How To Begin Collecting Art As Part Of An Investment Portfolio
Contributing Writer: Laura Dowers
Many people are looking at ways of investing their money to gain higher returns and ensure a comfortable retirement, but where should you invest your hard-earned money? Although no investment can ever be 100 percent safe, the safest acknowledged way to invest money is through diversification, investing in different types of assets rather than just one.
Art as an investment
Art can be one such asset. Ask any financial adviser and they will often say that art is second only to property when it comes to sound investments. However, for many, the art world is mysterious and expensive, requiring expert art history knowledge and a bank balance that boasts hundreds of thousands of pounds to gain a foothold. But it is possible to begin an art collection on a modest budget. Here's how.
Work out what type of art you like
The best way to build an art collection is to focus on art you enjoy looking at. Visit art galleries and museums where you will be able to get a sense of the different styles of art and a vague knowledge of the various artists. Focusing your collection on items you enjoy will help you to build a coherent and structured portfolio.
Whilst most artwork increases in value, the opposite is also possible. Modern art is particularly susceptible to fluctuations in value, so work out the pros and cons of buying such work. To help you make informed choices, it is a good idea to study and research the artists and movements that particularly attract you, or take advice from an art expert.
Establish your budget
You will then need to establish the budget you have available for artwork purchases. Be aware too, that there may be other costs than just the artwork itself. You may also have to put aside money for taxes, shipping, framing and insurance. Establish how much money you can realistically afford to spend on art per year and stick to it.
Understand that art is a long-term investment, not something you buy one day and sell the next. Art takes time to appreciate and you may need to hold on to an item for upwards of 10 or 20 years before you can realize a decent return on your original investment.
Never buy a painting or artwork without having done your research. The most important fact to establish is an artwork's provenance, or where it has come from. If possible, obtain a list of ownership from the seller and written confirmation of any repairs or restoration carried out, when and by whom. Always look for a signature and check that the work has been verified by an art sector specialist.
Art fairs rather than auctions
For the beginner collector, art auctions are likely not only to be beyond your available budget, but also offering work that exceeds your knowledge and which may lead you to make a blunder buy. It is far better to begin by attending art fairs and independent galleries to see the kind of work available and the prices they are being pitched at. Do not be afraid of getting to know the people behind the scenes, such as the gallery director and staff, and asking intelligent questions about the artist. Such relationships could prove invaluable in helping you build your collection.
When investing in art, it is best to start small until you get a feel for the kind of art you are interested in, and acquire knowledge about how the art world works. Once you feel confident in your ability to buy, you will be able to build up an art collection that represents a sound financial investment.