How to start investing in art?
There are plenty of good reasons major corporations like Deutsche Bank, UBS, and JP Morgan Chase have a curator who works on their private art collection. For example, the UBS art collection includes 35,000 pieces, which means around one piece of art for every two employees.
The reasons major banks and other corporations are bringing full-time curators onboard?
Art is a good investment that provides diversification and can protect against some of the typical challenges of the market, from interest rates to volatility in stocks.
While investing in art might seem like a great idea, particularly in the current economic environment, it feels unattainable for most people. Luckily, even as a beginner and without a lot of cash on hand, you can still invest in art and enjoy some of the benefits.
The following are things to know to get started.
Purchase a portion of a piece of art.
One of the most compelling ways to invest in art right now is to use a platform where you can buy and sell shares in iconic blue-chip art. Through these platforms, you can both buy and sell shares, creating a diversified portfolio. So how does it work? Masterworks is leading the way as far as this approach, and their steps include the following:
The platform has a research team using proprietary data to determine the artist markets with the most momentum. Then, the acquisitions team will negotiate a fair price and purchase the piece. The platform files an offering circular with the SEC, allowing anyone to invest. Then, when the painting is sold by Masterworks, you receive your proceeds after the company takes their fees out. You can also sell your shares on the secondary market.
Essentially, you’re buying fractional shares of art, and you don’t have to write a big check for it.
Another way to get started as an art investor, no matter your budget or level of expertise, is to get involved with digital art. In 2021, The First 5,000 Days by artist Mike Winkelmann, aka Beeple, sold at Christie’s auction house for more than $69 million. It was the third-highest price a living artist ever achieved, and it was the only time a completely digital piece of art was offered by a major auction house. The New York Times said it was the most significant indication yet that NFTs, which are non-fungible tokens, are becoming a viable part of the art market.
NFTs are assets verified with blockchain technology.
There are platforms that are offering services to anyone who wants to start investing in digital art.
Investing in traditional art.
While there’s a lot of talk about NFTs and digital art, you can also, of course, still invest in traditional art. If you go into a gallery and you love a painting, but it’s out of your price range, you still have options. You can, for example, get a giclee. Giclees are machine-made prints. They’re reproductions of fine art printed on special paper or canvas. They replicate the original in color and clarity. The original is always going to be worth more, but there can still be value in a giclee.
If you’re going to invest in traditional art, there are some good rules of thumb to think about as a beginner.
First, focus on emerging or young artists. These are going to be pieces that are probably more within your budget, whereas something from an established artist might not be.
You are taking some risk with a new artist, but that can potentially create a higher payout as well.
You should also try to focus on a certain category, and if possible, one that interests you the most and that you feel engaged by and passionate about.
The more you learn about one category, the more likely it is that you’ll make smart buying decisions.
You should also start small and don’t rush into anything or get too emotional about the process.
Keep up with trends, and look at art investing as something for the long-term. You’ll need to be patient, as you’re buying and before you plan to sell. Before you buy anything, do your research and connect with the artist if you can.
You should ask as many questions as you want and don’t feel intimidated to do so.
These are big purchases, and you want to be smart and prepared, just like you would be with any other investment.
The one thing to remember is that investing in art isn’t going to give you the instant liquidity of other options, but at the same time, it can provide you with value when other investments are down.