Investing in Art

Everybody knows that art can be a great investment. The difficult bit is finding the right piece of art to buy.

With financial markets being so volatile, and Isa’s, child trust funds and pensions giving such poor returns, many people are looking at alternative ways of investing money.

If your thinking of buying a piece of art as an investment, here are our two simple straight to the point tips:

1. Buy a piece of work from a well known, well respected artist who’s work you can sell in the future!

2. Make sure you like it

Great..sounds obvious, and it is!

Buying work from an unheard of, up and coming artist may well be a good investment, but it is an extremely risky thing to do.

Buying a piece of work from a well known artist who’s work has a value in the secondary market place is nowhere near as risky

Safe bets include Royal Academy and Turner prize winners or nominees.

Works by artists such as Sir Peter Blake, Damien Hirst, and Gary Hume all regularly command good prices on the secondary market.

Original prints with low edition numbers make work by these artists more affordable.

Auction houses such as Christies, Sothebys, Bonhams, Phillip De Pury regularly hold print auctions of collectable artists.

So speak to a good art dealer (Us !) then, use your common sense, and do your research!

And at the end of the day, if you buy a Picasso and all the financial markets collapse,and the world is in turmoil, you still own a Picasso!

 

Also six tips in a bit more depth from Nicholas Forrest, art market analyst & art critic

Nicholas Forrest is an art market analyst, art critic. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

1. Know what to expect

In recent times fine art has gained popularity as a hedge against the volatile fluctuations that have plagued the more mainstream financial markets such as the stock market.  The fact that fine art is a tangible object and can be traded for money in any currency also appeals to investors who have large amounts of money in intangible products and markets that use virtual or electronic market places.  As well as the financial benefits associated with the purchase of art as an investment, there is also the enjoyment you will get from purchasing and owning a piece of fantastic fine art, which is why it is important to purchase something that you actually like.

If you are expecting to score large and fast profits from investing in fine art then fine art is not the investment for you. If, however, you are looking for a long term investment in a tangible object that can be enjoyable, educational AND potentially profitable if approached in the right way, fine art is definitely something you should consider investing in.  Before you whip out the credit card there are some things you need to know about the art market and art investment.  First of all, the nature of the art market means that art investment needs to be approached as a long term investment that will usually require a minimum holding period of seven to ten years – but be prepared to sell sooner if market conditions are favourable.  Secondly, the cost of selling fine art tends to be quite high so one needs to factor in those costs when deciding whether to sell or not.  Thirdly, it is extremely important to remember that fine art should be approached as a way of diversifying an investment portfolio and should form part of a balanced portfolio.

2. Buy the best you can afford

When it comes to deciding what to buy it is important to remember that when purchasing art as an investment you should always purchase the best that you can afford.  This means that it is better to purchase a really excellent drawing or limited edition print than to purchase a mediocre painting. At the end of the day, a top quality original work on paper or limited edition print will always be more desirable than a mediocre painting.  It is also extremely important to purchase something that you would actually be happy to live with should the value of the work of art you have purchased fail to increase in value or, in a worst case scenario, go down in value.  If have purchased something you like and it does go down in value, at least you can still enjoy the work of art.

There is really no minimum amount of money that one needs to spend to invest in art, however, the more money you spend, the more options you will have, and the more likely the work/s you are buying will increase in value.  Limited edition prints or photographs by emerging artists can be purchased for as little as a few hundred pounds, but stand much less chance of increasing in value than a ten thousand pound drawing by a well known artist.  Essentially, the more you spend, the less risky the investment, and the greater the chance of receiving a higher return.  The more well known blue chip artists who have plenty of art historical and curatorial backing are going to be a much safer investment, but will also be require a considerably higher outlay to begin with.  Less well known emerging artists who are at the beginning of their career require a much smaller initial investment, but are also a much more risky investment as they do not have a proven track record.  To be honest, anyone can “invest” in art as long as they have extremely low expectations, but to stand a chance of actually seeing a proper worthwhile return on your investment I would suggest a minimum figure of ten thousand pounds.  The reason I suggest ten thousand pounds is that ten thousand pounds will buy a good quality photograph, drawing or limited edition print by a desirable artist.

3. Get involved

The best way to find out where, when and what to buy is to get to know people who are involved in the fine art world.  Go to gallery openings, visit museums, attend auctions and art fairs, befriend curators and engage with artists.  Not only will you get advice from these art market insiders, you are also likely to get opportunities to purchase works from sources that would normally not be available to the average art buyer.  Getting to know collectors and the artists they support can open the door to an artist’s studio where you may be able to purchase a work of art directly from the artist for less than you would pay in a gallery or at auction; befriending a curator or gallerist might get you access to works that are not usually made available to the general public; getting to know an auction house representative is a good way of finding out what the current trends are and which artists are worth investing in.  There is no doubt that the most successful art investors are those who are able to use the knowledge and expertise of other people to make informed, rational and justifiable decisions.

4. Think outside the box

If you have a limited income that would not allow a ten thousand pound investment then you may have to look outside the box to find something worth purchasing.  Artists often experiment with a range of different mediums even though they may be particularly well known for one medium in particular.  By thinking outside the box and looking at alternative mediums that an artist may have worked in, one can find some interesting and highly desirable works of art by well known artists for relatively small sums of money.  For instance, did you know that Picasso produced quite a number of limited edition ceramic objects that can be purchased for as little as a few hundred pounds? Picasso ceramic works are particularly desirable and present a rather interesting alternative for those who have a more limited budget.

5. Buy from a reputable source

Auction houses, galleries and art fairs are the best sources of investment quality fine art.  Although it may be tempting to just jump on ebay, the high number of fake and fraudulent works of art sold online make going to a reputable dealer who will guarantee the authenticity of what you are buying well worth the extra effort.  That is not to say that I would never recommend purchasing works of art online.  If you are going to purchase online you need to make sure that you are purchasing from a reliable source that has an excellent reputation and will provide a written guarantee of authenticity.  Regardless of whether you are purchasing from a dealer or online, it is well worth getting the opinion of a few experts before deciding what to purchase and where to purchase from.

6. Build a collection

Once you have purchased your first piece of fine art it is likely that you will be bitten by the bug and want to buy more.  By building a collection based around a particular theme, movement, artist or medium, you can develop a certain level of expertise and knowledge that will help make future purchases much easier.  Developing a collection is an enjoyable and rewarding process that also encourages a certain amount of discipline and connoisseurship that will help you make more rational and justifiable decisions – decisions that are more likely to result in the purchase of works that will increase in value.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications

One response to “Investing in Art

  1. fab prints my favorite is the stephen chambers set [one favorite]

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