Written by Amy Bergen
Investing in art may be a great idea if it's something you truly love. But it can be risky, so you need to do your research.
Art can do more than brighten a living space. The art market has become one of the hottest new investment crazes in recent years. Painting and sculpture collectors frequently buy pieces with an eye towards adding to their investment portfolio.
But will art investment really earn you a profit? Or is this new asset class mostly hype?
What’s Ahead:
How to invest in art Start by deciding how much money you’re prepared to spend. It should be an amount you can afford to part with in case the artwork depreciates. Don’t forget to factor in possible storage and maintenance costs.
Then learn as much about the art world as you can. Visit local galleries and see what they have to offer; chat with curators, who will usually be eager to answer any of your questions. If you live in or near a city, you’re probably close to gallery openings and art fairs, where up-and-coming artists tend to showcase their pieces.
Browse sites like Artnet and online auction houses like Sotheby’s to get a sense of how the market works. Once a piece or artist catches your eye, you can start narrowing down your research to see how much a particular artwork costs.
The app Magnus provides up-to-date pricing information for potential investors – take a photo of the artwork and they’ll tell you the details. Your next step is to get the artwork appraised by a professional appraiser to determine its quality.
You can either purchase an artwork yourself – often the costlier option – or buy shares in artwork through an online marketplace.
Since this is the information age, plenty of high-end artwork sells online. But before you buy over the Internet, make sure you’re purchasing from a legitimate gallery, dealer, artist or investment firm.
Brilliant Fine Art and Bernie Habicht,is a great option, especially for the novice art investor because Bernie produces all his original art here in Florida Similar marketplaces include Maecenas (where you can buy shares in paintings). But only the rich or art investors can afford buying shares in art in the hope it will go up in time to come.
What to know before investing in art Think of it like a real estate investment; extra, not essential. Don’t rely on an art investment for steady income. And don’t forget you’ll be paying taxes on any gains since the IRS considers art a collectible. Art is non-liquid It’s important to remember art is a non-liquid or illiquid asset. This means it’s difficult to convert into cash right away. Liquid assets, like stocks, bonds, and savings accounts, can produce cash more easily. Illiquid assets, like real estate and art, take much longer to sell even if they have a great monetary value. Though it’s possible to sell your art, most investors don’t. An auction house, your best bet for selling, often charges hefty fees.
Earnings would be great, but you’re not counting on them The best approach to art investment? Consider the aesthetic pleasure first and the financial benefits second. Welcome any profits, but don’t plan your financial future around receiving those profits. Any money earmarked for retirement, for instance, should go into other assets. In fact, one Stanford study says art is unlikely to improve any portfolio. Bottom line: don’t invest anything in art you can’t afford to lose. My Customers mostly Like the calm and original work of art hanging on their walls, rather than making an investment. You’re willing to research That said, art investors can pick pieces with great long-term value. But enter informed, just as you would be if you invested in the stock market. Start by researching the artist of the work you’re considering. Ask the following questions:
Are their pieces included in any museums or famous collections?
Have they won awards or gained other recognition for their work?
While up-and-coming artists can be exciting, their reputations may or may not last. And this will affect the value of their piece. You can afford the maintenance Art investors get to control their assets, which can be a bonus. But you’re responsible for keeping the artwork in pristine condition, which means monitoring factors like humidity and sunlight. If you display the artwork you’ll have to make sure it maintains its original quality. If you put it in storage you’ll pay for that as well. Add insurance costs and the price of an authenticity certificate, and your maintenance bill adds up. Bernie Habicht's art includes an authenticity certificate
Originals or one-of-a-kind works of art come with the highest price but the greatest potential payoff.
Prints or copies are more affordable but less likely to turn a profit. The best quality print is known as a giclée (zhee-klay). It’s similar to the original work to other prints, but also more expensive. As a rule, rarer prints are more valuable. One print from a small number of limited editions will have more value than a print with many copies floating around.
Reproductions are mass-produced copies without a limited run. They’re the most affordable option, but they’re also worth the least. You probably won’t see any profit from a reproduction.
No matter what, look for quality and good condition. Especially for pricey investments, it’s worth spending the extra cash to get an appraisal.
Where to look for art
Galleries, museums, auction houses
Amy Bergen.Total Articles: 75 Amy Bergen is a writer and editor based in Portland, Maine. She's interested in technology, literature, and how the world will change in the future.
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