Investing in art is not just a way to diversify one’s portfolio. However, like any form of investment, it involves risks and requires specific knowledge to avoid costly mistakes. In this article, we will explore the key points to consider to start investing in art, analyzing strategies, markets, and practical considerations.
Why Invest in Art?
Art is an alternative asset that can offer several advantages:
First of all, it offers the possibility to diversify your portfolio: Investments in art are not correlated with traditional financial markets, such as stocks and bonds. This makes them an attractive option to reduce overall risk.
In other terms, it helps in protection from inflation: Works of art, particularly those by established artists, tend to maintain or increase their value over time, protecting capital from the erosion of inflation.
What to Consider Before Investing in Art
Deciding how much to invest is fundamental. Experts advise not to allocate more than 10-15% of your total assets to alternative investments, including art. The budget must take into account not only the cost of the artwork, but also additional expenses such as:
- Auction fees
- Insurance
- Conservation and maintenance
- Transport and storage
Research and Authenticity
Before purchasing a work, it is essential to verify its provenance and authentication. The most common mistakes include purchasing fakes or works with dubious provenances. Collaborating with experts, such as art consultants or renowned auction houses, can help mitigate these risks.
Time Horizon
Art is not a liquid investment. Selling a piece can take time and depend on market conditions. This makes it essential to consider a long-term investment horizon.
Where to Buy Art
Auction houses like Sotheby’s and Christie’s are one of the most reliable sources for purchasing artworks. They offer transparency on prices and guarantee the authenticity of the works, in addition to having an enormous catalog of works. It should be noted in this case, however, that auction houses often charge high commissions (up to 25% of the sale price).
Art galleries therefore represent a valid alternative. They are ideal for purchasing contemporary art and supporting emerging artists to have a direct relationship with the artist and also have greater possibilities for customization. The downside could be having less transparent prices compared to auctions
Online it is also possible to purchase art. Platforms like Artsy, Saatchi Art, and 1stdibs offer a wide range of artworks accessible from all over the world with often competitive prices. Even though online, in general, there is a greater risk of purchasing fakes.
Another very interesting moment to purchase art is also events like Art Basel or Frieze, which are excellent opportunities to see a wide variety of works and meet artists and gallerists.
There is also the possibility of making direct purchases from other collectors which can offer competitive prices, but it requires an in-depth knowledge of the market and a careful verification of authenticity.
Strategies for Investing in Art
Investing in emerging artists can be an interesting option for those with a limited budget. These artists often sell their works at affordable prices, but their value could grow significantly over time.
Purchasing works by different artists, periods, and styles reduces overall risk. Do not bet everything on a single name or a specific artistic movement.
Analyzing sales trends is essential. For example, artists like Yayoi Kusama and Jean-Michel Basquiat have recorded a growing demand in recent years.
What Sold the Most in the Past?
Works by artists like Pablo Picasso, Marc Chagall, and Joan Miró are constantly in demand. Their works represent a combination of stability and appreciation over time.
Contemporary high-profile artists, like Jeff Koons and Damien Hirst, continue to record extraordinary sales, but often at very high prices.
Emerging artists like Beeple, known for his digital works, have recently captured the attention of the market, thanks also to the growth of NFTs (Non-Fungible Token).
Useful Tips for Those with a Medium or Small Budget
- Purchase prints and limited editions: Prints from established artists offer a more economical way to enter the market.
- Participate in local exhibitions: Many emerging artists sell their works at affordable prices during local exhibitions or events.
- Explore the secondary market: Purchasing from private collectors or through online platforms can offer interesting opportunities.
- Invest in education: Attending courses and seminars on art can help you develop an expert eye.
- Follow artists on social media: Many emerging artists promote their works directly on social media, offering competitive prices.
In short, investing in art is a fascinating journey that combines finance, culture, and personal passion. To be successful, it is essential to dedicate time to research, establish a realistic budget, and collaborate with industry professionals. With a strategic approach and a long-term vision, art can become a valuable element of your investment portfolio.
As expert in digital marketing, Amelia began working in the fintech sector in 2014 after writing her thesis on Bitcoin technology. Previously author for several international crypto-related magazines and CMO at Eidoo. She is now the co-founder and editor-in-chief of The Cryptonomist and Econique.
She is also a marketing teacher at Digital Coach in Milan and she published a book about NFTs for the Italian publishing house Mondadori, while she is also helping artists and company to entering in the sector. As advisor, Amelia is also involved in metaverse-related project such as The Nemesis and OVER.
