Guide for investing in art

Today, many long-term investors try to diversify by investing in different types of assets. For example, some prefer to invest in exotic jewelry and coins, while others put their money in collectible wines.

Works of art are among the types of investment assets that are growing increasingly in popularity. Truly, a good piece of art not only has the power to beautify your home, but it also has incredible financial value.

However, there are many myths and fears around investing in works of art, which have made it difficult for many people to put their money in these assets. Despite this, with a little knowledge and analysis it is possible to overcome all barriers. To help you, below, we tell you all the information you need to invest in this asset class.

Types of art

As an investor, you can choose between different types of art. When we talk about “investing in art”, beginners automatically think of paintings; but the reality is that art encompasses much more than this. Thus, the type of art is an aspect to consider when investing. In addition, it is convenient to ask yourself the following questions:

  • Who made this work? Was he a recognized artist?
  • Is it a copy or an original work?
  • Is it a unique piece or are there several of the same?

In the art world, original pieces are the most valued; however, depending on who the artist was, a copy can also have some value. At this point, you need to have some basic knowledge that will allow you to distinguish between an original artwork and a copy.

The original works stand out for being authentic and with a certain rarity, which justifies their high price. On the other hand, although the copies have a lower cost, depending on the printing technique used they can be very valuable. Similarly, copies are an excellent option for investors with limited resources to start creating their own collection.

How to buy works of art as an investment

First of all, make sure you know what style of art you want to invest in. Also, do not stop analyzing the differences that may exist between the primary and secondary markets.

On the one hand, the works of art from the primary market are unpublished (that is, they have never been seen or sold before), so this is where there are more enthusiasts; while the secondary market refers to works of art that have been sold previously.

Without a doubt, starting an art collection for investment purposes is an important step. However, there are a few factors to consider before deciding what to buy.

Research about the artist

Generally speaking, artists with an interesting story generate more interest from buyers.

Similarly, you need to investigate issues such as the artist’s age, the awards he has won, his participation in previous exhibitions, and his education. Generally, much of this information can be found in the galleries where the works of the artist in question are exhibited. Similarly, researching the web is also an excellent alternative.

Research the artwork

In the art world, impulsive purchases cannot take place. Thus, before buying a piece, it is essential that you study and understand it thoroughly.

The first thing you have to analyze is the authenticity of the work. This point is easy if the artist is still alive. However, if the artist has already died, you can turn to an expert in the field.

The next thing you should do is evaluate the piece itself, making sure that it is a work of art that has not suffered any type of damage or that has not been restored at some point, since this can affect its value.

Obtain information from the dealer

When it comes to investing in art, this factor is also very important. You need to analyze the reputation of the gallery or the person with whom you will do business. You can do this by obtaining information from past art exhibitions, as well as doing research online.

You must be cautious

Keep in mind that the valuation of a work of art can vary depending on the demand that there is, so be careful when participating in auctions and avoid getting carried away by exaggerated publicity. You need to have a critical mind to judge each work of art on its own merits.

If you feel that you do not have enough time to pay attention to these aspects when buying and investing in art, you also have the option of purchasing through an art fund. Similar to how a mutual fund works, the art investment fund is dedicated to buying and selling works of art for profit. However, many of these funds charge high management, storage and insurance fees, which can negatively affect your earnings.

Where can you buy art pieces?

Auctions

If you are a lover of adrenaline and strong emotions, then you will surely be fascinated by participating in an auction. However, here you must be careful not to bid more than the piece is really worth, and you should also try not to exceed your financial limit.

If you want to buy a piece because you really like it, then a higher price may be justified. However, if you are a collector or an investor, be sure to evaluate the price of the work, as well as its value and the condition in which it is located. Then adjust your bid based on those factors.

Also, keep in mind that your final offer is not necessarily the final price you will pay for the work. Usually, you can pay up to 30% more.

Galleries

Unlike auctions, galleries are a calmer environment for acquiring artwork. Here you can see the work carefully, analyze it and decide in advance if you want to buy it or not.

The advantage of galleries is that the price on the label of the work is practically the same as that paid if you want to acquire the piece. Likewise, you can choose between galleries that focus on new artists and that operate in the primary market; or secondary market-focused galleries that resell artwork without necessarily having any ties to the artists.

Art fairs

In these places you can find works of art for all audiences, both for beginners and experts when it comes to investing in art.

Here you can ask experts, explore, compare prices, etc. Similarly, some of the prices for various works may rival the prices you find in galleries and auctions. So, we recommend that you inform yourself about the date on which this type of event will occur in your area, so that you can plan your attendance.

Online

Surprisingly, many works of art are currently sold on the web, so buying a work online can be a great option. However, make sure that the website from which you will make the purchase has the endorsement of recognized galleries or distributors.

Advantages and disadvantages of investing in art

Advantage

  • You get a physical asset. By investing in works of art, you control the asset yourself and take care of it. In this sense, you do not have to put your trust in other investors.
  • You can contemplate the work. Most investors in art are first of all collectors and lovers of this field. So when buying a work of art they not only think about future investments, but also about adding a beautiful piece to their collection.
  • You acquire a slightly volatile asset. Generally speaking, art does not lose value over time. Thus, compared to stocks on the stock market, works of art are less volatile.

Desventajas

  • Necesitas tener conocimiento. Esta es la principal barrera que tienen muchas personas a la hora de invertir en arte. Tal y como mencionamos anteriormente, necesitas conocer y analizar mucha información antes de realizar tu compra.
  • El arte no es un activo líquido. Esto significa que para vender arte y tener ganancias debes ser paciente, ya que esto requiere más tiempo, planificación y esfuerzo.
  • Las obras de arte requieren de un cuidado especial. Cada pieza de arte debe pasar por un proceso de cuidado especial para preservar su valor con el tiempo, además que necesitas tenerla asegurada en caso de que ocurra algún desastre natural o un incendio que pueda afectar su integridad.
  • No existe garantía de que el arte realmente aumentará de valor. Finalmente, no existe como tal garantía de que la obra valdrá más dinero transcurridos unos años, ya que esto depende de si el artista seguirá siendo apreciado por la sociedad.

Conclusion

Investing in art really isn’t for everyone. It can be extremely lucrative, but there is always some risk. Therefore, first of all you need to educate yourself correctly in this sector.

In any case, and now more than ever, it is possible to invest in art with small amounts of capital through the tokenization of assets or fractional investment. Tokenization allows you to acquire a fraction of a piece of art. In this way, you can access this type of investment without having to risk large amounts, while you can access the same return profile.

Brickken, with its asset tokenization technology, facilitates investment in illiquid assets, allowing investors who want to access the art market to invest in pieces that would otherwise be beyond their possibilities.

Join Brickken, and start investing in art.

Published On: February 16, 2021Categories: Finance0 Comments

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