Art investment is a non-liquid, alternative form of investment. Additionally it should be a part of an investment portfolio, along with stocks, bonds, real estate, businesses and more. An art investor aims to buy a piece of artwork, preserve it for years
or decades, while it appreciates, and sell it years later at a profit. Art has some qualities that other investments do not; for instance, it can be hung on the wall and enjoyed for years. It also does not have to be declared to the government in terms of capital gains when sold by an individual, like in the case of sale of stocks and bonds.
- Make research.
The best art investor do their research on the pieces of art that they will purchase; they will contact people in the art world, such as auctioneers, gallery directors and dealers, who can give good investment advice and understand this market.
- Pay attention to what schools of art are selling well, and which ones are down.
Study the Mei Moses Fine Art Index to get a firm grasp of the art market. Although they cannot predict what will be popular in the future, they can tell you what art tends to keep its value and be a low-risk and what art has a more volatile market value.
- Reach out to trusted auction houses and dealers when you are looking to buy art.
Get all the information you can out of them before making a purchase. If you are going to buy at auction, be prepared to walk away if the price goes higher than your investment range. Watch out for art auctioneers or dealers that promise too high a return on artwork. In many ways, they are just like stock brokers and other financial investment firms, who may promise anything to get a sale. They should be found trustworthy before you buy anything, because ponzi schemes and art market bubbles are part of this investment panorama as well. If you have never bought art in an auction environment before, you may want to seek advice about how it is done properly.
- Buy your investment art when you feel confident of its worth, its price and its ability to grow in value.
Arrange for payment, shipping and insurance. Each piece of art should be insured and catalogued as part of your estate.
- Study how art is properly stored.
In order for an art investment to retain its value, it should be kept at low-humidity and avoid being marred. You may hang it in your home, but you may want to get an art collector’s advice about where to hang it and how to care for it. Share this information with your children, if it is intended as an inheritance investment. They need to be well aware of how to take care of art, or they may lose money or ruin the painting entirely. Some investors keep their arts in banks or other financial institutions.
- Have your art investments appraised occasionally.
To understand the rise and falls of certain schools of art, an appraiser can tell you how your investment is maturing. They may give you an idea on the best time to sell your artwork. Moreover, you may request an estimate of your artwork from reputable art auction companies to see the value of your art.
- Consider renting out your art investments.
Make a research of banks, hotels, museums and other institutions that rent fine art. You may be able to demand thousands of dollars per year for your art to hang in another building and this is another way to earn money on your art. Keep in mind you will need to make sure your art is covered by an insurance policy for loss or damage. Make sure the renter provides insurance for your art. You should prepare a contract that stipulates the time allotted the fee, the insurance and the shipment of your art.
Art investment is an opportunity and should be part of your investment portfolio. As more banks and financial institutions venture into, it is a form of investment that needs attention. All form of investments has risks as well as art investment; but with good research and information you can minimize the risks and make a successful investment.