Why Should I Invest in Fine Art?
Collecting fine art is an enriching hobby that brings cultural and aesthetic value to your business, home, and gallery. Here’s why you should also see it as a financial investment.
Art as an Investment
When looking for ways to invest for their future, most people gravitate first toward traditional investment methods like stocks, bonds, or even buying property. While these methods alone are proven to generate wealth in the long term, the strongest investment portfolios incorporate more diverse sources of financial gain. This is where the idea of art as an investment comes into play.
Quality art pieces are an excellent addition to an investment portfolio because their value does not fluctuate with the rise and fall of the stock market. In the event of a recession or market crash, art buyers are protected from losing all of their assets at once.
Another benefit of investing in art pieces is that your investment holds not just monetary, but cultural and aesthetic value. While you can’t reap the benefits of a stock portfolio until you cash them in, you can enjoy art in your home for years as it steadily appreciates. And unlike other cultural luxuries such as expensive cars or wine, which lose value as you use them, art remains consistent no matter how much it is enjoyed.
The Art Market Today
The art market today is thriving considerably, with sales even exceeding pre-pandemic levels. In 2022, fine art sales totaled $67 billion across the globe, marking a 3% increase over the previous year. According to an analysis from Bank of America, 2021 marked the art market’s “recovery,” while 2022 marked its “new frontier.” Factors involved in the market’s recent success include low interest rates and the rise of online sales. Bank of America’s ultra high net worth clients spent an average of $180,000 on luxury items and collectibles, with art being the most popular item in this category. These figures illustrate the viability and profitability of art as an investment.
Who Should Invest in Art?
If you’re wondering if fine art investment is right for you, there are a few points to consider. First things first, the ideal art investors are people who truly appreciate the aesthetic value of their investment, and can pick out pieces they will cherish for years. Financially speaking, art is a great option for people looking for a long term investment that will gain value over time. It is also ideal for those who are already investing through more traditional avenues such as stocks or retirement funds, and want to diversify their portfolios.
How to Get Started
When looking to purchase your art piece, there are a few factors to consider. First, you must decide how much you are willing to spend, and how much you are willing to risk. If you have a smaller budget and are willing to take a chance, buying from a relatively new artist can be the way to go. Being one of the first buyers of a new artists’ work means you will be able to purchase the piece at a relatively low price, and could access a large return if the artist grows in popularity over time. If you want more certainty on the value of your investment and are willing to pay a higher price up front, you could purchase art from an established artist with the knowledge that the piece will be even more valuable when you are ready to sell.
Once you have an idea of the type of art you want, there are several outlets to go about collecting. Purchasing fine art is traditionally done through attending in-person galleries. Immerse yourself in the local art scene by attending shows, networking with fellow collectors, and even seeking professional guidance from art consultants or financial advisors specializing in fine art.
Online art galleries are also a fantastic place to start looking and make your first purchase. Investing in art is a less exclusive process now than it was before as most sales were conducted by established galleries. Today, however, the online art market is an increasingly excellent choice for investors since it provides global access to artists and artwork, specific search criteria to find exactly what you are looking for, and less transaction and commission fees for both buyers and artists.
Conclusion
