Collecting items of value has been a long time strategy of the rich. It comes as no surprise that many people want to invest in Art and other collectibles such as coins, stamps, or Gold. There are many different investments and with so many people wanting to diversify their investments it makes sense that some will land on Art as a good option.
The primary reason the rich invest in Art is because they enjoy the visual and cognitive stimulation from the piece not the potential return on investment. Art is high-risk and potentially very volatile Asset but the value of Art is not directly correlated to other investment vehicles such as stocks or bonds. When incorporated properly Art can add a strong diversification to someone’s portfolio even though from 1971 to 1996 the overall return on US Paintings was only 4.6%/year.
Why Collect Art?
As stated the biggest reason people collect Art, in particular, is because they enjoy the piece. Like many other collectibles, Art provides a visual or cognitive appreciation that other investments such as stocks, bonds, or ETF’s may not provide.
Collecting Art isn’t a new phenomenon; people have been collecting luxury items for centuries, especially the rich. The pursuit of luxury has always had an innate feeling centered on feeling wealthy. And while not everyone can afford to purchase an $18,000,000 painting at an auction some can and enjoy the emotional connection Art can provide.
With an overall Global Market Value of $64.12 Billion in 2019 (Statista) up from $1.8 Billion in 1997 there has been some very strong potential to make money over the years. Now, this being said, the overall consensus from most studies of Art as an investment conclude that Art tends to underperform in comparison to other investment Assets.
While you can make money from investing in Art there tend to be some major drawbacks such as;
- It can take a long time from the decision to sell and the sale
- The fees and transaction costs are expensive
- You need to be very knowledgeable in Art
- Art is a very illiquid Asset
- There is a high investments Risk from many factors
Does Art Increase In Value?
Art like other Assets has the potential to increase in value over time as well as potentially lose value. Generally speaking, the overall value of Art will increase but it may not be at the rate you think. There have been many cases lately in the news about how much certain Art pieces have been sold for but this normally isn’t an accurate snapshot of the overall Asset class.
Being that Art is a very volatile asset to hold in terms of value. You can make high returns over a long period of time if you have the right piece.
With the potential to make returns above 10% it can be an attractive investment. But, this was one painting and it was held for many years. Throughout those years the painting would have cost money for upkeep and security.
Ways Of Investing In Art
Like anything, there are multiple ways you too can start investing in Art. You don’t even need to be an expert or go to an auction to be involved.
Not all Art investing is done through individual purchases of pieces yourself. There are other ways you can start making money from Art.
Invest In An Art Fund
You can explore different Art Funds and let the professionals do the hunting and investing for you. You get the profit and they get a small fee for managing the fund.
This is a great option as it has a low barrier to entry and can diversify your Art investments right away. This way you can lower some of the risks associated with Art Value Fluctuations.
Have a look at some of the Investment options available for Art and Collectables!
Pool Money In A Partnership
You and some friends can get together and start pooling money in a partnership. Take matters into your own hands and start small. By starting like this you can get into a slightly higher price range increasing your potential investment returns.
By having a team available you can also leverage other people’s knowledge of Art and the passion they possess.
Go To Smaller Auctions And Keep An Eye Out
Along the lines of taking matters into your own hands, you can start going to smaller auctions and looking out for off the radar pieces of value. Some people are making quite a bit of money finding the “diamond In the ruff” so to speak.
Auctions can be fun and exciting and add some more spice to your investing!
Start Marketing And Selling Your Own Art!
Arguably one of the most rewarding ways to make money from Art is to start marketing and selling your own Art. It can be hard at first but after a while, you will get the hang of it and you can start making some good money.
The easiest way to get started would be to make a quick website with a website provider like BlueHost and start building pages and posts about your pieces. You can explore and share how you make them and what makes them special. By providing this information you are building the story that makes Art so interesting.
You too can be “One Of The Greats!” You just need to start!
There are many reasons people start investing in Art. But for the most part, people invest in Art because they enjoy it.
You too can start in much the same way as other people and you don’t need a huge pool of money to get started. Through investment funds or local artists, you can get exposure and diversify your investments outside of just stocks or bonds.
In doing this you will also get to see your investment and enjoy it rather than just looking at a portfolio report.
Check out how to use the Compound interest to your advantage and Increase your Return on investments!