In decades gone by, investing in fine art was relegated to those individuals who were well connected and extremely wealthy. However, that is no longer the case today as collecting fine art is now viewed as a viable investment strategy.
With a bit of due diligence and some serious research, investing in art can be very enjoyable and surprisingly lucrative. Additionally, Forbes Magazine reported that past trends in art collecting showed that this practice had outperformed the S&P 500 on several occasions.
In recent years, fine art has made some huge financial news such as in 2006 when a painting done by Gustav Klimt went for $135 million. This is just one example of how big of an investment can be made when you collect fine art for investment purposes. Although for many individuals, collecting fine art is their passion and helps to promote their prestige and status as well as their egos. So is fine art a viable and worthwhile investment? Many would say “yes”, although there are still many individuals feel it is far more frivolous and costly than other riskier investments.
Concerns and considerations
Naturally, those investors who are intrigued by the possibilities of investing in fine art should always keep the old adage of “buyers beware” to the forefront. There are three very important concerns that an individual needs to consider whenever contemplating collecting and investing in fine art:
• Beware of fakes and forgeries – remember that what ever is said regarding investing in fine art applies to only those pieces that are certified as being genuine. An investor should always verify with the dealer or gallery that the piece in question carries a Certificate of Authenticity (or COA). Another possibility to consider is to talk directly with the artist if they are still living.
• The liquidity factor – the ability to convert an investment into cash is known as “liquidity.” In the case of fine art, liquidity is oftentimes limited. Despite this fact, there are numerous investors who would tell you that this risk is quite manageable.
• Truth of the matter – taking the risk of investing in art has one solid truth above all the others. From and aesthetic standpoint, if you enjoy what you are doing, purchasing a piece of fine art because you truly love it because of its beauty as well as personal appeal, you can never really lose.