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06 June 2023 12h15
Source: Banco Carregosa

Investing in art: 7 practical tips

Investing in art: 7 practical tips

 

Investing in art can be financially rewarding as well as provide emotional and artistic value. Find out how.  

 

The art market has attracted high net worth investors looking to diversify their investments and acquire assets with aesthetic, emotional and financial value. Contemporary art, for example, has outperformed the S&P500 index by around 14% over the last few decades. Is it time to invest in art, given its history of stable performance and low correlation to other assets?

 


 

Source: caia.org


As with any investment, there are always risks that need to be considered. However, with the right due diligence it is possible to make good choices. Before you take the first step, follow these 7 tips for investing in art. 

 


1. Define what you are looking for

 

Before investing in art, it is important to define your priorities from among the many options available in terms of styles, movements, artists and works of art. It is important to understand the context and relevance of the works of art you are considering investing in, as each has unique characteristics that can have a significant impact on the value of the work.

 

COUNTRIES WITH THE HIGHEST SALES OF REGISTERED WORKS OF ART 

 

 

Source: artprice

 

It is also important to study the sales history and prices achieved by the artists and their peers, as well as their reputation in the marketplace. Auction house and gallery sales histories are essential sources of information for understanding the market value of a particular artist's work. Part of this research includes monitoring trends, as the art market is constantly evolving. This allows you to identify promising investment opportunities.

 

 

2. Make the most of each and every visit to exhibitions and art fairs 

 

Make the most of visits to museums, galleries, art fairs or auction houses to broaden your knowledge, discover new artists and learn about different types of work. For investors who already have a more critical view of works of art and can therefore identify when a particular artist is likely to be valued, emerging artists are a good option. 

 

Don't miss the opportunity to expand your network of contacts in the art world, both with professionals and with other galleries. A good way to deepen your knowledge of the market and current trends is to sign up for educational programmes, lectures and debates. 

 


3. Define the amount to invest and consider all the costs

 

Determine how much you are willing to invest, taking into account your current financial situation, goals, time horizon and risk tolerance. This assessment will be an important guide to your subsequent decisions. The art market can be volatile, prices vary widely and returns are not guaranteed.

 

Take into account market prices to get a realistic idea of what to expect in terms of cost and value. There may be additional costs such as gallery commissions, auction fees, transport costs, and insurance and storage costs. Even after you have settled on a value, you should review it regularly and make any necessary adjustments. 

 


4. Talk to art experts

 

Art experts and advisors can provide valuable guidance on the market and the works of art that have piqued your interest. Experts can provide valuable insight and help you make more informed decisions. 

 

For example, curators have extensive experience in selecting and organising exhibitions and can therefore offer a unique perspective on the artistic and historical value of some works of art. They can also advise on the authenticity, value and provenance of works of art by providing impartial valuations and strategic advice. However, it is important to look for reliable professionals with a good reputation and proven experience.

 

 

5. Diversify your portfolio

 

When investing in art, diversify your collection with works by different artists, styles and periods. As with any investment, diversifying is key to reducing the risk associated with market fluctuations and maximising opportunities. 

 

This means not putting all the money into one artist or art movement. In this way, a potential loss can be offset by other assets. Diversifying is also about balancing your investment with a variety of asset classes – not just art – such as shares, real estate and other financial investments.

 


6. Consider the investment period

 

It is important to remember that art may have a longer investment horizon than other more liquid financial assets such as shares or funds. While some works may appreciate quickly, others may take years or decades to reach their potential and generate good returns. 

 

Moreover, like other financial markets, the art market has its own boom/bust cycles. Taking a long-term view will help to mitigate temporary fluctuations. So be prepared to wait for works of art to appreciate and remain realistic about how much to expect. 

 


7. Seek professional advice

 

It is important to note that investing in art, like any other investment, involves risk. Professionals specialising in this type of investment have a solid and deep understanding of the art market and are essential to the balance of an investment portfolio. You should therefore seek the advice of a specialist art investment advisor to help you make informed decisions, minimise risk, access exclusive opportunities and receive personalised guidance according to your financial goals and risk profile. 

 


Invest in art with the advice and support of Banco Carregosa

 

With the help of Banco Carregosa’s team of experienced professionals, you can benefit from the highest level of advice and supervision in the design of art investment solutions that match your risk profile and return objectives. This enables you to make the most appropriate decisions to protect and increase the value of your investment. Contact us