Many investors diversify their portfolios with contemporary art. Unlike stocks and bonds, you can experience art as it grows in value. Art can be seen, touched, and felt. Your investment can entertain guests, be a conversation piece, and enhance the look of your home or office. As with any investment, both positive and negative aspects exist for trusting in art.

 

Advantages

Discovery

Most art collectors don’t start out with the ambition to invest in art to further their financial future. They find a piece they love and then want to accumulate more. An advantage over stocks, bonds, and other financial investments is that you can enjoy the process of purchasing art. First, you must discover the style you like. You can scout out graduate degree shows for the next big artist. Here you might find the next Picasso and pick up one of his first works for a steal. Then install it on your wall, and your investment begins to grow. Collectors suggest investing with your eyes. If you like something, chances are someone else will like it also. Once you are ready to part with the piece, you can get it appraised and place it for sale. When starting out, you might want to limit your financial outlay. As your knowledge of art grows, you can invest more capital.

 

Sizeable Returns

The largest sale on a single piece of art was $450 million! While this large of a sale is unusual, it shows the potential that art has to increase in value. Globally, sales average $63.7 billion, and art has an average annual return of 8.9%. Art has been proven to rise in value along with the same rate as stocks. People love contemporary art, and the audience for it is steadily growing. As the number of potential buyers increases, the value of art escalates considerably. Art auctions place these buyers in a bidding war against one another, and the owner of the art comes out as a winner! In order to capitalize on market growth, look for an artist who might be undervalued. Sometimes, this happens to diverse artists, as well as new ones. When you go to an art gallery, pay attention to who the artist is. Is it a woman or someone of non-Caucasian descent? Unfortunately, these artists are often undervalued. However, by purchasing their art, you bring attention to their work and can help change this discrepancy.

 

Visual Investment

People would think it strange if you framed your bond certificates. However, art is an investment that exists to be displayed! As you look for pieces, think about the feel of your home and what type of art would complement it. A large amount of contemporary art is available for purchase, in a variety of styles and subjects. Choose art that appeals to you and the vision you have for your home. Even if you don’t sell, you’re investing for future generations. Twenty-five percent of art collectors view their collection as priceless. If you love your art, you may choose not to have it appraised or look to sale it. However, there usually comes the point where the market values the painting or other work more than you do. Then you know it’s time to sell! Having frequent appraisals will allow you to know when this moment happens and take full advantage. Once you sell one piece, you can invest in a more well-known or larger piece.

 

Available Help

When you begin purchasing Vancouver contemporary art, you might feel overwhelmed. There are many artists, options, and price levels. How do you know where to start? Art professionals are one place. Every art gallery employs one or more professional art buyers. They will help you make purchases for a fee. They are a useful source of information if you see a painting or other work in their gallery that you enjoy. However, where do you turn if you are at an art fair or independent display? The Internet has a wealth of information! Do your homework before purchasing. You’ll want to research the artist. Look for information on their latest and past sales and which museums or galleries feature their works. Try to find artists with momentum. These artists are on the rise, and their works will probably become more valuable. Some signs of momentum are world-wide gallery support, acknowledgments and awards, museum retrospectives, and broad institutional support.

 

Disadvantages

Illiquid Assets

Art is considered an illiquid asset, meaning it cannot be quickly sold or exchanged for cash like other options. For this reason, you do not want to invest all of your capital in art. Once you realize you need to sell, it may take years to get what the painting is worth. You could always sell at a loss, but this option does not make financial sense. For investors looking at a long-term plan; however, art is an excellent investment. Still, make sure you have significant liquid assets to tap into if needed. You may hold onto a piece of art for years before it gains substantial value. If you buy art you love and use it to decorate your home; this disadvantage will not affect you. As with any type of investing, you can expect inevitable gains and losses in the process of buying and selling art.

 

New Market

Contemporary art is a relatively new market. As such, it is unregulated in contrast with the best provincial online casinos. With virtually no rules, new partakers should be cautious and find a trusted advisor to help them avoid common pitfalls. Art galleries will buy and sell pieces for you. This service allows you peace of mind. You know you are obtaining a legitimate piece of art, but it comes with a price. Galleries often charge 25% commission or more per piece! If you choose not to use an art gallery, every work you choose to buy should first be inspected by a reputable third party. Find someone who can verify that the piece is an original, not a fake or forgery. Both of these types of deception are common in the art world. In this new market, there are different levels to join in based on the art value. Most pieces fall somewhere between 1 to 5 million dollars. However, some pieces sell in the 100 to 200 million dollar range.

Investing in contemporary art can become a hobby that pays in great dividends. Art is a good illiquid investment that increases at the same rate as stocks and has a large market. When beginning, you should find a knowledgeable person you can trust, maybe another collector, to ask basic questions and keep you from making common mistakes.