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Art as An Investment

Posted by Jacob Hawthorne on

A number of studies have proven that art is good for you. Viewing art decreases anxiety and depression. Visiting a museum or gallery improves your thinking and increases empathy. Art nourishes both the mind and the soul. It’s also been discovered that art can nourish your bottom line. While many people look to stocks, bonds, and mutual funds when trying to diversify their portfolio, many overlook the potential value of investing in art. 

Art has become one of the most sought-after investments today. In 2018 the Wall Street Journal declared art the best investment class as it outperformed all other categories. Like anything else you’re thinking about investing your money in, a little research will help you make the right investment for you.

What kinds of art can I invest in?

With so many types of art to choose from when it comes to investing, it can be overwhelming. Then there are the myths surrounding buying art as an investment. Many would be investors have put off investing in art believing that not knowing about art makes it out of their reach. Then there are those who believe investing in art is only for the affluent. Like any other investment people are considering, many people fear they may get ripped off buying art. While these are possible scenarios, educating yourself about art can help a new investor make the right choice. When people think of investing in art they often look to paintings. While paintings are both beautiful and a potential investment, art encompasses photography, prints, sculpture and more.

A good place to start when deciding what kind of art to invest in is to think about what you are attracted to. Are you drawn to contemporary art or do you enjoy admiring the work of the masters? Are there certain styles that appeal to you? You can start by exploring some styles such as abstract, impressionism, photorealism, and pop art.

How do I buy art?

The internet has affected the art market with an increase in competition between art collectors. Art lovers have the ability to bid from all over the world without leaving their home. For this reason, you should start by deciding how much you are willing to spend. Like any other investment, consider an amount you can afford to part with as you will spend some time anticipating its appreciation. Investments in art are challenging partly because they are illiquid or not easily converted to cash. Once you have a set amount in mind, your next step is to learn about the art world and the artists who create the work you are looking for.

If you live in a city you have an advantage as you will most likely be able to find art galleries you can visit in person. Talking to gallery owners will help you discover what art the gallery showcases and find out about upcoming fairs. Depending on their size, art fairs can bring together dozens to hundreds of galleries presenting art buyers opportunities to discover new artists, purchase art that hasn’t been shown anywhere before, and find out what’s happening in the art world.  

If you’re far from a city or art gallery, don’t overlook online galleries. Online galleries offer buyers looking to invest in art a variety of art styles in a range of prices. Online galleries are bustling today, and much art is being purchased this way. For a new art investor, buying art from an online gallery may get you more for your money. Online galleries don’t have overhead expenses to take into consideration when pricing their art. Be sure to do your research to make sure you are buying from a reputable gallery. Online galleries are a great way to see what artists are creating and what artwork is in your price range.

Regardless of whether you buy art in person through a gallery, at an art fair, or online, research living artists who you find appealing. Educate yourself about the art world by learning about the artist’s education, their exhibits, and their recent commissions.

Are Only Originals Worth Money?

If you’ve spent any time in an art gallery, you may have caught a glimpse of some of the prices of the art. If you’ve found yourself drawn to one particular painting only to realize its way beyond your means, you might not be prepared to buy an original. Original works are the most highly valued in the art world. However, sometimes a copy can be worth something if you know the value of the different copy options available.

Original artwork is the crème de la crème of the art world. An original is one that is a one-of-a-kind work of art. While many believe an original work of art is one signed by the artist, you should be aware of what the procedure for signing was during the time period the art was created in. Additionally, it’s important to know what the individual artist’s signature practice was.

If you can afford to buy an original, there are two methods of signing that will get you the best return for your investment. Up until the 19th century artists signed in the plate. It simply means the artist put their name in the matrix that it is printed within the art. The matrix was commonly wood, metal, or stone. A plate signed work of art is usually more desirable than an unsigned piece but less desirable than a piece signed in pencil. Collectors prefer a pencil signed piece where the artist has signed their name in the lower margin beneath the image. Sometimes an edition number, title, and date accompany the signature.

If an original isn’t in your budget, prints are considered a work of art that can have value despite being a copy. Through a number of techniques, prints can have a quality and clarity of detail that can match the original. While some prints do not appreciate in value, the right print from the right artist can be a great way for investors to start an art collection on limited funds. If you are looking to invest in prints, consider buying limited edition prints. Limited edition prints are prints the artist has agreed to run a set amount of. That amount can be as low as thirty or as high as one hundred. But the important thing to remember is that once they are sold you will be unable to buy one, something that adds to their potential value. Another thing to look for when buying a print is whether the artist autographed it. The value of an autographed print increases, sometimes quite considerably.   

After prints, reproductions are another option to explore if you are looking to invest in art with a specific price in mind. Reproductions are copies of original works of art like prints. However, unlike prints, reproductions are not limited in their run. So, while there may only be fifty prints of an original you are interested in, there could be hundreds or thousands when it comes to reproductions. While an original or print is worth more than a reproduction, some reproductions have commercial value if they are one of a limited edition. Supply and demand can also increase the value of a reproduction.

Since you are buying art as an investment, it’s important to get an appraisal of the art, especially in the case of an expensive original. Pay attention to quality and pass on any work of art in bad condition.

Financial Benefits of Investing in Art

As the Wall Street Market found, the art market is growing in popularity. If you are still on the fence about whether to invest your money in art, you can look to the UK’s Art Market Research. The company was founded when Robin Duthy, an investment analyst in London, discovered there were no systems for analyzing the art markets. AMR created a unique set of indices that study the leading collectibles in the art world. According to Art Market Research, the price of art has risen consistently over the last several years by twenty-five percent or more. The global art market is continuing to experience an upward trend due to auction and dealer sales.

There are multiple benefits to investing in art. One of the most basic is pleasure. The pleasure of owning and being surrounded by art is priceless. Unlike stocks and bonds, art can be displayed and appreciated. As an art investor, the most important benefit of investing in art is there are no fluctuations like what you see in the stock market. Volatility does not exist in the art world. As an investor of art, you won’t be biting your nails and weathering the ups and downs of price changes. This may very well be the biggest benefit of investing in art. While investors of stocks and bonds may toss and turn, as an art investor your head can rest peacefully on your pillow.

Lastly, art appreciates over time. Unlike the car you just drove out of the show room, the value of art does not drop once you take it home. If you’ve done your homework and you’ve made your purchases strategically, your art will appreciate with time. While it might take time, down the road you will have an art collection that is worth markedly more than what you paid for it.

Read more of a Conversation about Art or Shop Now at Schmidt Fine Art Gallery

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