Investing in Art | How to be an Inadvertent Investor
While you love art and understand its cultural value, wrapping your head around its financial value can represent a challenge. An asset class like no other, this is our guide to inadvertently investing in art.
The Right Art-itude
Art’s faces of value - emotional, cultural and economic - may seem in tension with one another. In reality however, they all interlink - the market looks to culture, which looks to the individual. How a viewer feels about an artwork translates into its cultural status, which in turn informs its investment potential.
With this in mind, the best advice for investing in art is to care about it. Buy art you love, share it with your friends and family and cultivate it in a considered, long lasting collection. This is how to inadvertently invest. Unlike stock traders, collectors live with their investments - so love them to watch them grow.
Unless you’re an art market expert (and even then, be wary) collecting with the sole goal of financial gain is risky. Sans crystal ball, predicting the next ‘art star’ or super trend is near impossible. Making smart, economically minded moves however, is not.
When searching for an artist to invest in, keep an eye on art prizes, exhibitions and the media. When face to face with a work of art, consider its physical condition and how well it represents the artist’s strengths. If ever in doubt, seek the counsel of your trusted Art Consultant.
Parting with Art
The other side of inadvertent investing, is parting with art. To bolster your return, keep the work in your collection for as long as possible, maintain its condition and retain any relevant documentation, such as Letters of Provenance, exhibition catalogues or Certificates of Authenticity.
In Australia, our Cultural Gifts Program can also offer an avenue for returns. If donated to a government-approved public institution, the market value of your work can be a tax deduction. Be aware though, terms and conditions apply.
Investing in art can go beyond the frame. You can for example, invest in art businesses such as galleries or dealerships which can either translate into works of art or a share in the business’s profits.
Another slick option, is to build a collecting collective or art fund. Corporate or personal, an art fund brings together individuals to invest in a portfolio of artwork. The pros of this approach are significant. Not only collaborative in nature (art, friends and wine anyone?), art funds can also connect you with more or more spectacular works of art. Before leaning in however, make sure you’re all on the same page.
Art is about more than money - and the inadvertent investor knows this. Keeping collectibility in mind however, is always advisable. By approaching custodianship with passion, patience and pragmatism, you will not only build a life-affirming collection, but make a reasonable investment. Money talk has never looked so good.