Contemporary art pulled back the art scene from its decline in 2020, generating interest in art investment. Art investment is considered an alternative market and unpredictable, but knowing the right information, and doing it for the love of art can help you get your foot in the world of art investment.
The art investment world bounced back strong after a temporary dip in 2020 that coincided with the onset of the Covid-19 pandemic. Many people acquired art pieces to decorate their living space or brighten their mood in their quest for solace. When non-fungible token (NFTs) art started making headlines after selling for millions, even more people—many of them young—entered the art market.
Some have become so taken with art collecting that they became serious art investors over the year. Modern art investors earn almost 8% a year on contemporary works alone. And according to Standard & Poor’s historical records, art generates 10% in returns annually. Here are tips to follow when getting started.
Do your research
The early stages of art investment require a lot of patience and reading. The good news is that you are learning about art, so it is sure to be a pleasant time! These are the three things you should research:
- Art books – purchasing or browsing art books gives you an idea of the kind of art you like. You could even explore websites like Pinterest or WeHeartIt.
- Artists – list the ones you are interested in, and divide them into two categories—the more reputable whose works will have a higher resale value, and the up-and-coming artists whose artworks you can afford
- Galleries – some less credible galleries might sell reproductions or fail to vet the work they sell thoroughly.
Trust your gut. Data and knowledge can help a lot, especially if you have been studying art investment for a while. In times of doubt, lean into your gut feeling. Instinct will be your last line of defence against a persuasive art dealer.
Choose work you love
Take your time when choosing an art piece. If you are not in love with it, try looking at similar works by the same artist and other artists to see how you feel about it. Sometimes, it may take years for art to earn a return. When you are holding on to a piece of artwork or painting for that long, it is helpful if the creation is one that you genuinely enjoy.
Getting your hands on artwork
There are many types of traditional art that you can buy:
Originals are the most expensive. They are one-of-a-kind works that only you own.
Gicleés are fine art digital prints made on inkjet printers. Think of them as premium prints—they are printed with pigment-based inks rather than the dye-based inks of affordable home inkjets.
Prints are a printed reproduction of original art. Their prices can vary widely, and they come in all shapes and sizes.
Reproductions are essentially copies of original art. Some collectors enjoy collecting oil painting reproductions of famous paintings to hang in their homes. There is risk in buying reproductions if an unscrupulous seller tries to pass it off as an original.
The world of art has expanded in the past year, and you can now buy digital art. Digital art comes as a file in .jpg, .png, or a non-fungible token (NFT) stored on your computer or a hard drive.
There are many avenues to purchase or obtain art:
- Online art (digital file) purchased through a platform
- Physical art purchased through an online platform (for example, eBay or Carousell)
- Physical art purchased through a store or auction
- Art that has been given to you by a friend, family, or acquaintance
- Free digital art “drops” by artists, creators, or businesses
In the past, art was often sold in auction houses for high prices or traded between collectors. Now, though, online platforms are a great place to start.
Weigh the risks you have to undertake
Like every other investment, there is still risk in art investing. Returns are never guaranteed in the industry, even when you acquire a valuable piece from a well-known artist. Some of these famous artists were never appreciated in their time. It is hard to tell if an artist will still be popular by next year.
Art is illiquid. Even the most well-regarded masterpieces can take time to sell, and those cost millions of dollars apiece.
Ask yourself the following questions before you make a purchase:
- How long do I want to wait to sell an art piece? The longer you wait to sell it, the more likely it is to increase in value.
- How much do I want to spend on a piece of artwork or painting?
- Do I have other investments that I can fall back on if the artwork is never sold?
Is art investing worth it?
The art scene is an alternative market to stocks, bonds, and gold investment. While it is very unpredictable, it can also be very exhilarating! Imagine the surprise and awe when you discover the artist whose work you purchased years ago has become renowned for his talent. Returns can be rewarding, which is why art investing is still very much alive.
Remember that you are also doing this for the love of the art, not just for the money. In the best-case scenario, you find the next Da Vinci, or Monet, or Picasso. At worst, you have a lovely new addition to your home.
Art is extraordinary and a valuable asset. Read more about the rich history of the art trade here. And if you are interested in investing in art in a convenient and accessible way, keep your eyes peeled on our updates and announcements—Everest Gold will soon be expanding its product offerings to include art investment.