemic where other markets fluctuated significantly while the art market remained stable. The changes were not felt because the value of investment grade art is independent of most external events and has a tendency to steadily increase as the years go by.”
Although it is a non-liquid investment (meaning it cannot be easily converted to cash), “art can serve as a good hedge against inflation,” said The Motley Fool, an investment guide website.“As a result, we’ve seen strong increases in auction values during recent high inflation. The trend bodes well for the future of art as an investment. It’s possible to generate positive returns from investing in art by being selective, diversifying your collection and holding pieces for the long term.”
So how to begin investing in art? GroveGallery.com, a London based art gallery, advises that it’s good to have a passion for art or humanities (such as historical pieces) before you begin.
“When you invest in something that you’re passionate about, you’re more likely to do your research and learn everything there is to know about it. If you are intrigued by a particular artist or time period, you can gain a lot of knowledge by going to auction houses, talking to art advisors and sourcing rare finds in your growing collection.”
GroveGallery.com said that “contemporary art has delivered an average return of 7.5% per year over the last 38 years, which is one of the reasons why art is such an attractive investment opportunity.”
The site also details several factors that can determine whether art pieces are worthy of investment. These include:
• PROVENANCE – “Provenance is the history of the piece — a list of people or bodies that it has been owned by since it was first created, whether it be art collectors in notable art collections, galleries or museums.”
• ARTIST – “Always research the artist before investing in art, regardless of whether it’s an experienced blue-chip artist oran up-and-coming artist. New artists will generally produce artwork with a lower value than established artists. However, this can work in your favor — their artwork will be affordable, and they may gain popularity, meaning you can sell the art for the highest price at a later date. Blue-chip artwork is considered a much safer investment. However, professional advice [is] highly recommended.”
• QUALITY – “If a piece of art hasn’t been preserved well and isn’t in immaculate condition, it won’t hold as much value as a piece that has. Many art collectors and fine art investors store their art in professional storage facilities to ensure that it’s kept in pristine condition. Ensure that you take measures to protect your artwork once you purchase it if you wish to sell it for profit.”
• RARITY – “The rarity of the artwork can also determine its investment potential. For example, an original work or a limited-edition print is much more likely to increase in value than a mass-produced print.”
Once you have done your own research, it’s important to engage an experienced professional if you are serious about investing in art. You can visit auction houses online to find an expert who can guide you in your investment. “This could bean art dealer, gallery owner or even a private collector that you know and trust. The most important thing is that they are an expert in the type of artwork you are looking to acquire,” said Artelier.com.
Finally, experts recommend having patience when investing in art. You will typically have to hold onto a piece of artwork for along time if you want it to ultimately yield benefits.
“Investing in art isn’t for everyone…investors shouldn’t expect huge returns, even from a diversified collection of works. But if you buy artwork that makes you happy, at the very least you’ll own pieces that you love and can proudly display. If any of your artwork substantially increases in value, then you can sell those pieces for a handsome profit and use the proceeds to redecorate,” said The Motley Fool.
