Considering Investing in Fine Art? Some Things You Should Know….

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invest in art

SHOULD I INVEST IN ART?

Unlike collectors of the past who bought what they liked, art buyers today increasingly consider financial gain in their decision making. The rapid rise in art prices has changed virtually every aspect of collecting. Financial advisors are now focusing on art as an integral part of their client’s portfolios. In fact, a recent survey done by Deloitte Luxembourg & ArtTactic shows that 78% of wealth managers now believe that art and collectibles should be a facet of their wealth management offering. Wealth managers and investors now, more than ever, see art as a way for investors to lower the volatility and often erratic performance of their investments. Many wealth managers see art as having a low correlation to stocks and other investments, which is not always true, and as a way to diversify investment holdings.

Another recent survey found that 73% of wealth managers surveyed, expected their clients to want to include art and collectibles as part of their overall wealth reporting. This statistic is up from 22% in 2011. This clearly indicates that many wealthy individuals and families are buying, or have already bought, a substantial amount of art. Additionally, 79% of wealth managers said they are now offering advice in the area of art and estate planning.

REASONS TO INVEST IN ART:

Besides having monetary value, art adds aesthetic pleasure and beauty to our surroundings. It is also a mode of self-expression and symbolism that represents the collector’s views and beliefs. Art can also provide its owners with intellectual benefits, social capital, and cultural status. In my opinion, one should invest in art to get enjoyment and derive pleasure from it.

  • Art adds aesthetic pleasure and beauty to our surroundings.
  • Art is a mode of self-expression and symbolism that represents our views and beliefs.
  • Art often provides its owners with intellectual benefits, social capital and cultural status.
  • Buying investment quality art adds diversification to a financial portfolio and helps to lower a portfolio’s volatility.
  • Art can be an integral part of an estate plan and an efficient and gratifying way to pass wealth to heirs and philanthropic causes.
  • Purchased properly, art can be a very good long-term investment.
  • Art is an excellent store of value that can help build wealth.
  • Unlike other investments (like real estate, cars, and yachts), art has minimal carrying costs. Often appreciates or maintains its value.

COMMON MISTAKES MADE BY COLLECTORS:

  • Overpaying.
  • Buying works with title/ownership issues.
  • Buying forgeries.
  • Failing to get objective professional advice. Lack of due diligence.
  • Buying works without knowledge of extensive restoration.
  • Buying art which has poor resale value and little chance of appreciating.
  • Buying works without proper authentication documentation, without which they can be later deemed a forgery and difficult to sell.
  • Selling art in the wrong venue and paying exorbitant fees.
  • Lack of diversification (i.e., purchasing too much of one artist or genre).

WHAT IS THE BEST WAY TO PURCHASE ART?

Finding a knowledgeable and trustworthy advisor is crucial. Your advisor should have consistent access to the most exceptional artwork available on the market, and ensure you are getting them at the best price possible. A good advisor is transparent,

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Principles of Art Investing

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