Investing in Fine Arts – Can it Pay Off?

Investment into arts is not something new or particularly exciting, yet it is a way of making profit. Not too many people, however, dive into the murky waters of art investments, and for a couple of good reasons.

You might not get your money’s worth, or you may make a wrong purchase and fail to capitalize, ending up with a strict loss of money. Can you make money by investing into fine arts? Yes, you can, but with some caveats.

The Value of Art Changes with the Times

A painting can be worth a lot at a given time, if a certain artist is favorable among the dealers and world of art, in general. It can also, lose value if the artist falls out of grace or is simply not well-known enough for the painting to have any real financial value. Unless you have precognitive abilities or have inside information into which artist is going to be a bit more popular, you will have to result to riskier investments or hope that you get your hands on a piece from an already popular artist, with the idea of reselling it at a higher price.

Purchasing is much, much easier than selling art. It is quite similar in that regard to cars, which can lose value tremendously fast, while some can keep it for a long time, like Toyota Land Cruisers, a direct comparison to da Vinci’s works, for example.

Apart from the Top Artists, All Other Artworks are Risky Investments

Art is a very illiquid investment, so unless you have a basement full of Caravaggio’s paintings, you are unlikely to be able to make a profit that easily. The top names will sell easily, but there are only so many top names and they come with a very large price. The other names, even though they might have been popular for some time, will come with a much lower price, and even worse, people will be much less interested in them.

Risk Measurement is Next to Impossible in Art Investment

Compared to the stock market which uses some measurable indexes like Nikkei 225 or the DAX PERFORMANCE INDEX, or the S&P 500 index, art investment is nor measurable and you cannot properly account for all changes and variations a price can have. This means that you cannot really plan a long-term investment, and you are basically playing roulette instead of poker, hoping for the ball to stop in the right slot.

If you want to invest money in art, it is worth knowing what you are getting into. It can pay out, tremendously, yet you need a lot of capital and sometimes, more often than not, a lot of luck.

 

Leave a Reply

Your email address will not be published. Required fields are marked *