How to Invest in Art: Everything You Need to Know to Get Started?

At a 2017 Italian polymath of the Renaissance auction, Leonardo Da Vinci’s Salvator Mundi fetched a whooping US$450.3 million, making the painting the most expensive one sold at an auction. In 1958, the painting was worth just £45, which, when adjusted to today’s inflation, amounts to about $1237.

Back then, people collected art to hang on the wall or if they loved the artwork. But today, artworks have become some sort of investment, similar to a company’s stocks or bonds. As a result, investing in arts is one of the simplest and the best ways to diversify your portfolio and can fetch higher sums in the long term.

In today’s article, we will discuss things you ought to know while investing in art. Well, if you want to invest in art, read on!

Research and Gather Information

Buying newfangled alternative investments without fully understanding them—and the risks they carry—is more gambling than investing. This very principle also applies when investing in artifacts and luxury artworks. Like any other investment option, the art world is quite complicated, and before you start investing in it, it’s a good idea to take some time to learn all you can.

There is much information on the internet today, whether in videos, journals, databases, or blogs. However, it is worth noting that the more informed you are about the subject matter, the better off both your art-buying experience and your return in the future will be.

Other than the internet, you can also visit local art museums, galleries, and exhibitions in your free time and explore. Through multiple sources, you can learn about various art movements, art masters’ styles, and choices of art. Once this is done, you will have a rough idea about which artwork to invest in.

Invest In Old Masters

In art investment, there are multiple classes under which an artwork can be classified. The primary difference between these classes is the expected return and accessibility. Once your research is done, and you are ready to buy an art piece, deciding what to buy might require time and effort.

First, the most demanded and profit-generating artworks are of the old masters. “Old Masters” refers to the artworks you might have probably seen in museums or galleries that the world’s most renowned artists create. Art pieces carry a lot of prestige, have demand, and often tend to generate a large sum of money in the long term. You can also get oil painting reproductions of these artworks from art galleries such as the 1st art gallery.

That’s not all; these art pieces are also very rare, thus increasing their value. However, individual art collectors, especially beginners, cannot get their hands on old masters’ paintings. Instead, they are often purchased by Ultra-High-Net-Worth collectors or institutions like museums or galleries that want to curate a specific exhibit.

For instance, the Salvator Mundi, the most expensive painting ever sold at auction, was bought by Badr bin Abdullah bin Mohammed bin Farhan Al Saud, a business magnate based in Saudi Arabia.

Understand the Risks Involved

Like any other investment, art is subjected to its risks. Theft, damages, and potential loss by any other means are the common risks of investing in artwork. Undoubtedly, ensuring your art investment is one of the best ways to minimize these risks. However, on top of these risks, the lack of liquidity in art is probably the biggest risk of all.

Artworks are extremely illiquid assets and thus cannot be converted into cash immediately. As a result, it is often challenging to find buyers for high-value art, especially on short notice. Therefore, investment in artworks should only be made as part of a larger long-term investment strategy.

That’s not all; maintenance and repair costs of artworks are also very high and often cost a fortune in private collections. As a collector, you will need to ensure that your art is kept in the best shape possible. You also must document the authenticity of each piece and have adequate insurance for it. Besides that, the insurance cost for artwork is also pretty expensive.

Consider Seeking Expert Advice

Art investment can be tricky, especially for the beginner. To ensure that you are crystal clear about the risks involved, it’s best to consult a professional art advisor. An expert will help you determine and evaluate an artwork’s value and provide assistance for the third-party take.

A good art consultant can help you make the right decision while purchasing artwork. Art consultants are usually independent freelance experts who have years of experience in identifying works of art and helping people invest in them – the role is similar to that of a real estate agent.

The range of prices for art consultants is limitless, though some may offer discounts. The average amount of commission is 10–30% of the total cost of the artwork purchased. It is also worth noting that art galleries also offer discounts to the art consultants so that they can sell the art piece at full price and take the discounted amount as remuneration.

The Bottom Line

To sum up, art investing is a way of investing in art and replica paintings with the hope of receiving a return in the future. Therefore, it can be seen as a more enjoyable and accessible alternative to investing in stocks, bonds, and mutual funds.

However, as with any investment, it’s possible to make money in the long term with art investing but not guaranteed. Moreover, one must be ready to take losses if things don’t turn out as one hope. Therefore, it is crucial to have adequate knowledge about paintings before investing so as not to lose your hard-earned money.