How to Be a Successful Art Investor
People investing in art have found it to be a stable investment in times of financial crisis because it is not directly tied to the stock market. However, for many people, it is a difficult investment to understand. Here is information you’ll need to know to be a successful art investor.
A Short History in Art Investments
Ten years ago, the art markets were worth half of what they are today. The growth of value in the markets has attracted more investors. Art is not only beautiful but can also provide its owner with immense value in terms of profit.
In the 17th century, one of the earliest bull markets in art occurred as the urban middle class’ demand for art spiked. In the 1800s, more regions followed suit as industrialists and business owners acquired a taste for art. And, as the middle class grew, art ownership increased. In contrast, the wealthy preferred to keep the works they bought.
How to Find Art to Invest In
There are different locations that one can buy art from, from New York to London. London is one of the epicenters of the art world where people from around the world gather to share their love for art at auctions. While there is a lot of money to be made in the markets, buyers are reminded that the bigger profits are at the top – usually requiring heavier investments.
Art follows money. Those who seek to make money in the sector are more likely to make a higher profit if they have more funds to invest with. Unlike other luxury objects such as boats or cars, art increases in value.
Seasoned art collectors take several factors into consideration when buying art. This includes the profiles and tastes of the elites of tomorrow. As there is a drive in the demand for art, many collectors pay close attention to how tastes change over time.
How to Be a Successful Art Investor
It is difficult to figure out the next trends in such a huge market worth billions of dollars. In many senses, the market for art is opaque. It is difficult to gather accurate data about the prices in the market. This is due, in part, to the fact that a lot of buyers conduct sales in private.
Masterworks has a treasure trove of research and market analysis on investing that makes it easier for buyers and sellers of art to align their strategies with the realities of the markets. It is the first company that allows investors to purchase shares in works by legendary artists such as Picasso and Warhol.
The organization was founded in 2017. With as little as $1,000, investors can buy into top-tier works in the art world. Masterworks has worked closely with the SEC (Securities and Exchange Commission) to ensure that users of its platform can invest in confidence, knowing that regulatory support is in place to mitigate the risks of their investments.
Masterworks simplifies the process of how to become a successful art investor. Its processes are structured to maximize user experience while also ensuring that regulations are adhered to. After purchasing a painting with its own capital, Masterworks files an offering circular with the SEC. Investors may buy shares in the painting after the offering is qualified by the SEC. Profits from the sale of the painting are distributed among investors.
Of course, before making any investment you should always do your due diligence. Talk to investment professionals and research returns online. Getting the best information to make an informed decision before buying a piece of art is the best way to go.
Should You Consider Investing in Art?
Investing in art certainly isn’t for everyone. The only people who should even consider this type of investment should have five figures in “extra” cash that they don’t mind being tied up in a physical piece of art. Investors should also be aware of the possible risks and returns associated with this type of investment.
In addition to needing a sizable amount of money to invest, people looking to put money into the art sector should also be aware that not every piece of art provides the same return. While they’ve historically maintained or appreciated in value, not all pieces of art do. It also shouldn’t be expected to see huge returns on your art investments.
On average, the return on art investments sits around 10.6 percent. This means if you invest $10,000 you’ll get a return of about $1,060. Individuals who are looking for more aggressive returns should consider another type of investment. It is also possible that the piece of work you buy doesn’t appreciate in value at all. You may even lose money attempting to sell it.