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How to Add Art to Your Investment Portfolio

In 2019, Jeff Koonss stainless steel “Rabbit” sculpture was sold for $91.1 million, breaking the record for most expensive work sold by a living artist.

Investing in art isn’t anything new. Timeless pieces of work are around the world for generation after generation. To this day, people continue to auction off these artifacts for hundreds of thousands, and even deep into the millions of dollars.

Art is one of the few tangible things that has stood the test of time. Many pieces from famous ancient artists — Leonardo da Vinci being an excellent example — continue to grow in value year after year. Two years ago the 600-year-old painting “Salvator Mundi” by Leonardo da Vinci sold for $450 million.

Although not every painting will sell for $450 million, many will sell for $1 million to $5 million. Those numbers give the illusion that investing in art is only for the rich and famous. That may have been true years ago, but in today’s world, art investment is something that anyone can, and should consider.

You can invest in art through companies like MasterWorks. They’ve changed the playing field for how people can invest in art. Instead of outright buying something, you can now purchase shares of a masterpiece like you would for a public company.

If you’re thinking that it’s time to add art to your investment portfolio then you’ll want to spend some time researching and asking questions before making a final decision, just like you would for any other investment opportunity.

Look for Momentum

What’s the best way to get a good return on your investment? Finding a piece that has a low price, but has evidence of increasing relatively quickly. In other words, the investment shows momentum.

Your first step is to begin researching by reading, looking around, and visiting museums. Sift through all the artwork to find the one that shows potential for increasing in value. That will be something worth investing in.

Researchers expect the art industry to increase to $2.7 trillion in value in the next seven years.

Look for the Undervalued

The difficult thing with art is that what one person likes, someone else may not enjoy it as much. Art is personable and is often left to interpretation. That means that you could have a piece that may seem worth investing in, yet no one else feels the same way. On the other hand, you could have a piece that everyone is ignoring but is, in fact, the next big investment.

While looking for undervalued artwork look for diverse artists; they’re usually up-and-coming artists who catch people off guard.

Develop a Plan

All investments should have a plan, and a reason behind it, and art investing is no different. Creating both a short-term and long-term plan allows you to stay on track and avoid making any emotional decisions. When we let our emotions get in the way while investing, we often make a decision as a reaction rather than from reason.

Your plan should have research on every investment you consider. It should answer the questions as to why you want to invest in this particular piece, what the outlook is of it, and what’s your goal behind this investment?

Art is More Than Paintings

We often forget that when we’re speaking about art, that doesn’t mean it’s only paintings. Art includes many avenues besides canvas, like sculpting and drawing. A famous artist may have a painting that goes for millions of dollars, but could have a drawing that is a fraction of the price.

Ensure Authenticity

If you haven’t already, at some point, you’ll likely come across a common issue in the art world: authenticity. You could find a crazy deal on a beautiful piece of artwork, only to later find out that it’s a replica and isn’t the real deal.

If you’re offered a deal that seems too good to be true, be cautious about taking it. That could mean two things: the artwork is a fake, or the value is expected to drop. Your art investment plan will help you avoid investing in a piece that will lose you money in the end.

Photo Credit: Christie’s

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