To date, the most expensive painting ever sold at auction was Leonardo da Vinci’s painting of Salvator Mundi. It sold for a whopping $486.6 million to an unknown buyer.
Now, we’re not saying that you need to be dropping half a billion in cash in order to get in on the game. We just wanted to show you how insanely lucrative investing in art can be.
Have you ever wondered how to break into the world of buying art, but you’re not sure where to start? It can feel like an impossible challenge, especially in the modern age.
We’re here to help. We’re going to outline everything you need to know about buying artworks and what it means to be a savvy investor. By the end of this article, you’ll be a pro.
What Does Investing In Art Mean?
Just like stocks and bonds, art can increase massively in value. If the artist has a successful career, the value of their work will skyrocket.
That being said, it’s important to note that you won’t see profits from art overnight. A time window of 10 or more years is recommended to see good appreciation. Art investment is a long-term game.
However, relative to other investments, art has had a long and stable place in the global investment market. Art has grown in value in much the same way that gold has.
In fact, compared to other asset classes, art has a strong positive correlation to the growth of gold value. And, despite economic lows, the art world has continued to flourish.
An investment in art can be for personal or financial reasons, but you have to understand what you’re buying into.
The Pros And Cons Of Buying Art
There are pros and cons to investing in art, as there are with investing in anything. Whether you’re buying original works of art or commissioning art from a well-known artist, there are a few points to keep in mind.
Understanding The Cons
It can feel like there is a significant barrier to entering the art world. At best, it feels overly elite and unapproachable and, at worst, exceptionally expensive and inaccessible. You might feel overwhelmed walking into that.
Additionally, because art can take so long to appreciate in value, we cannot think of it as a liquid asset. So, the money you’re dropping on a piece of art shouldn’t be anything you’ll miss, because you won’t be seeing a return on it for some time.
Unfortunately, no guarantee exists that your work will actually appreciate, as it largely depends on the artist’s future success.
All that being taken into consideration, let’s get onto the good news. Most of what we’ve just presented above is easily mitigated.
Yes, the art world can feel elitist and unapproachable, but many galleries and auction houses have set up systems where you can build a payment plan to finance your artwork. And yes, while there is no guarantee that your work will gain any value, this can be offset with excellent research and expert support.
The Pros Outweigh The Cons
As a physical asset, you have complete control over your investment. Plenty of people has a hard time trusting investment firms with their money, especially when wrongdoings and investigations are consistently making the news. Art investment is all yours.
With that comes little to no market fluctuations and more enjoyment value than other investments can provide. Sure, you may be holding onto the art for the time being, but who says you can’t display your investment in your home?
Even the cons we mentioned above can be useful. Art appreciates over time, so it’s not a get-rich-quick scheme, but it’s unlikely to reflect the same volatile nature as stocks. This makes art a sturdy and reliable choice for investment.
The Three Types Of Art Buyers
We must consider that unless something tragic happens to the work, your art is likely to outlive you. Valuable art particularly has the potential to move through the generations of your family, gaining more value as it ages.
If you are buying art because you love the way it looks, you’re a collector. Collectors will usually spend sizeable sums of money on the art they want. They will also hold on to them for as long as possible, only selling if they’re forced to.
On the opposite spectrum of that are flippers, who will buy art when it’s cheap and sell for a greater profit where they can.
In between these lies the investors. An investor will probably buy a work when it’s at a midpoint price and sell later if the economic conditions are right.
There is no right or wrong way to buy art, whether you’re interested in becoming a collector or a flipper, or something in between. You may be interested in paintings, sculptures, and even performance art and large-scale installation pieces. There is a market for anything and everything under the sun, or perhaps, under the moon?
Understanding The Administration
So we should be at a point now where we understand what actually goes into buying art. However, there are two fundamental points to consider before you decide actually to invest in art.
How Much Money Do You Really Need?
You can start off in the world of art investing with as little as $50, but the amount you need hinges squarely on the work you want to buy.
You could look at spending closer to $1000 upwards (and more) for your first steps into the fine art world. With payment plans in place at most galleries, you can spread your investment out into more digestible installments, making the initial hurdle far lower.
Where Do You Go To Buy Art?
These days, buying art online is the most common practice and the easiest. Consider working with an agent to iron out the fine details for big purchases.
Remember, you want to make sure you’re getting certificates that verify the piece’s authenticity, whether you’re buying original art or giclee prints. Brick and mortar galleries are also still popular, especially if you’re someone who needs to see something physical in order to make the leap.
For big investments, particularly of older pieces, you’re going to want to look at auction houses, but be prepared to spend a pretty penny. While they will have some lesser-known artworks available, these may not fetch the same return on investment at a later date.
Invest In Art You Love
For many people, the world of art is more than just an investment – it’s a passion. Investing in art opens doors to boundless possibilities and can be an incredible journey.
However, there comes a time when you need to put emotional value aside and operate from an analytical standpoint. You must choose your art with the eye of a collector but the mind of an investor.
For us, and hopefully you, art is more than luxury. It’s spiritual. For more articles like this, head to our lifestyle blog and embrace your personal luxury.
Featured image source: Unsplash.com