Investing in the art world can seem daunting. You have so many different options and opinions that it’s hard to know where to start. However, investing in art can be timeless, and if you invest in a high-quality piece of artwork itself, it can be a fantastic store of value.
But, the question is, where should your money go when you make an alternative investment like art
Featured Art Investments
Potential Return: 15%-18
Open to Non-Accredited Investors?: No
Is Art a Wise Investment?
If there is 1 stereotype about art investments, it’s that it mainly involves older rich people. However, that is not necessarily the case. Even though the costs of investing in art can be high, various ways of investing in art can make money from the investment.
One thing to be aware of is that art is generally a long-term investment. The value of art can make significant gains during prosperous periods or remain stable, but its value can also plummet in recessionary periods.
Like investing in other assets, you must conduct thorough research before making an investment choice. Again, like investing in other markets, you are not assured a profit, but if you complete the necessary due diligence, you will be able to make good art investment choices and, maybe, find a gem or 2.
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The Benefits of art Investment
Of course, any investment is made because of its potential value over a period of time or the returns it will bring in. Now, unless you are investing in a company involved in art, the art itself isn’t going to bring in a profit every quarter. However, as we mentioned previously from the Citibank report, investing in artwork can provide returns similar to the bond market. So if you make the right investment choice, art can be a safe investment, providing a return over time.
Another benefit is that it is not correlated to the stock market. The stock market can sometimes be highly volatile, but these fluctuations won’t impact the art world. So if stocks have a bad day or are in a bear market, your art can still gain in value or at least hold its current value.
Of course, as mentioned, art is seen as a long-term investment by many and can build value over a long period. However, some pieces can surge in price. Therefore, if you can find a piece that is blowing up in popularity, you may be able to gain a considerable profit in a short time.
Blue Chip Art vs the Stock Market
Perhaps counterintuitively, blue-chip art investments tend to be more stable than benchmark equities indices like the S&P 500. For instance, between 2008 and 2009, the global art market value dropped over 36% whereas the S&P 500 shed only 22%. However, in 2010, global fine art had jumped 44% while the S&P gained only 19%.
In the end, the S&P’s dramatic rise has provided the superior return profile. Nevertheless, the volatility of stocks could mean that future corrections may take a while to recover from. In contrast, fine art valuations stay relatively stable once it has found its price threshold.
Does a Financial Crisis Affect Art Investments?
Like any investment sector, a financial crisis is the last thing anybody wants. As demonstrated above, the global art market value slipped double digits during the onset of the Great Recession.
On the flipside, however, the premium end of the blue-chip art market may be at least partially insulated from economic downturns. When you’re at this level to fork over millions of dollars for fine art, a recession may not necessarily dampen sentiment.
Therefore, select works from blue-chip art offer a resilience that you can’t find, even among benchmark equities indices such as the Dow Jones or the S&P 500. When you’re playing with this market, you’re rolling with the biggest powerbrokers in the business — and they essentially operate in a different paradigm compared to the average Joe.