I am often asked why I should buy art if I can’t display it in my home. While I do believe that the best investments are those that you can personally enjoy and appreciate, there are many other ways to profit from art investment.
Art is an excellent investment in many ways, both tangible and intangible. Tangible return on investment is the monetary value that you can expect to either receive or sell your work for at a future date. Intangible return on investment is the experience of investing in art; watching it gain in value over time and also the ability to diversify your portfolio through art.
But investing in art is not just an emotional or aesthetic choice; it’s a financial one as well. Art is one of the most cost-effective ways to enhance your portfolio. According to the British Association of Art Investment, a single work of art has the potential to appreciate in value by more than 600% over 20 years, based on a survey of their members.
Tangible Benefits
Art is easy to buy and sell. There are no age requirements and no need for any special licenses. You can literally open your wallet and decide if you want to buy a piece of art based on your tastes, needs and budget. In addition, you can resell at any time or donate to charity if you ever wanted to get rid of the piece.
Art is highly liquid, meaning you can turn it into cash easily. Since there are numerous buyers and sellers in the art market, art can be sold quickly – even within 24 hours – without affecting its value.
You can use art as collateral for loans or to secure insurance policies. This makes it a great way to protect your assets against future financial loss.
Unexpected tax benefits may come with owning art. If you’re thinking of buying art as an investment, you should investigate how it might affect your tax status
Art is one of the few investments that can be both a financial investment and have a greater intrinsic value. The Art Market is an ever-expanding global marketplace with a total estimated worth of $64.7 billion USD, making art one of the largest markets in the world. The value of art is always fluctuating and as a result, art investment is often seen as risky business. However there are many reasons to buy and sell art now more than ever before including:
1) Art can be used as collateral for loans
2) Art is tangible asset that can appreciate in value over time
3) It’s easier to transport art than it is to transport other forms of property such as real estate
4) Buying and selling art can be less risky than other investments with higher returns
In the past few years, the art market has been on a roll. As reported in The Art Newspaper, sales of art at auction rose from $4.6 billion in 2009 to $10.3 billion in 2014. The art market is however a tricky one, in that it is not easy to predict what will be popular or unpopular among collectors and investors.
Along with this, the nature of an investment in art is different from the stock market or real estate. For example, while the value of land and property can go up and down, fine art tends to hold its value over time; it is not subject to fluctuations that are tied to economic conditions or new regulations (unless they are tied directly to the artwork itself).
While some people may see art as a good investment solely based on its monetary worth, others argue that investing in art provides more than just financial rewards.
You can make money in art, but it is not an exact science. It takes knowledge, research, and insight to do so. You have to learn about the artist and their work, the market for their work, and trends within that market.
Truly successful art investors balance a variety of factors when buying or selling art. They are knowledgeable about the market and have experience with prices of comparable pieces. They also have a good understanding of the artist and his or her body of work. They can spot emerging artists who are on their way to becoming well known.
Art investors also tend to be highly curious people who like to talk to other interested collectors, gallery owners, curators, and artists themselves.
In order to make the best decisions, you need to do a lot of research. The more you know about art and its history, the better your chances will be at making a profit.
Though art investing is not as simple as stock trading or betting at the track, it is still a very accessible pastime for those who enjoy learning about an exciting field that almost everyone can appreciate on some level.
The art market is a unique asset class, because it does not follow the rules of traditional assets. The typical factors that influence an investment’s value are not at play in the art market. Art does not appreciate or depreciate based on interest rates or inflation, it is not affected by economic growth, and it is not highly correlated with other asset classes. As a result, the art market typically benefits from good economic times and suffers in bad economic times.
I believe one of the reasons the art market is so recession-resistant is because art has intrinsic value that goes beyond financial value. While I’m sure there have been periods of time when art was more speculative than it is today, most people who buy art are buying it because they love it and want to hang it in their home. This means that, unlike stocks, which tend to appreciate based on earnings growth, or bonds, which appreciate as interest rates fall and companies can borrow money more cheaply (thereby increasing their stock price), works of art usually appreciate simply as a result of supply and demand (which is why you see such huge prices for works by artists like Andy Warhol).
Treating your collection as an investment is a great way to diversify your holdings. If you own lots of stocks,
Research shows that art appreciates over time. Art is usually one of the first things people want to liquidate when they need cash. But why would you want to buy art as an investment?
The most common answer is that art is a good investment, but it’s not true. It’s just a better investment than most people think.
We know that art appreciates because art prices have been rising for hundreds of years and continue to rise today. That doesn’t mean that buying art will make you rich, but it does mean that if you’re already rich, and have a lot of money invested in something else, adding art to your portfolio will increase your wealth over time, even after adjusting for inflation.
Yes, I know that’s not what people usually mean when they say “art is a good investment.” They’re usually using the term “good” in the sense of “I like this.” But we can argue about taste later. First let’s talk about price.