Art as CapitalTheresa G. Burroughs / October 26, 2018
The acquisition of paintings is a good way to invest money. Especially with modern and contemporary art, the collector’s heart beats faster at the moment. But the increase in value hoped for with the purchase depends on many factors.
It doesn’t always have to be equity funds, real estate or securities: art as a capital investment is finding more and more followers who are discovering their passion for collecting with this alternative. Visit exhibitions, talk shop with gallery owners, make new social contacts and exchange ideas with collectors. Anyone who has ever had the taste to enrich their portfolio with art will hardly want to give up this passion. But it is the right feeling for trends that counts and the laws to which the art market is subject.
Which works add value to an investment? Which small artist today will become a big star tomorrow and make the acquisition of his work a financial success? Even the death of an artist does not always guarantee an increase in the value of his work on the market. For there are productive creative periods with works in demand and also less creative periods, the results of which do not appeal to potential buying interests. But how can you acquire this know-how? “Auction houses, galleries of trust and museums are the best places to get to know the market. The industry expert advises investors with a small purse to invest in smaller works by younger artists – who are often still undervalued on the market, but in a few years’ time will be a good investment due to their resounding name. However, according to an expert, the market is also creating trends such as street art at the moment: “That’s suddenly in demand, but it will break away in ten years. Old art is therefore more stable in value”.
But old masters like have the disadvantage that the purchase price is already very high. Even first-class collections cannot always be sold quickly. A disadvantage of art as a mobile financial investment that needs to be taken into account. Auction houses usually hold only two events a year and charge a commission of between 10 and 20 percent for the sales. “More and more people are investing in art not only for emotional reasons. In the foreground however should stand the joy in collecting and the contact with other collectors. The format is also important for art as a capital investment. A large-format work is more difficult to hang than a small-format work. The minimum subscription amount is 2,500 euros in order to attract less financially strong investors for this form of capital investment.