Good Art Investment Strategies

November 15, 2021

When most of us think of 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. But more recently, there has been a trend towards investing in artworks, including paintings and sculptures. This movement towards expanded investment in art shows no sign of slowing down.

In order to succeed in art investment, it is important to have a handful of reliable strategies designed to help you succeed. 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 investment remains sound for years to come.

Choose Your Artist

In decades past, the conventional wisdom was to focus solely on established artists, and preferably those who were deceased, in order to maximize value. The current social climate means that it is possible for artists to become incredibly popular seemingly overnight, and this means that there is some serious money to be made. In 2020, the global art market soared to 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.

With so much new talent emerging, investors can sometimes grab a piece at a lower price, only to see the value skyrocket over a very short period of time. This is where contacts and connections can come in handy; 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 come in handy, 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 as 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 to follow the same path.

Choose Your Category

It is 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 possible to become knowledgeable about a very specific part of the field.

This is where solid research will come in handy, particularly if you are new to the art world. Take the time to familiarise yourself with a range of artists, art styles, movements, and schools, and make sure that you have a strong general understanding of art history. Not only will this help you go into your investment with greater confidence, but it will also boost your understanding of what you like and don’t like, your own tastes and preferences, and the 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 not go 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, and make yourself known on the art scene. 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 take decisive action at just the right 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, you can build confidence in your decision making skills. 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, the chances are that you may pick a dud now and again, but as long as you never invest more than you can afford to lose – a golden rule with any kind of investment – this should not cause you too many issues.

Final Thoughts

Investing in art is a great opportunity to diversify your portfolio, expand the scope of your financial investments, and secure 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 into art investment 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.