Contemporary art has become a significant part of the art world, with artists pushing boundaries…
How to invest in art: everything you need to know
If you are thinking about investing in art, then you are on the right track. Art is a special asset class in contrast to stocks and other traditional investments. Reports from 2021 showed that worldwide art sales surpassed $65.1 billion. However, before starting it’s important to know some things to avoid a low turn on your investment. Keep reading to learn more about how to invest in art.
Kinds of art you can invest in
There are many artistic items and mediums to invest in the art world. Many think of paintings when they first hear about art investment, but the truth is you can invest in sculptures, street art, photos, etc. Many people like to invest in old masters, which refer to pieces from the world’s most renowned artists. These pieces are often purchased by high-net collectors or institutions like museums or galleries as they carry prestige, notoriety, and large price tags (millions or even billions).
Ways for beginners to invest in art
Nowadays, modern art investing platforms allow people at every income level to become investors. Here are four key ways to invest in art:
- Art funds: Companies that offer art-specific funds are becoming increasingly popular. These platforms allow you to invest in blue-chip art and also help you manage and insure your investment. Blue chip art makes up a significant majority of art investing and pieces usually sell for more than $10,000.
- Fractional shares: Some artworks can cost thousands or even millions. And there are many investors who are interested in the art market but don’t have that kind of money. An alternative is through fractional shares platforms.You can purchase slices of valuable artwork by opening an account with as little as $1,000. Find more information about his option in our Partners page, or contact us for further assistance.
- Related stocks: Another way is to invest in supporting stocks that are related to art. For example, some people invest in stocks such as Adobe Inc. where they can benefit from the popularity of NFTs without needing to use blockchain technology.
- Individual works: You can directly purchase art by working with a dealer, art gallery, auction house, or attending art fairs. Make sure to research past performances or the growth rate of the pieces you are interested in to estimate the expected return on investment.
Where to get started
It’s important to note that there are primary and secondary markets for art. The primary market is the first time a piece of art has been sold, it is usually bought directly from the artist. Once an item has been sold for the first time, it enters the secondary market.
- Auction houses: Usually, auction houses sell artwork that someone has held and is trying to make profit from. Auction houses are typically secondary markets and can be both in-person and online. It’s important to note that if you buy art at auction, you also end up paying a buyer’s premium in many cases. At famous auction houses, this can be as much as 30% of the hammer price (the price the item sells for).
- Art galleries: Many art galleries are primary markets since they exhibit pieces that haven’t been sold in the past. They offer the chance to discover a variety of pieces and can also help you determine whether something might be valuable.
- Art fairs: Art fairs are great if you’re interested in buying directly from the artist. Fairs are also good places to find upcoming artists, but at the same time, as with all art investing for beginners, it’s important to do your research. You can also go to local art fairs to find works by smaller artists. While these artists might not be huge, you can still find hidden gems that look good on your wall and could potentially be marketed for a little more later.
- NFT marketplaces: If you’re interested in digital art, you can find good artists and buy unique pieces on the NFT marketplace. Some platforms offer NFT “drops” which are basically digital packs of artwork, some of which could turn out to be valuable.
Nowadays the idea of investing in art has become increasingly popular. But this market is huge and therefore it’s important to make some research to better understand where to get the art, whom to invest in, and how to determine the value of a piece. Once you’ve researched how to invest in art, you can move forward. Fortunately, we can help you with this process from start to end. Contact us today to learn more about investing in art, or expanding your collection.