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Art as an Investment: what to buy and at what price

Art as an investment photo by cris dinoto z lh7Mz7wFQ unsplash
Art as an investment - Photo by Cris DiNoto on Unsplash
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Art as an investment is still partially unknown to the general public. Most people who have some cash to invest generally prefer to invest it in real estate and life insurance, as these are investments with which we are all more or less familiar. However, investing in art provides certain advantages compared to investing in real estate or on the stock market.

First, investing in art is a pleasant way to embellish your interior and diversify your patrimony. Indeed, buying an antique painting or a vintage watch allows you to make an investment while enjoying it daily. This is the beauty of tangible alternative assets.

Another advantage of art as an investment is that the works of art are not limited exclusively to paintings. Far from it; the most usual art investments, include artists’ photos, antiques, vintage watches, and precious jewels, antique paintings, design furniture, antiquarian books, and documents, or even sculptures.

Finally, the art market is not subject to the same fluctuations and pitfalls often faced by the stock market and real estate. Yet, since the beginning of the year 2020, these two sectors have been sailing through particularly stormy waters. This is due in particular to the global coronavirus pandemic, the effects of which have been seen on the financial markets.

In this context of crisis, investing in 2021 will be done under the sign of caution. Investors are above all looking for security and stability. Thus investment in art represents a viable and profitable alternative for more and more people who seek to place their money in a safe place.

Art: a passion investment

“To combine business with pleasure” is how one could define investing in art. Unlike investments in shares, bonds, or other financial products which are ultimately just a few lines on a computer, part of the return to investing in art is the intrinsic enjoyment of the objects themselves. The total return consists of the monetary return and the enjoyment of ownership.

You can enjoy the decorative factor of a beautiful painting that will visually enrich your room. Or the convenience factor of a rare mid-century modern shelf in your living room. Or a beautiful wristwatch that you will enjoy wearing every day. After all, we are only the custodians of the objects of art that we have in our care for a certain period of time. Before passing them on.

If you are sensitive to the idea of actively enjoying your investment, then buy what you like, what speaks to you, and what corresponds to your tastes in terms of decorative arts. But without forgetting of course the financial aspect of making a sound investment.

Art as investment: what to buy?

Before investing, keep in mind that not all art objects are created equal. Some categories of objects are constantly on the rise, while others have been declining in popularity for several years now.

Antique rugs, chandeliers, and antique furniture are less popular than before. Among other factors, the increase in real estate prices and rents, as well as the trend towards de-cluttering one’s home, have had a relatively devastating effect on the antique furniture market.

Conversely, paintings, jewels, vintage watches, and bronze sculptures have been keeping their value in a rather stable way over time. These “space-saving” decorative collectibles remain a preferred investment as they can be easily moved, stored, and are not a permanent decorative statement. They appeal to a wider segment of the population than antique furniture.

If you want to know the value of certain works of art and antiques, there are online resources that track the value of collectibles markets. Such as collector cars and vintage watches. These market indexes are an indicator of financial trends in the used or collectible market.

The Watch Market Price Index, for instance, is composed of 30 popular watch models with high trading activity. The index shows the average market price of these 30 watches over time. This index not only shows the top brands of the moment (Patek Philippe, Audemars Piguet, A. Lange & Söhne, Rolex), but also the overall watch market price index that features watch models with the best average annual growth rate (AAGR).

With these free online resources, you can get a better idea of the average market price of collectibles as an investment.

Investing in art can start with a few hundred dollars

Art is a rich and diverse investment. In addition to paintings, there is a multitude of ways to invest in art. Even if you’re on a small budget: old books, photos, prints, coins, period clothing, vintage cars, etc.

Although the market is subject to fluctuations, artworks stamped by the greatest master cabinetmakers or particularly rare antiques and masterpieces have always remained a safe investment. One example is the Japanese lacquer chest of drawers by the cabinetmaker Joseph which fetched 2 million dollars at an auction. Other eras, such as the 20th century, are experiencing a resurgence of interest. For example, the creations of Charlotte Perriand, Pierre Paulin, or Jean Prouvé, which we discussed in our article Does Antique Furniture Hold Its Value?

But far from these important sums, pieces of antique furniture and works of art can be acquired for only a few hundred dollars. They too have the advantage of allowing you to build up an estate and take advantage of an interesting tax system (if you live in a country that offers this kind of incentive) while offering you the pleasure of enjoying your investment on a daily basis.

The complete index of contemporary artists listed for sale is available on Art Price’s website, the world’s leading art market information company.

But the bigger the investment, the better

Whether at art and antique fairs, antique stores, or auction houses, you can buy antique silver, an old painting, or a vintage lamp for a few dozen or a few hundred euros. But in this case, do not expect to make a huge capital gain, unless you have a very fine nose or a stroke of luck.

