Why you don’t have to be rich to start investing in art
Art investing isn’t just for the 1%. Here’s how this unique asset class is winning over new, young collectors.
6 min read
Investing in art might sound bourgeois, but it’s not just for the wealthy 1%. In fact, it’s more accessible and exciting than you might think. Younger investors are leading the charge in the art market, spending more on fine art than any other age group in 2020. These collectors aren’t just motivated by potential financial returns — they’re also driven by a passion for art, with 95% citing emotional connection as a key factor for their acquisitions. So, if you want to diversify your portfolio with an added splash of creativity, investing in art could be for you.
Investing in art can be a stroke of genius…
When we think of investments, it’s usually stocks, bonds, and real estate that come to mind. But more and more people are seeing the value in investing in art, and it’s not just the ultra-wealthy brushing shoulders at Sotheby’s. One reason collectors invest in art is that it tends to hold value over time. Unlike the rollercoaster ride of the stock market, art is less susceptible to market swings. During the 2020 pandemic, for example, the art market stayed stable while other markets were turned upside down.Beyond its financial appeal, investing in art can be incredibly fulfilling if you have a genuine interest in it. Even if a piece doesn’t skyrocket in value, the joy and aesthetic pleasure it brings can make it a worthwhile investment.
…but it comes with some drawbacks
However, investing in art has its downsides. For starters, art comes with its fair share of extra expenses. Auction houses and art dealers often take a hefty commission when you buy or sell a piece. Then, you might want to get insurance to protect your precious investment from damage or theft. Verifying a piece's authenticity is also crucial, as forgery scandals can shake even the most seasoned collectors. It’s often a good idea to get an expert evaluation and make sure the artwork you’re eying is genuine.And unlike stocks, art isn’t something you can quickly sell for cash. Investing in art is a long game — it can take years or even decades for a piece to appreciate significantly in value. When you’re ready to sell, it could take time to find a buyer, or your piece might sell at auction for less than you hoped.
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From Banksy to Botticelli: art to match every budget
Choosing the right piece of art to invest in is more of a science than, ahem, an art. According to the TEFAF Art Market Report, a mere 1% of artists account for over half of all artwork sold globally. There’s no surefire way to predict which artists will become the next big thing or guarantee a positive return on your investment. Plus, the type of art you can invest in largely depends on your price point. In general, there are three categories of art you can invest in: emerging, established, and blue chip.
Emerging artists
Buying works from emerging artists is typically more affordable, although it’s riskier as an investment. These artists are at the beginning of their careers and could someday become household names. For instance, early buyers of Jean-Michel Basquiat’s work in the 1970s saw tremendous returns at today’s auction houses, but they bought the works before he became a household name. That said, there’s no guarantee that an artist will make it big and their work will increase in value. This category is best for true art-lovers who have less cash to spend and who don’t mind the financial uncertainty of taking a chance on up-and-comers.
Established artists
If emerging artists seem too risky and you have a bit more cash to invest, it could be worth considering established or mid-career artists. These artists have already made a name for themselves in the art world, with consistent sales at auction houses and steady returns on investment. Contemporary artists like Banksy and Damien Hirst fall into this category. Although established artists aren’t drawing the same prices as blue-chip artists, they’re still relatively well-known and have a dedicated following of collectors and curators. This makes it more likely that their work will retain or even grow its value.
Blue-chip artists
Blue-chip artists are the heavyweights of the art world — think: Monet, Picasso, or Cezanne. The term “blue chip” comes from the finance world, where shares in the strongest, best-known, and most reliable companies are called “blue-chip stocks.” Art from blue-chip artists commands the highest prices, so buying it takes a significant upfront investment. But with big-name artists whose work appears in the world’s most prestigious museums, the artwork’s value is typically very stable. Indexes such as Artprice100 track and document the top 100 performing artists at auction over the past five years. If there’s a blue-chip artist you’re interested in, you can check what sale prices their work has fetched at recent auctions.
Taking the plunge – how to buy a piece of art
If you want to dip your toe into art investing, how do you actually start? Well, there are numerous avenues to buy art, each with its own pros and cons.The art industry is divided into two main markets: primary and secondary. The primary market refers to art sold directly by the artist or their representatives. The secondary market involves art that has been previously owned and can be found at auctions, art fairs, or through private sales. Buying on the secondary market can be less risky financially because you know how much the piece has sold for in the past. This makes your investment more predictable. However, before taking the plunge and investing in any piece of art, be sure to:
Get it authenticated: Don’t fall for forgeries. Always ensure the piece you’re buying has been authenticated by a credible source.
Do your research: Understand the artist, the artwork’s history, and its previous sales so that you know what you’re purchasing.
Choose pieces you love: Art isn’t just a financial choice, but also a personal and cultural one. Investing in artworks that you genuinely like is a way to cultivate your aesthetic tastes and support artists who you admire.
Your money at N26
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