Tired of falling for Crypto scams? Losing your shirt in the stock market crash? Well, polish your monocle because today’s article is all about how you can invest in art.
Buying art has many perks. It looks nice (I bought my first painting at 18, a time when most guys still hang Scarface posters on their walls). It’s more affordable than you’d think. And, it provides a real tangible asset (unlike stocks or BitCoin).
Plus, if you’re lucky, you can buy a piece from some unknown artist who later hits it big.
Case in point, my parents bought this Keith Haring for $500:
When they had it appraised in 2003, it grew 6,000% in value. That’s strong, solid growth. Especially compared to the flaccid, unsatisfying [note: finish boner joke before publication] returns of the 2018 stock market.
Between this, buying a new paint set, and wanting to pick up some wall pieces, I’ve had art on the brain.
And to help make today’s article as accurate as possible, I’ve asked some friends and family for art investment advice (if anything is incorrect, yell at them). Anyway, here are five key tips.
1. Do Your Homework
Every few years you’ll see a story about rich people getting duped into buying what they thought was “fine art.”
These folks shell out big bucks, only to find out they’re the victim of an art hoax. Accidentally buying something made by grade school children, or purchasing Ikea paintings under the belief that they’re rare designs.
Fun stories to laugh about, but not a mistake you want to make.
You need to research what you’re buying, who the artist is, and how much their work usually sells for.
This protects you from overpaying for “Cruise ship art.” Paintings which are somewhat expensive at the gallery, but have little to no resale value.
Don’t pay $1,800 for a $100 lithograph.
2. Rarity Drives The Price
This should be obvious, but many people completely overlook this. The less of something, the more it is worth.
This is economics 101 and it’s true whether you’re buying stocks (Warren Buffet calls it a “moat”) or starting to invest in art.
Old comic books have value because they’re rare. Honus Wagner baseball cards are worth millions, because there aren’t many of them. And the same principles apply to art.
If you buy something that’s mass-produced and sold at 50,000 malls, it’s never going up in resale price.
Buying something original is your best option. However, it’s not the only one. In fact, you can actually buy limited edition print copies of a work, and they’ll still increase in value.
Allow me to explain.
3. When Buying Prints, Aim For The Earliest And Most Limited Ones
While original works are always the most valuable, prints can make for good investments too.
My parents’ Keith Haring is a first-run printing. Despite being a “copy,” it’s still risen quite a bit in value. As such, there’s nothing wrong with buying a print.
However, you want to invest in the earliest printing possible.
If there’s a run of 100 prints, number 27 is often worth considerably more than number 99.
Additionally, the run size itself can factor into a piece’s worth. Printings of 200 or more are sometimes called “multiplies” and they’re often worth far less than a more limited set of works.
Lastly, you want to buy printings from a first edition run. Later editions, especially posthumous ones, are often worthless.
Also, quick side note, don’t join that stupid art shares program where you trade fractions of a painting on some brokerage app. While I wouldn’t call this a scam, I don’t think it’s a particularly realistic way to make money.
If you want to invest in art, physically buy it.
4. Attend Student Art Exhibits If You’re Speculating
Buying from an up-and-comer is like purchasing penny stocks or betting the long-shot.
You might not get anything valuable, or you might hit the jackpot and earn a massive return on investment. It’s a gamble.
To quote Charles Saatchi:
Lots of ambitious work by young artists ends up in a dumpster after its warehouse debut. So an unknown artist’s big glass vitrine holding a rotting cow’s head covered by maggots and swarms of buzzing flies may be pretty unsellable. Until the artist becomes a star. Then he can sell anything he touches.
In other words, student art offers some of the biggest risks and largest rewards.
If you want to invest in art like this, here are some additional factors to consider:
- Does the artist have a prominent mentor? – Being promoted or endorsed by others is always a good sign.
- Are you looking at something unique? – Not really quantifiable, but is the piece you’re looking at aesthetically pleasing. Is there something about it you’re drawn to?
- Do you want to take a risk? – Many famous artists weren’t well liked in their time. As such, their work was inexpensive. Buying an Andy Warhol in 1960 would be like buying $10 Amazon stock in the early 90’s. It’s cheap because most people aren’t expecting much from it.
If you’re looking to gamble, art speculation is worth a look.
5. The Most Important Rule: Buy Something You Like!
Most fine art is never resold. Likewise, many pieces never appreciate in value. For every $100 painting reappraised at $100 million, there are dozens of other works whose value flat-lines.
Because of this, you might as well buy something you like.
If it looks good on your wall, great. And if it skyrockets in price, even better. Buying from new or obscure artists is a game of speculation.
But, unlike penny stocks or alt coins, you at least have something tangible to enjoy.
So you might as well invest in a piece you’re drawn too.
Final Thoughts On How To Invest In Art
If you’re going to decorate a home or apartment, you might as well do it with quality art.
At worst, it’s going to look nice and spark conversations. And at best, it’ll skyrocket in value. Causing everyone to think you’re a savvy connoisseur.