How Do I Invest in Art?
Despite what you might think, you don’t need to be an art expert or have a multimillion-dollar budget to invest in art. But like any other investment, it’s important to research and diversify.
Art can add beauty to a home, and it can also grow in value over time. However, as with any investment, there is risk.
A popular art investment platform called Masterworks allows people to buy shares in pieces of artwork that they would otherwise not be able to afford – for example, a painting by Andy Warhol or a Banksy. The company also allows investors to diversify their portfolios by investing in alternative assets, which are often overlooked by financial advisers.
Masterworks is open to all types of investors, unlike other art investing platforms that require you to be an accredited investor or have a high net worth. They have a simple process for linking your bank account and you can start investing right away. They also have some great resources on their website such as a contemporary art price database.
The first step in investing in art is to clarify your goals. Do you want to make a profit, or are you more interested in collecting art for its own sake? You can do both, but it is important to understand that just like any other investment art cannot guarantee a return.
Next, do your research. There are many online resources on art pricing and auctions. If you are unsure where to start, speak with your financial adviser. Remember that art is an illiquid asset and that you will likely not be able to get your money back for three to ten years.
Art fairs are a great place to spot emerging artists and see the latest trends. You can also attend fairs to get a sense of how much people are willing to pay for a work. These events are held in different locations throughout the world and can offer a variety of price points.
Investing in art requires research and a long-term approach. It can also be expensive to maintain a physical collection, especially if you’re investing in large pieces. It’s important to diversify your portfolio with other types of investments, and a financial adviser can help you develop an art investment strategy.
Many art investors focus on so-called “blue chip” artwork or works that have already demonstrated their value in the market. However, you can find some promising works by emerging artists at more affordable prices if you’re willing to look for them.
You can find new work at fairs such as the New Art Dealers Alliance, which opened this week in Manhattan. The fair features 120 exhibitors, from local alt-staples like 56 Henry and Marinaro to Warsaw’s High Gallery and Buenos Aires’ Galeria Nora Fisch. The New York edition’s highlights include an arcade-inspired booth pairing gaming stations with paintings by Jeremy Couillard; and solo presentations of works by Julia Jo and Elif Saydam. If you want to buy, be prepared for sticker shock: Auctions often charge a buyer’s premium on top of the hammer price, which can add up quickly.
As the world of art continues to evolve, it’s becoming easier for anyone with a few hundred dollars to invest in their favourite artists. Digital platforms like Yieldstreet and Masterworks allow investors to purchase a stake in millions-dollar artworks through fractional investment models.
However, before deciding on any platform, it’s important to understand why you want to invest in art in the first place. The art world is highly subjective and is a market driven by value judgements. It’s important to know what you’re getting into and to have an experienced art advisor by your side to guide you in your investment choices.
One of the main reasons people choose to invest in art is because they have a passion for it and want to collect something that will increase in value over time. It can also feel good to support a living artist and to know that you’re helping them in their endeavors.
Art is also a great long-term investment because it tends to be uncorrelated to other investments. This was especially evident during the 2020 pandemic when other markets saw dramatic fluctuations while Marks Art remained relatively stable. However, the risk is that you may end up with a piece of art that you don’t particularly enjoy, and it’s often illiquid, meaning that selling it can take weeks or months.
While it is possible to purchase physical art through auctions and galleries, this can be a costly investment. In addition to the price of the art (known as the hammer price), there is often an additional buyer’s premium which can add another 30% or more to the cost of the piece. Furthermore, it can take weeks or even months to sell art as it is an illiquid asset and investors must plan accordingly.
One way to reduce these costs is to invest in digital art through NFT platforms which allow you to buy shares of a work of art rather than the actual artwork itself. These investments are also known as art indices and are a great way for new investors to gain exposure to the industry without having to spend huge sums on purchasing actual art pieces.
Art has long been a popular alternative investment and is becoming increasingly accessible to new investors thanks to technology. Online investing platforms are making it easier than ever for people to get started with this unique asset class and with art being such a reliable inflation hedge and a solid diversifier, many investors choose to include it in their portfolios. In the future, art will likely be offered through securitized investments like mutual funds or ETFs making it even more accessible for a wider audience.