With interest rates on savings remaining at an all-time low and returns on traditional stocks and shares investments not fairing much better, many people are considering investing in what are known as SWAG (silver, wine, art and gold) assets to try and make money.
Of these, art is probably the highest profile and most popular, with articles regularly appearing in the press telling readers about how much money a piece of art has sold for. It’s no wonder many investors now see it as an attractive option, and rightfully so because, if they get it right, investing in art can produce a significant return on their investment.
The question, though, is how to get it right, especially if you don’t have a lot of money or are new to the market. We look at the answers to that question here, starting with what is art?
What is art?
This might seem like a strange question, but if you’re looking to invest in art, you need to understand what is meant by the term as it goes beyond a painting you might hang on your wall to include photography, sculptures, and what might be otherwise considered crafts such as metal and glass work.
Each art form has a ‘starting price’ so you’ll need to work out which falls within your budget. There’s no point in getting excited about buying a sculpture, for example, only to find that it’s out of your price range.
The Pros and Cons of Investing in Art
Because of the costs involved, investing in art won’t be for everyone, but if you’re comfortable spending the amount of money needed, there are definite benefits. The main one is art isn’t attached to a financial market, meaning its price won’t be influenced by world events that can wipe billions off stocks and shares overnight.
There’s also the fact you own your investment and can control how it is stored and taken care of as opposed to trusting your money to a financial advisor who you often won’t know.
The downside of art, however, is that you can’t release your money quickly. Plus, you can’t guarantee the value will increase, especially if you’ve bought the work of an emerging artist whereas, in the long-term, you’ll likely see an increase in your stocks and shares.
If you decide to display your art (which many people do) there’s always a risk that it’ll get damaged. Make sure you understand how best to take care of it, not exposing a painting to direct sunlight for example in case it fades and follow any advice you’re given.
Buying Art as an Investment
When it comes to investing in art as a beginner, you’ll need to:
1. Visit artists and art galleries
Before you can decide if art investment is right for you, you should visit galleries and exhibitions and meet with artists so you can get a clear idea of what you like, what’s selling and what’s available within your price range.
Research is key when it comes to art investing. As well as visiting galleries and exhibitions, there are plenty of sites that allow you explore the work of established and emerging artists so you can get a feel for what you like and what you don’t and what you might want to buy.
2. Buy what you like
Art is personal, and there’s no guarantee what you like will be what other art investors are looking to buy. But, if you find you can’t sell it on for a profit in future years, at least you’ll be able to enjoy having it in your own home.
As well as being personal, art is also trend-based and goes in and out of fashion. Don’t buy something because it’s ‘on-trend’ unless you really like it and can hold onto it if it falls out of fashion until its time comes around again.
3. Learn about the artist
Artists, like art, fall in and out of fashion and it’s a good idea to understand if the artist whose work you’re buying is the flavour of the month or someone who’s likely to have a long-term career, which will make their art more sellable in the future.
Artists with an interesting back story tend to have a better resale value than those that don’t, especially if this story feeds into the art and makes each piece unique. Use this story when you go to sell the piece on; it could add value to the final price.
4. Decide between established and emerging artists
Emerging artists are less well known than their established counterparts, and their work is likely to be more affordable as a result. If you’re new to investing, this can be a good thing as you’re risking less of your money. However, the risk itself will be higher as the long-term value of emerging artists is hard to gauge; get it right, though, and you could make a significant return on your investment.
Established artists present a much lower risk to investors, though the returns are also likely to be lower too. Also, investing in established artists costs more money upfront, meaning it could be out of your budget when you’re just starting out.
If you’re thinking of buying from an emerging artist, you can reduce your risks by doing your research. Find out where they studied, the awards they’ve won, where they’ve exhibited, and the other pieces they’ve sold before you decide to buy their work. To help you, Saatchi regularly releases investment guides on emerging artists.
Finally, remember that investing in art is the same as investing in stocks and shares. The price of your assets can go up and down, and your initial investment could be at risk. However, the returns could be significant if you get it right so do your research and speak to experts before making a final decision to buy.