Fine art value appreciation
Is fine art a sound investment?
Unlike stocks, there is little chance that art will depreciate in value. Because art has no correlation to the stock market, the appreciation of art will increase regardless of market activity, making it a safe way to diversify a portfolio. Furthermore, art is a unique asset because it also has aesthetic value.
If you are a first-time investor, or more comfortable buying and selling stocks than art, then knowing which artists are worth investing in can be overwhelming. Working with a fine art consultant can alleviate some of that stress. The right art consultant has an innate understanding of the art world and the kind of works that engage you, and can help you find a fitting investment.
Understanding the art market
Before becoming involved in the art market, it’s important to know what to purchase. For first-time art investors, trying to predict emerging trends is challenging. X percent of the global economy is attributed to the art market, therefore, understanding the art market is key.
You can begin by developing a broad understanding of the history of art. But more importantly, you should visit museums and galleries and identify which pieces you engage with most. Next, do your research on the art market. Familiarize yourself with reputable galleries and auction houses, and their quarterly sales.
Consider art indices, such as Art Market Research, Sotheby’s Mei Moses and UBS Art Market Report, which can help create a more holistic picture of the market. Art indices have been traditionally restricted by the lack of sales data available. By relying instead on data only from the auction market they have excluded the global art market, private galleries, and dealer sales. But recent improvements in data science have made art indices more reliable for understanding art market trends.
Finally, set a price point. How much are you prepared to spend? What is the value of fine art worth to you?
Long term gains
Fine art can be a promising investment, but, like any other investment, there is risk to consider. On one hand, the market is illiquid. On the other hand, art is not correlated to other traditional markets, and is a potential inflation hedge. Art also performs financially well long-term, as fine art value appreciation increases with time.
Despite the risk, art as an investment is a good option for those looking to diversify their portfolios in a market poised for growth. Furthermore, there is an endless reserve of artists to choose from.
If you’re thinking about investing in art, Heather James Fine Art Consultants can help you combine your passion for art with smart investment strategies. Call us today.