If you want to invest $500, $700, $1000, it is preferable that you buy with your heart, for pleasure. Otherwise, you risk being disappointed the day you sell. In this price range, the return on investment is the pleasure of enjoying your item every day in your home. Now if you have a larger budget, say $10,000, you can purchase a piece of art with a more famous signature and whose value is likely to increase over time.

The more expensive the piece is at the beginning, the greater its potential increase in value.

An unknown painting, a piece of furniture, or an ordinary vase has very little chance of increasing in value over time. And often the opposite is true. On the other hand, a work of art that is well known in the art world may increase in value. But people who think only in these terms do so only to make money. And often put their property in a safe. This is a different approach from that of the collector or the lover of beautiful things.

Regardless of the approach chosen to make an investment in art, the value of a work of art invariably depends on 6 factors: its age, its workmanship, its style, its condition, the quality of its materials, and its general aesthetic. If you are interested in the subject of appraising antiques and art objects, you can learn more about it in our dedicated article: Estimating The Price And Value Of Antique Furniture.

Art Funds: when the art market isn’t anymore the sole purview of the deep-pocketed

With the democratization of the art market, online services facilitating access to blue-chip artworks have started to emerge. Platforms such as Masterwork offer the possibility to buy shares of multimillion-dollar paintings and sell them as you please.

Unlike traditional art funds where you’re investing in a fund that includes multiple artworks, Masterworks, lets you buy shares of a single piece of art. The price of entry is therefore much lower. And as long as there are buyers willing to purchase the shares of the artwork, investors are not tied to the fund for a set period of time. Investors can earn a return by simply selling their shares as they appreciate in value, without waiting for the artwork itself to be sold. They will make money if the price of their artwork goes up, and lose their money if it goes down. Simple as that.

Where to get antiques and art as an investment?

The best solution to get antiques and art as an investment is to contact a professional antique dealer. As he buys before reselling, he takes particular precautions in his choices. An antique dealer will be able to advise you according to your needs: decorative art, art as an investment, or both. In the digital age, online catalogs of professional antique dealers exist. However, it is always preferable to meet the antique dealer in person after finding the object online.

Keep in mind that the goal is not to buy an antique or a work of art “at all costs” or to invest “as soon as possible”. Do your research, ask questions, compare. Don’t buy just anything to be like the others, and if in doubt, call on the knowledge of an appraiser. If you are interested in knowing the value of your antiques, I invite you to read our article How To Know The Value Of My Antiques? We share some tips on how to choose a good appraiser, as well as some reputable sources.

Investing in art: basic advice for a safe investment

The purchase of a work of art presents few risks, provided that a few basic rules are respected.

First of all, the traceability of the work must be perfect: it must be attested by the gallery or the expert who represents the artist or his beneficiaries. If the work appears in a catalog raisonné, that is to say, a very detailed work that makes an inventory of the works and traces the artist’s career, then the certification is absolute. Secondly, you should always buy an artist who is listed, i.e. one of his works has already appeared in a public auction and in a sales catalog.

If you are buying a painting or a photo, avoid large formats. Or opt for the horizontal Italian format, which is more suitable for small apartments in New York or London. If you follow these basic rules, a nice transaction is guaranteed after a few years. If well-chosen, the works of art sell very well, in just a few days.

A wise investment if you know what you are buying

Whatever the type of artwork, the motivation (pleasure or financial investment), the amount of money spent, whether you are a connoisseur of the market or not, it is advisable to seek advice from a professional to avoid copies and scams. A good investment starts with a good purchase. It is, therefore, necessary to research the work, according to your artistic preferences, to study the quotations of recently negotiated works, and to situate the artist in the market.

If most people can get a quick idea of whether an item is genuine or not from a simple observation of the piece, only a professional appraiser or a professional antique dealer can provide either an estimate or expertise. You must always obtain confirmation of the authenticity and quality of the work in question. Whenever possible ask for a certificate, a guarantee of authenticity, or an invoice.

Conclusion

In an environment of low or even negative interest rates, it has become almost impossible to really make money with an investment. And the art market seems to be a good alternative to more traditional investment products. Moreover, the advantage of investing in the art market is that it is no longer necessary to be an insider. Thanks to the internet, a private individual can have as much information as a great expert of the 1980s, as long as he knows how to use it.

With a profitability approach, investing in tangible alternative assets is anything but a spur-of-the-moment purchase. Just like the stock market or real estate, an investment must be based on a well-informed decision using the numerous information available. By following a few simple rules, good returns are almost guaranteed, especially since the tax system in many countries is very favorable. Not forgetting of course that beyond being an investment, a work of art also has the advantage of being pleasant to look at.

Photo by Cris DiNoto on Unsplash

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