Things to Know before You Start Investing in Art

27 February 2021

Things to Know before You Start Investing in Art

The Wall Street Journal declared art to be the best investment class in 2018, outpacing all other categories. Blue-chip artworks posted an average gain of 10.6%. According to the Mei Moses Art Index, contemporary art from established artists between 1966 and 2016 averaged an annual return of 10.85%.

It turned out that the price of art does not necessarily rise or fall with the development of the stock market but follows rules of its own. Therefore, art offers a unique way to diversify a wider investment portfolio with the recommended share between 10 - 20%. Fine art is a long-term investment, usually taking ten years or more to produce any form of monetary gain. Many investors acquire works of art to contribute to future generations.

The advantage of art is that unlike graphs and tables, you can enjoy it and perhaps form a personal and emotional connection with it. So, even if you happen to make a false step, you will still have a beautiful piece of art hanging on the wall of your home.

Artists can be divided into three categories according to the level of possible investment risk. The first group consists of emerging artists, who are in the early stages of their career or finally gaining attention after years of hard work. Their artworks typically represent the lowest price point and the most potential for appreciation, but this is difficult to predict. It is important to look at the artists´ development so far, whether they have already had any exhibitions or won any awards, and to be interested in what the artists´ future trajectory will be in terms of their artwork. It is wise to invest in artists before their first museum show, or before they sign a deal with a major brand that will help to boost the value of their works.

Established artists are those who have already gained recognition on a regional or national level. The financial return is lower in this case, but these artworks maintain their value in the passage of time. The third and final category consists of first-class or so called blue-chip artists, who are well-known internationally. The price of their work is already high as they have built themselves a stable market but shall guarantee you a solid annual return. With this category you need to be careful about art forgeries.

Paintings continue to remain the most common works of art to invest in. However, works on paper are beginning to gradually increase in popularity, especially limited editions of art prints signed by the artists. These prints are also a very affordable way to buy an original work. Our motto at EDUART EXPERIENCE is that anyone can start collecting art, regardless of the budget.

In case you have already invested in art and have been considering other types of investment, we have a special offer for you from our partner Fondee. Use the code FONDEE4EDUART to try this digital investment platform for free for three months.