Investing in Art: Where to Start?

16-05-2022 BACK


If you're thinking about investing in art, you may be wondering where to start. In this article, we'll give you some tips for investing in art and how to get into the collecting scene.

Alternative asset classes like art can add diversity to your investment portfolio and help you achieve your financial goals. This type of investment can be a good hedge against inflation and provide you with a tangible asset that you can enjoy on a daily basis.

However, for the most part, investing in art is not only about making a smart financial decision – but also about finding pieces that you love and connecting with them on a personal level.

Let's dive deeper.

Why Invest in Art?

Here are a few key reasons to invest in art:

1. Diversification

One of the most important reasons to invest in art is to diversify your investment portfolio. Adding alternative assets like art to your portfolio can mitigate risks associated with more traditional investments, such as stocks and bonds.

2. Inflation Hedge

In addition to diversification, investing in art can also be a way to hedge against inflation. Over time, art prices tend to go up at a rate that outpaces inflation. As a result, your investment will be worth more in the future.

3. Personal Satisfaction

Investing in art can also be a way to invest in your satisfaction. Unlike stocks and bonds, which are often seen as impersonal investments, art is something that you can enjoy daily. Whether it's hanging a piece in your home or office, owning a work of art can be a source of enjoyment.

4. Appreciation

Of course, one of the ultimate goals of investing in art is to see it grow in value. Over time, as demand for specific artists and styles increases, the value of your collection is likely to go up, making it a good long-term investment.

5. Potential Return on Investment

While there are no guarantees when it comes to investing, art has the potential to provide you with a significant return on your investment. If you're patient and do your research, you may be able to sell your art for a profit down the road.

Now that we've explored some reasons you should invest in art, let's look at how you can get started.

How Do Art Investments Work?

Similar to other investments, when you purchase art, you are buying something that has the potential to increase in value over time. There are several reasons why art appreciates, including scarcity, popularity, and provenance.

Unlike stocks or bonds, there is no standard measure of an art investment's performance, making it challenging to track the value of your collection and compare it to other asset classes.

In addition to this, there are some things to consider before investing in art, such as:

1. Art is an illiquid asset, which means that it can be difficult to sell right away, even if it has a significant monetary value.

2. There is no guarantee that your art investment will appreciate; in fact, it could even decrease in value if the artist falls out of popularity or if the piece is damaged. This is one of the reasons most investors start as art collectors and only invest a small portion of their overall portfolio in art.

3. There are costs associated with buying and selling art, such as storage fees, insurance, and framing costs.

4. You may need to partner with an art consultant or advisor to help you find and purchase the right pieces.

With this in mind, let's look at the types of art you can invest in.

Types of Art You Can Invest In

Knowing the different classes of art can help you make informed investment decisions. Here are some of the most popular classes of art that people invest in:

1. Old Master Print

Old Master prints are typically from artists who were active before 1800. These pieces are often seen as safe investments since they have a long history of appreciation. However, as you might guess, they are often pricey.

2. Blue Chip Pieces

Blue-chip art is created by world-renowned artists who have a consistent track record of producing high-quality work. These artists typically have been in the business for many years and have a large body of work.

3. Emerging Artists

Emerging artists are up-and-coming talents who may not have the same name recognition as blue-chip artists, but show promise for future success. These pieces can be more affordable than blue-chip art, but they also come with more risk.

Investing in Art: How to Get Started

1. Know your preferences

The first step to getting started is knowing what you like. As we mentioned above, investing in a work of art you love can help you stay motivated during the ups and downs of the market. Consider the different styles and artists that appeal to you. Spend time visiting art galleries or museums to get a feel for the type of art you might want to purchase.

2. Define Your Budget

How much can you afford to spend on a work of art without risking your financial stability?

When you're starting, it's important to remember that art is an illiquid asset, which means it can be difficult to sell quickly if you need the money. As a general rule of thumb, experts recommend keeping art investments to around 5% of your overall portfolio.

Having a more conservative budget when starting can help you minimise your losses if the art market takes a turn for the worse, as well as gain confidence and expertise before making more considerable investments.

When determining your budget, don't forget to consider other associated costs, such as storage, transport, and insurance.

3. Do Your Research

Now that you know your budget and preferences, it's time to start doing your due diligence on potential investments.

Remember, art is a long-term investment, so you'll want to be sure that you're comfortable holding onto the piece for some years.

In addition to considering the aesthetics of a piece, look into the artist's background and previously sold works to get a sense of their track record. Research art market trends to see if there is interest in the type of art you're considering.

If the artist that catches your eyes is represented by a gallery, you can reach out to them to get more information on the artist and their work.

4. Consider Working With an Art Consultant

If you're new to the art world, working with an art consultant can be a helpful way to get started.

An art consultant is an expert who helps clients source, purchase and sell works of art. In addition to offering guidance on what type of art to buy based on your preferences and budget, they can also provide insight into the art market, empowering you to make more informed decisions and navigate the art world with confidence.

5. Familiarise Yourself With Auction Houses, Galleries and Museums

You can learn more about the art market and current trends by familiarising yourself with these places.

Auction houses are where pieces of art are bought and sold through open bidding. Galleries are usually run by art dealers who represent artists and help market and sell their work. Museums display art for the public and typically don't sell the pieces in their collection.

Attending art auctions, visiting galleries and exploring museums can help you discover new artists, learn about art history and get a sense of what is currently popular in the art world.

6. Buy, Keep and Sell

Investing in art is a long-term commitment, so you need to be patient and willing to hold onto your investment for at least a few years.

Furthermore, the art market can be volatile, so there's no guarantee that you will make a profit on your investment. However, if you do your research and purchase art that you love, you're more likely to weather the market's ups and downs and be happy with your investment over the long term.

When the time comes for you to sell your art, work with a reputable gallery or auction house to get the best possible price for your piece.

About Florence Bell Art Gallery

Florence Bell Art Gallery is a leading art gallery offering the best of British art to collectors and investors. With a large team of experienced professionals with a passion for fine art, we can help you source, purchase and sell art confidently.

Whether you're new to the art world or a seasoned collector, we can provide the guidance and support you need to make informed decisions and navigate the art market with ease.

If you're interested in learning more about investing in art, please don't hesitate to get in touch. We would be happy to answer any of your questions and help you get started on your collection.

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