Investors can be tempted to invest in art because of its potential to increase in values. But even if art is a lucrative investment, there are costs associated with it and many risks involved. In order to reap the maximum benefits from art investing, here are some helpful tips to take into account:
Think of Art as another Commodity
Art is an illiquid and unregulated asset. Because of these limitations, investors must take care of the needs of their liquid assets first before they purchase art and develop a cash cushion which they may need during a tough market condition. Also, since there are many risks involved in art investing, they will need advice from experts such as those from Artrium Foundation.
Pay Attention to Supply and Demand
The problems associated with supply and demand have continued to strengthen the dominance of modern art at many auctions. As an investor, you also have to know that some art categories are getting scarcer, which is reflected in their prices. The market has seen the diminishing supply of impression and contemporary masterpieces since a lot of them are already owned by certain organizations.
Always Ask Questions
Before buying art, ensure you have a full understanding of what you are getting. Be aware of the problems which could impact its value. Make sure you ask about condition since this has an effect on the price.
Do your Due Diligence
In order to succeed in art investing, you have to be as informed as possible and consider hiring professionals if you are not confident with your current knowledge and experience. A great appraiser could tell you in case there could be a condition problem.
Moreover, understand the unique cost associated with owning a piece of art which include appraisals, maintenance, insurance, storage and gallery fees. There are many risks involved in art which impact its physical condition and in order to maintain its value, it is necessary to keep it in its pristine condition. Unlike bonds and stocks, you cannot put art in a bank safe.
Protect your Investment
Insuring works of art is affordable and investing in insurance for your collection is a must. If you are serious about investing in art, look for a company which specializes in the particular kind of art you collect. Work with a company which can help in offering resources necessary to maintain and protect your collection.