An Insight into the world of Art Investment

An Insight into the world of Art Investment
If you are looking for an alternative non-liquid investment form to add to your investment portfolio you should consider art investment. You can hang art on your walls, enjoy it for as long as you like, without needing to declare it to the government, giving it an advantage over stocks and bonds. As an art investor, you will be purchasing historically popular painting and letting their value increase over time, generally at rates of 5-10% increase in profit every year, and sell it once the market is ready. This is different from art collecting, in which people buy art to decorate their homes and do not sell it unless absolutely necessary. It is also different from art speculation, in which people buy art from artist at the start of their careers at low prices and wish to sell it later on when the pieces have increased in value.
How to Prepare
You should educate yourself in art to be able to understand the niche market of art investment. You also need contacts for sound investment advice – gallerists, dealers, auctioneers etc. Keep in mind that art investment should comprise a small portion of your investments only, and settle on how much you are willing to spend before you go hunting for pieces.
The Buying Process
You need to study the art market to check what kind of art is selling well and what isn’t. It is difficult to predict future trends, but you can find out what kind of art keeps its value and is at lower risk than the more volatile kind. Fine art is generally a better investment than decorative art. Deal only with trusted dealers and auction houses, and don’t hesitate to walk away in case the price exceeds your range. If you are new to this world, get as much information as possible before buying anything. Ask fine auction houses for advice on secret buyers, inflation and other basics.
Don’t buy a piece unless you are confident that it is worth the price and will increase in value. Also make sure you insure and catalogue your purchase. Remember that if you want your investment to yield any kind of return, you need to store it properly, at low humidity. Consult with an art collector as to how you should care for the painting, and make your children aware of it as well if the piece is to be passed on as an inheritance, or the painting might get completely ruined.
The Selling Process
Get your investments appraised once in a while to find out how they are maturing, so you know when the desired profit margin is reached. Appraisers can keep you updated on how different kinds of art are faring in the market. Also keep in mind that you cannot rush with selling art investments, you will have to wait for the right time and buyer.
While your investment is maturing, you can rent it out to institutions which rent fine art – hotels, banks etc – and make a considerable amount of money. But ensure that insurance is provided by the renter against loss or damage.

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