What The Rich Must Know About Investing In Art

Quite often, you would hear about rich people attending, establishing art galleries, and/or purchasing artworks. They will participate in charity events for museums and galleries such as the Metropolitan Museum of Art (MET). There could be several reasons, whether from the point of view of public relations or investment, and we will stick to the investment aspect today. You may or may not know, but art has become a charming investment avenue for the rich. Too much buzz has already been created with recent incidents of high-profile auctions and purchases in the fine art market. After all, like equities, the value of artwork is generally appreciated.

Of course, one cannot invest in any art. You have to do a lot of thinking, research immensely, and consider the potential returns before you do anything else. An informed decision can only be made if and when you take into account certain inevitable factors that determine the future of your art investment.

 A handful of those factors are discussed below. Keep these in mind, and perhaps you should be able to decide whether art investment is your thing. 

There are no instant returns on art investment

Unless you have the money and the right degree of patience, you should not invest in art. Art is a liquid asset, and it takes a while before its value is significantly appreciated. Yes, it comes with very little risk, but that doesn’t mean that the returns on your investment will come in a swing of a magic wand. You have to be really patient with your investment; it can take as much as a decade before you see any worthwhile returns. Also, this means that you will have to expend your money on keeping and maintaining the artwork, or else it will depreciate. 

Consult with an experienced curator

You cannot jump on the bandwagon without research. All kinds of artwork exist, but only some of them have the potential to profit immensely in the future. Artworks are not mere reflections of creativity; they embody themes, vision, impact, and relevance that help in deciding their value, intrinsic and materialistic. It is, therefore, advised that you consult with curators. Talk to as many curators as you can to be able to form a well-rounded opinion on whether or not to put your money on something. Only after having gained sufficient information should you occupy a seat in one of those art sales. 

The potential of the artwork needs to be assessed thoroughly

While implicit in the previous point, I would like to elaborate on what you should see in an artwork. The intrinsic value of artwork goes a long way to deciding the worth of the artwork. You may like some art, but you should not invest in it just because it is visually appealing from a conventional, first-impression perspective. You understand who made it, why, and how it was made. The underlying meaning in artworks plays a key role in giving a sense of drama and essence to these creations. A portrait of a wall painting now characterized as an act of vandalism may be celebrated as an act of political activism. Aside from money, you must be armed with foresight. 

NFTs are less daunting but may not have inherent artistic value

NFTs, or Non-Fungible Tokens, are a rage now. It is said to be an alternative for purchasing digital artwork and operates through blockchain technology. These are unique digital artworks because these NFTs come with unique digital signatures providing much-needed protection. Yet, when it comes to artistic appeal, not much has been gained. The NFT space is very volatile; a picture of a trash can ends up selling for millions. Yet, there is potential that is being explored by art galleries and museums. You may want to invest in NFTs, but the volatility will be a real problem because it will be very hard to measure the authentic value of the artwork. If you end up buying an artwork that truly is valueless, then your money would have been spent for nothing. 

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