Art as an Investment: How to Invest in Art?

Posted by Robert Lange on

Is art a good investment? Yes, it is. If you know how to buy art for investment, you are bound to find it an excellent way to increase your net worth and allocate your savings. Here we will tackle this in more detail and explain to you how to purchase art to benefit from it. Are you interested? Then we invite you to read on.

Is Art a Good Investment?

First, let’s discuss why art is a good investment. It all goes down to the numbers.

According to data collected by Yahoo Finance, art has impressive potential, with the annualized price appreciation reaching 14% for contemporary art and 9% for all art. This means that in certain cases, art might be an even better investment than gold, which reached 12.27% price appreciation in 2023 (via Macrotrends).

But, even if we take the numbers apart, there’s a reason why you should consider purchasing art as a form of investment – diversification. Artworks are easy to keep at home (like gold) and are an excellent alternative, especially since they’re experiencing steady growth, unlike gold which actually dropped in price in 2021 and 2022. So, if you want to protect yourself from market trembles, it might be worth placing some of your savings in art.

How to Buy Art as an Investment?

Knowing why art is a good investment, we may discuss how to buy it. For this, we will aid you with our 4 tips:

1. Don’t Invest Too Much in Art

Firstly, you need to remember that art is a non-liquid asset – you won’t sell paintings, sculptures, or reliefs quickly. Therefore, you must not treat art as your reserves but rather as a long-term investment.

This means that you shouldn’t put too much money into purchasing art. Instead, you should make sure that your portfolio includes other, easier-to-liquidate investments, like gold or shares.

2. Seek out an Expert to Help You

You won’t know yourself what art to buy as an investment unless you have excessive knowledge of the market. It’s like with stocks – you must know the trends and the value of different stocks to make the right purchase. Thus, in the case of art, we recommend working with an expert.

You will need someone who will not only help you determine what type or genre of art is worth investing in but also protect you from overpaying or fraud. This means that you need a mastermind in both business and art. This is especially true if you consider participating in auctions, a popular way to obtain fine art – you won’t know when the price is too high without a skilled advisor.

Who should your expert be? An art dealer, an art gallery owner, or a private collector whom you know and trust.

Instead of an expert, you may also opt for visiting only well-established art galleries. This should mitigate the risks related to investing in art, but it will also mean that you’re exposed to more expensive works than in smaller venues.

art as an investment

HOW THE MARKET USED TO BE - 5.5" x 3.5" oil on vintage Charleston postcard framed behind glass

3. Establish Criteria for Purchasing Artwork

Art evokes emotions, but as an investor, you need to cut yourself off from them. The best way to prevent feelings from affecting your purchases is to establish criteria that you will follow when purchasing art.

One such criterion could be predicted ROI. You could base it on the historical sales by the particular artist and the general trends for the particular type of art. You may also implement less business-driven criteria, like how much you like the artwork, as they will help you when you’re truly uncertain about a piece. However, treat them with lower priority than the business indicators.

4. Research the Artists Whose’ Works You Want to Buy

Certain education and experiences might affect our chances of success, right? The same goes for artists. Therefore, it’s always a good idea to conduct a small background check. This way, you might discover artists who have not yet gained popularity but are likely to do so in the coming years, artists whose works will steadily become more and more expensive.

The Takeaway

Knowing that art is a good long-term investment and how to buy it, you are ready to allocate some of your wealth to fine paintings or sculptures. Remember that artworks are non-liquid assets, and be sure to cooperate with experts when making purchases. This way, you’ll be able to place your money securely into fine pieces of art that will be a valuable addition to your home’s decor.

And since you wish to invest in fine art, we recommend that you read our article on where to buy art online.

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