As an aspiring art investor, you might appreciate the allure of investing in art while being rightfully apprehensive of the risks. So, this begs the question - should you buy art as an investment? This article will explore the potential benefits and drawbacks of investing in art to help you make a more informed decision.
Fine art has always evoked emotions and has been seen as a desirable commodity for a long time. With every brush stroke, an artist pours a little soul into their work, expressing their unique world perspective. This visual representation of an artist’s inner thoughts and feelings fascinates viewers and arouses desire.
With this age-old allure, it’s no wonder that people have been buying art as an investment for centuries. In fact, many view it as a more stable investment than stocks and bonds, as the art market is not subject to the same volatile conditions.
Whatever the case, we bet you are still on the fence about whether you should buy art as an investment. Let’s take a closer look at some pros and cons:
Top 4 Pros of Investing in Art
1. Personal satisfaction
Chief among the reasons you might want to buy art is for personal satisfaction. After all, if you are going to be living with the piece, it should be something that you enjoy looking at, and that makes you happy. For many art lovers, the satisfaction of owning a treasured piece of art is priceless. This is why some art collectors hold onto their pieces for decades, even generations. This intangible benefit alone could make investing in art worthwhile for you, as no inflation rate or stock market trend can take away your enjoyment of the piece.
2. Appreciation potential
Enjoying that Banksy on your bedroom wall is excellent, but it’s even better when you can profit from it if you choose to part with it at some point. Unlike many other investments, art has the potential to increase in value over time as it gains popularity and appreciation. While there are no guarantees in the art world, you could see a significant return on your investment if you play your cards right by investing in well-known or upcoming artists.
3. Diversification
Buying art as an investment is also an excellent way to diversify your portfolio and reduce your reliance on traditional investments like stocks and bonds. By investing in art, you can spread out your risk a bit, which is always a good idea when it comes to investing. The current economic climate is particularly volatile, so now might be a good time to start diversifying your portfolio if you haven’t already.
4. Hedging against inflation
Purchasing art as an investment can also be a way to hedge against inflation. Over time, the purchasing power of money tends to decrease as prices for goods and services go up. As this happens, many people turn to investments like art, as they are often less susceptible to the effects of inflation.
Having said that, you should be aware of some potential drawbacks to investing in art before making any decisions.
Top 4 Cons of Investing in Art
1. Art is illiquid
One of the most significant drawbacks of investing in art is that it can be relatively illiquid, and it can be challenging to convert your art investment into cash quickly if you need to. If you purchase a piece of art and then decide that you need the money shortly after, you may have to wait for extended periods to find a buyer willing to pay your asking price.
2. High barrier to entry
Investing in art can also be expensive, with many blue chip pieces selling for millions. This high barrier to entry can make it difficult for some people to consider buying art as an investment. However, remember that you don’t need to spend millions to see a return on your investment. There are plenty of reasonably priced pieces out there that have the potential to appreciate, especially artworks from up-and-coming artists, which takes us to:
3. Knowledge and research required
Buying art requires a lot of research. Unlike stocks or bonds, there is no easy way to track the value of art over time. You need to be familiar with the artists you are investing in and the current trends in the art world. You also need to invest time to develop an eye for emerging artists who may not be well-known yet, but who have the potential to produce valuable art in the future.
4. Storage and maintenance costs
Another potential drawback of purchasing art as an investment is the cost of storing and maintaining your artwork. If you have an extensive and valuable art collection, it can be expensive to insure and keep your pieces safely.
So, to answer the question, should you invest in art?
The answer is- it depends.
The best way to arrive at the correct answer is to put the pros and cons on a scale and decide for yourself whether the potential benefits outweigh the potential drawbacks.
For instance, being passionate about art can be enough of a reason to invest in it, even if you never see a return on your investment. That passion can also be an impetus for researching and securing the right partnerships to ensure that your investment decisions are well-informed.
About Florence Bell Art Gallery
If you choose to buy art as an investment, you can rely on us to provide you with top-notch consultancy services to ensure that you make the best choices for your portfolio.
Florence Bell Art Gallery also provides a wide selection of vintage artworks, antique pieces, and contemporary art that you can choose from.
Get in touch with us for more information.
