Investing in art isn’t something new to the market. We’ve seen wealthy people buy various forms of art for their own collections throughout history, as they knew they would capitalize on these assets. The financial gain from cultural appreciation made Bernard Arnault and Philip Niarchos the richest art collectors in the world, as they’ve been gathering on contemporary works of Philippe Parreno or Maurizio Cattelan.
While it seems unreachable to invest in art as these affluent personalities do, anyone who loves art in any form should pursue investments for future gains. At the same time, collecting fine art throughout the years will broaden your horizons and deepen your understanding of the world as you expose yourself to new cultures and perspectives of what can be considered art.
So, let’s introduce you to the world of art investments.
Why should you consider art as an essential investment?
Art can be a physical or digital asset whose value increases over time and generates financial returns. Although many investors fear it because it implies a high upfront cost, art is a long-term reliable investment because it’s less volatile than stocks or bonds. For example, during the pandemic, art like sculptures for sale remained steady on the market because it was not as affected by external events like regular investments.
Art is beneficial as an investment because it offers diversification opportunities. It covers various assets such as fine art, rare coins, or jewelry, which can be more or less valuable based on their historical significance or cultural heritage. For instance, classic cars are always in demand and expensive due to their rarity.
So, how should you start investing in art?
Investing in art can be challenging, considering the numerous varieties of digital or physical forms. Every artwork ecosystem has its own audience, making it a difficult domain to master and learn about. That’s why you should start by setting a specific goal, whether it’s based on making a profit or building a unique art collection.
Research is essential to making the most of your goal, but also time-consuming. Many investors rely on contemporary art as it’s more in the momentum and will value more in the near future. On the other hand, others like to curate art from the 18th century, leveraging unique and unseen pieces. Independent research is important, but you may need an expert’s opinion when things get serious regarding investing.
That’s because you need to align your budget with expectations. Considering how expensive art can be, whether an ancient painting or an NFT, you must be able to set how much you’re willing to spend and correlate it with an expected future return. An advisor can help you understand historical valuations of art and ROI measures.
Where do you find valuable artwork?
Now that your plan is settled, you should search for valuable artwork. Luckily, there are a few renowned websites where you can check out auctions for contemporary and historical artworks, so you only need time to see the auction calendar and start trying out your luck.
Of course, if you’re an art enthusiast, you’d love to participate in an auction held physically as you get to increase your network and expand your knowledge of art. There are four types of auctions:
- The reserve auction requires a minimum price for the artwork, which might not be sold if the bidding doesn’t reach that amount;
- In the absolute auction, the artwork pieces are sold to the one with the highest bid;
- Private auctions are confidential, and bidders are unaware of others offers;
- In online auctions, worldwide bidders participate;
Participating in a physical auction means engaging with the community, an essential but optional step in the digital world. Nowadays, you can become a successful investor even anonymously.
When’s the best time to invest in art?
Artwork investment works similarly to any other asset. You usually buy when prices are low and sell when they’re high to maximize their value. However, you should be careful with this strategy, especially when working with contemporary artwork. Artists tend to sell their art at lower rates due to the massive supply of art online, which poses risks to your portfolio, as there’s no reassurance that out of all the artists online, the one you chose will become a star one day. Before buying from an emerging artist, ask yourself, “Will this person become the future Basquiat?”
Sometimes, you should look towards more established artists who have been on the market for some time and have created a considerable audience. For example, if we look at NFT artwork auctions, we can see that artists who pursued their art for a few years have reached highs. We’re talking about Beeple, the digital artist who sold his NFT collection for $69 million. Although the bid started at $100, the artists’ popularity caused a price boom. The collection is called “Everydays: The First 5000 Days” and has 5,000 individual art pieces.
Are blue-chip artists still the best investment option?
If you’re unsure about contemporary artists, you can always seek blue-chip art, which involves pieces from high-valued artists like Pablo Picasso, Andy Warhol, or even Jean-Michel Basquiat. These are considered safe investments because their value has gained considerable value over time.
However, be aware of the prices of these artworks. You may want to start small. Not all blue-chip artists are that expensive, but you may need the help of an advisor regarding which artist or piece is better suited for your portfolio risk value and budget.
What do you think about investing in art?
Investing in art has the best of both worlds ―capital and visual arts. Investing in art is a great long-term strategy for finding profit in the beauty of a painting or an NFT, which is why we’re seeing all these wealthy investors become part of the community and shaping their tastes for art. Anyone can become an art investor with the right plan and budget, but seeking help from advisors is essential.
