A Strategic Approach to Art Investing

November 8, 2021

When most of us think about investments, our minds will automatically go to the stock market, and the complex mixture of stocks and shares which make up the majority of a traditional portfolio.

In recent years, however, there has been a trend towards investing in artwork, including paintings and sculptures. This movement shows no signs of slowing down.

In order to succeed in art investment, it is important to have a handful of solid, reliable strategies designed to set you up for success.

Recently, the art market has begun to draw more mainstream attention, and there has never been a better time to start. With options available for both veteran investors and those new to the business, here are some of the best strategies to ensure that your art investments remain sound for years to come.

Choose Your Artist

While once the advice was to focus solely on established artists, and preferably those who were deceased to maximize value, this is no longer the prevailing methodology.

The ubiquity of the internet and current social media climate has made it possible for artists to become incredibly popular overnight. This means that the value of pieces can change rapidly and sometimes unpredictably.

In 2020 the global art market soared to a market cap of over $50 billion, and while the global situation slowed growth in 2021, experts predict that the market is well on its way to a full recovery.

Part of this involves the emergence of new talent. This can be a great way to grab a piece at a lower price, only to see the value skyrocket over a short period of time.

Contacts and connections can come in handy here; if you are new to the art world, and still in the early stages of building your knowledge, then a good gallery owner, art auctioneer, or curator can be extremely useful, offering valuable insight into the next ‘big thing’ before it happens.

Moving at the right time can make all the difference in this market, so make sure you are in the center of the action before it happens.

Once you have an idea of the styles and pieces you enjoy, you can then look at other works by that artist, before broadening your search to look at their contemporaries. This will then unlock a range of similar styles and art pieces that you are likely to enjoy, especially if that artist is or was part of a particular artistic movement or school which spawned or inspired a myriad of other artists.

Choose Your Category

It’s a good idea to choose your favorite category of art, and stick to it with your investment options, rather than attempting to specialize in a range of different areas. Nobody can be an expert in all things, but it is very possible to become knowledgeable about a very specific area.

This is where plenty of solid research will come in handy, particularly if you are new to the art world. Take the time to familiarize yourself with a range of artists, art styles, movements, schools, and a general understanding of art history. Not only will this help you go into your investment with greater confidence, it will also boost your understanding of what you like and don’t like, your own tastes and preferences, and the type of art that really speaks to you. This is particularly important if you are planning to store the artwork in your own home until it is sold. The last thing that you want is something that does fit with your taste and style hanging in your home.

As part of this research, make sure that you are visiting galleries, exhibitions, auctions, and art fairs on a regular basis. The internet is also a wonderful resource, allowing you to study and explore a wide range of artworks, including paintings, sculptures, and prints.

Blogs, journal articles, virtual galleries, and databases are all useful ways to boost your knowledge and increase your understanding. You can even take an online class or, if you are super keen, ask a local college if you can audit some classes to boost your skills.

Look for pieces that capture your attention, and try to avoid falling into just following trends. Just because everyone else appears to be extolling the virtues of a particular artist does not mean that they are the best fit for you.

Understand The Market

As well as increasing your general knowledge of art, you should ensure that you have a good understanding of how the art market works. This is a fast-paced world, and in order to keep up and thrive, you need to have a good understanding of how the market evolves, changes and adapts – this will ensure that you are ready to make a change at the most opportune moment.

Part of this involves understanding that although art is generally a long-term investment, you should be open to the constant changes and fluctuations of the market – in some cases, a perfect opportunity may arise ahead of schedule, so you need to be prepared to move quickly.

It is also good preparation to get an idea of what you will get for your money – and contrary to popular belief, there really is something to suit every budget.

Demand remains consistent for lower-priced pieces, so it is useful to know how far your budget will stretch, and what the usual selling price is for pieces in your available budget, allowing you to estimate a potential return on your investment.

Trust Your Instincts

While it is important to do your research and preparation, there are some situations where trusting your instinct is the best option. As long as you have done your research and trust your own opinion and experience, then you can make a safe wager that you will make good choices the majority of the time.

Sometimes, having too many opinions around you can make you doubt yourself, so take your time, ask the questions you need to, and allow your gut to guide you.

As with any investment, you may end up picking a dud now and again, but as long as you never invest more than you can afford to lose – a golden rule in any investment – this should not cause you too many issues.

Final Thoughts

Investing in art is a great opportunity to diversify your portfolio, expand your financial investments, and make sure that you broaden your financial future.

Beyond this, art investment offers a unique opportunity to trade in physical items, and the chance to really enjoy and appreciate the works you bid on in a way that is not possible with traditional stocks and shares.

Many of those who end up investing in art find their way there through a love of the subject, and this allows you to enjoy the best of both worlds; you can appreciate beautiful and interesting objects, while still planning to make a profit in the future.

Even if you are not initially a fan of art, the chances are that you will discover a love of the subject through your investments. Developing an appreciation and affinity for art allows you to make the most of your investment; with a few exceptions, these tend to be long-term projects, and if you can enjoy your item, then the interim period is not wasted.

As long as you are willing to put the time and effort into researching not only the quirks of the art market, but the artists and artworks themselves, and are prepared to play the long game in terms of your return, then art investment could be an amazing opportunity to boost your portfolio.

Masterworks is a fintech company democratizing the art market. Our investors are able to fractionally invest in $1mn+ works of art by some of the world's most famous and sought-after artists.