Which are the Good Art Investment Strategies?
Whether you are aiming to improve your private collection with a few artworks or you are an enthusiastic owner who wishes to put a small gallery on a rising trajectory, you will have to start investing in art. Art investment has become a popular trend both in and outside of the art world as more and more people, some of which are not even particularly interested in arts and crafts, are investing heavily in emerging authors and pieces. If you wish to learn about the best strategies of investing in art, you came to the right place. Regardless of whether you are a casual collector or someone with a little more ambitious plans, you will have to stick to the same rules and principles when it comes to investing in art – the only thing that truly changes is the financial scale of the investments.
The art market is quite a fickle beast and there are no guarantees of profitability, but with a little legwork, forethought and some advice from yours truly, there’s a solid chance you can come out on top. Just keep in mind that you have to be consistent, you have to stick to a principle if you are looking to make headway in the game of art investments. Keep your cool and remember that investing in art is far from gambling if you know what you’re doing.
Why Consider Investing in Art?
Make no mistake, lots of people think they should be investing in art and they are right. Art sales in recent years easily passed the $60 billion mark, which was unimaginable a decade ago. Studies suggest that seventy-five percent of collectors and buyers are purchasing art for collecting purposes but are also keeping an investment aspect in mind. Furthermore, the same studies state that art is becoming an increasingly popular option for investors that do not even have a fondness for art. Why is that? It’s because, unlike the case is with stocks or bonds, art provides investors with a tangible work whose value will remain even if the market takes a dive. It’s a lot like owning an apartment in a neighborhood whose prices will never go down significantly – the worst case scenario is that you can’t immediately find the right buyer.
There’s another reason why people of all goals and statuses are intrigued by the idea of investing in art. In times of high and rising inflation, art has performed historically well across all the market’s sectors. Furthermore, there is a prestige associated with art that will never change, even if the value deteriorates. A good indicator of how smart a move is to go after an art investment is that people in charge of modern finance strategies are actually suggesting their clients to always have 5-7% of their portfolios diversified into the art market.
Insights into Art Investment Strategies
Regardless of the financial level of your plans, the core strategies are very similar to other asset investments strategies. This means that concepts of buy and hold, newcomer, arbitrage and liquidation are all applicable in funds connected to it. Buy and hold describes a long-term investment, referring to 5-10 year plan in what is usually a high profile art portfolio during which the cash flow is disabled. The newcomer strategy is the riskiest move of investing in relatively little-known contemporary artists. Arbitrage has about the same meaning as in finance, referring to taking advantage of existent incompetencies of multiple decentralized art markets. Division and acquisition of completely formed collections from either private or corporate collectors would be the liquidation strategy.
These strategies can be used in numerous combinations, while each one of them comes with its own potential risks and rewards. If you are looking to expand your private collection without venturing too deep into your budget, then the newcomer strategy is a match made in heaven with your needs. If you are willing to pay a bit more, buy and hold might be a better option, but be armed with patience. However, if you are a curator of a gallery, then you have a bit more choices at your disposal – if you are willing to play ball on the money front, of course. In that case, you need to be prepared to use any of the listed strategies. There are the scenarios that fit perfectly with any strategy and identifying opportunities to utilize the right one will ultimately set the best from all the rest. Just keep in mind that this is a waiting game as investing, by definition, means that you will have to wait a certain while before you see any profit.
Types of Art Worth Investing In
There are many types of art a new investor might find interesting. According to Zatista, an art gallery that sells original art online, the popular types newcomers often go for are paintings, drawings, photography, digital art, mixed media, sculptures, prints and video art. Honestly, it matters little to nothing what kind of art you determine to invest in – there are other factors that determine how the investment will turn out to be in the long run, so you might as well just go with what you enjoy the most. However, there is a huge factor that always needs to be accounted for and that’s to be sure whether you are investing in an original or some sort of copy.
The Originals vs Copies Problem
Original works are the most highly valued pieces in the art world as they are one-of-a-kind and most of the top-notch investing happens with these pieces. However, although buying original works is often a no-brainer, some of you with a more limited budget should definitely consider investing in copies. Contrary to popular belief, a duplicate can definitely be worth something if you know what to look for. Of course, it is the rarity of the original that commands the high price tag, so do not expect for copies to cause earthquakes as an investment. When it comes to copies, there are a few kinds out there: prints (produced through a variety of printing techniques), gicleés (the highest quality print available, superior to other types of prints) and reproductions (copies of original works without a limited run of printing). All three kinds of copies are potentially worth your while, so give them considerable thought and determine if they fit in well with your collection or your gallery assortment. If the copy makes more sense as a part of a collection, the fact it’s not an original piece will not diminish the overall value of your acquisitions as much as you might expect.
Buy and Sell Wisely
Buy wisely, sell wisely means that you should be able to understand the trends of the art scene before making any purchasing or selling decisions. This means you have to make yourself a part of it all if you want to be successful, so get acquainted with the current leanings, standards and major individuals. When it comes to selling a piece, it is usually recommended that you always have a certification of authenticity from the artist and you should retain the artwork for at least three years. Remember that you are under no obligation to sell in most cases, so keeping the piece is nearly always an option.
Furthermore, like the case is with any sort of investment, it is important to diversify your efforts. This applies to both private collectors and individuals running a gallery on any scale. Don’t invest into just one artist, create your own art investments portfolio with pieces from different authors. Don’t limit yourself to just one country, but instead keep an open mind and purchase from various geographical locations. Try to make connections between pieces based on something more than the simple who-when-where – try to link them based on style, how they made you feel or their shared history. Remember that good and unusual stories sell, so taking care of your collection in this manner will definitely help improve the outlook of your investment.
The Quality of Your Art Is More Important Than the Artist
If you are an up and coming curator or a collector looking to invest a limited amount of money, then it’s always safer to rely on the quality of the piece rather than on who created it. In fact, even if the piece is attributed to a particularly big name, rarely will you run into a situation where quality will be an ignored factor. The quality of artwork should always be your top criteria when picking potential art investment pieces. Needless to say, if it looks too good to be true, it probably is. Keeping that in mind, always make sure that you have an art specialist whenever you are planning on investing a large amount of money into any kind of artwork.
- Baltayan, A., 2017, How to Invest in Art – Types, Pros & Cons, Buying & Selling, Money Crashers [Sep 20, 2017]
- Kollewe, J., 20 May 2017, Picture perfect: how to make an art of your investments, The Guardian [Sep 20, 2017]
- Ashe, J., 11 January 2017, Fine Art Investment, Enness International [Sep 20, 2017]
- Korteweg, A., Verwijmeren, R. K. P., October 21, 2013, Written Research: Is Art a Good Investment?, Stanford Business [Sep 20, 2017]
Featured images: Man Looking at a Piece Made Out of Dollar Signs, via insidehook.com; A Curator Placing a Piece On Display, via pinterest.com; Art Investment Networking, via artempire.com. All images used for illustrative purposes only.