December 15, 2020
Joe Fairless

Art Collecting

Do you enjoy pieces of art? Perhaps you want to use the benefits of your wealth building to purchase and hang up beautiful, historic paintings in your gorgeous home. You may also consider decorating your prime pieces of real estate with artistically crafted sculptures. Or maybe you do not have any interest in art from an aesthetic view, but you view it as a passive investing opportunity that you want to utilize. Regardless of the reason, purchasing art is a great way to use your wealth.

Art Experiences

One option for having a complete art-buying experience is taking part in art fairs. When you do this, you will have memories to go with the beautiful art that you decide to take home. One of the most popular art fairs is Art Basel, which takes place in Switzerland, and its counterparts in Hong Kong and Miami Beach, Fla. Since the first Art Basel in 1970, all three of these events have gained significant audiences of international art enthusiasts.

Another one to consider is the Frieze Art Fair. This newer event started in 2003 and is held on an annual basis in London, New York and Los Angeles. The one in the City of Angels is the newest; its inaugural edition was in February 2019 at Paramount Pictures Studios. Meanwhile, the one that was held in London in October 2019 attracted 125,000 visitors.

These art fairs are ultimately great experiences to have even if you decide that none of the artwork on hand fits what you are looking for artistically or as a passive investment opportunity. In fact, they all also attract art connoisseurs who simply enjoy taking in the art that is on display and have no interest in buying any of it.

Make sure to also research similar events taking place in your own community. Depending on where you live, there may be a thriving arts scene there that you had not even realized existed. And, as the common saying goes, “art is in the eye of the beholder,” meaning that you may discover pieces that really touch you in your own community without needing to fly to places like London, New York or Hong Kong to find artwork that fits your personality and interests.

Do keep in mind the varied types of art that exist. When many think of the term, “art collecting,” the accumulation of paintings by Picasso or sculptures by Michelangelo comes to mind for many, but that is a narrow view. Many today are also interested in other types of art, such as graffiti art. Meanwhile, an example of a highly coveted non-traditional piece of art is Kaws’ painting of “The Simpsons” that had the look of the “Sgt. Pepper’s Lonely Hearts Club Band” album cover. It went for $15 million in 2019.

Also consider that collecting art does not necessarily mean that you need to have physical pieces of art that you are bringing home. You could simply collect artistic experiences. Use some of the generational wealth that you were fortunate enough to receive to do things such as enjoy a box view of a prestigious opera or buy prime tickets to a production such as “Hamilton” for $1,000+ dollars apiece.

The best reason to focus on art collecting from an experience standpoint is because an increasing number of people are valuing experiences over things. Think back to your childhood. The memories that you likely most treasure from that time in your life were the experiences that you had, not any sorts of things that you may have accumulated. The same is true in adulthood. Of course, the experience of going to art exhibits and discussing art with others fits that mold as well, particularly if that also involves traveling to those events.

Online Art Purchases

The purchasing of art online has received increased interest as of late, and many of the aforementioned arts events that have historically welcomed so many physical visitors to their gatherings have started making the move to offering online options for purchasers as well. The more prestigious ones have ensured that multimillion-dollar transactions can be done online safely and securely. They also make sure that the entire experience, including perusing which pieces of art that you are considering, is a seamless one. Many of them have embraced those new to art collecting and make it an enjoyable experience for them as well.

Art as Investing

One way to engage in wealth building is by investing in art. However, it is viewed by many as a risky investment, so it may be better to only go down this route if it is also something that you love as combining the two – investing and love of the arts – is probably the best way to use art as a wealth-building mechanism.

If you do decide to focus on art solely as an investment opportunity, make sure to do your research while concurrently being prepared for it to not be a smooth or predictable path towards greater financial success. This is a passive investment opportunity in that you are not apt to buy and sell in significant numbers, but it is not one in that it may not be the best way for you to maximize returns. But if you are interested, websites such as Artnet, Sotheby’s and Magnus will help.

You can research the art world in a number of ways. This can include regularly visiting local galleries and ones in other cities and countries while you are traveling and talking with curators and other experts there to increase your knowledge of art and of what types of pieces are valuable. Also visit the art fairs mentioned earlier as well as special events such as gallery openings.

However, with that said, this can be a passive investing strategy that results in significant gains. One of the best examples of this is buying art from an up-and-coming artist and then seeing the value of that artwork skyrocket. In this sense, this is no different than stock traders getting in on the ground floor of a company that ends up achieving tremendous success.

Regardless, be prepared for it to normally take 10+ years for art investment to provide significant dividends. This is one of the reasons why this could be a great way for you to pass on generational wealth to your loved ones.

One other thing to keep in mind is that the value of art tends to not closely correlate with how the stock market is doing. As a result, art investment can be a great way for you to diversify.

You could also view art investment as a way to increase the value of your real estate, by providing it with valuable pieces of artwork. In those cases, your art-focused investment could end up more immediately paying off by increasing the value of your real estate a significant amount prior to you selling it.

If you are going to focus on the purchasing of art for economic reasons, make sure to also take into account all of the possible associated costs, such as how much it will cost to store and maintain it, which can involve monitoring things such as how much light and humidity it experiences.

Also consider taking part in buying shares of expensive pieces of art, which can be done through an online marketplace. A couple of investment platforms to consider that will help with this include Maecenas and Masterworks, but note that Masterworks is only available to those outside of the United States.

Types of Art

Art tends to be one of three types.

Originals are one-of-a-kind pieces of artwork. These are usually worth the most. Prints are copies of originals. They provide a great way for you to have a beautiful piece of art for not a lot of money, but they are, for the most part, poor investment opportunities. Of course, it depends as rare prints can command a considerable dollar amount. Lastly, reproductions are similar to prints, but this term refers to copies that have been mass-produced. They are much more affordable but unlikely to earn you a profit.

Is Art Collecting for You?

One of the best ways that you can use the wealth that you have accumulated is to engage in your passions. If art is one of them, this could be a perfect match for you, the same as if you were a sports enthusiast who wanted to use your wealth to enjoy those types of events or invest in sports-related organizations.

Note that you can also use your interest in art to focus on supporting artists who you enjoy. Of course, you may even be able to earn some income if the artwork that you purchase increases in value and you do not mind parting with it. Regardless, art can provide you with unique investment opportunities.

Is art collecting for you? It depends, but it is something that you should consider.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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