The Pros and Cons of Art Investing
Art investing can be a great way for the fine art lover to make a little money doing what they love. It can also be a risky venture that an inexperienced investor could find financially crippling. There are many advantages and disadvantages of art investing. Before you jump in with both feet and your family's nest egg, make sure you have weighed all the facts. It's not right for everyone, so do your homework and know the pros and cons.
Art investing involves a tangible asset that can be appreciated on your wall or kept in storage for buying and selling only. No matter what you do with it, investing in this type of commodity offers a certain level of security. Many people like knowing that even if the value of their artwork is low now, a good piece will almost positively increase in value with time. The stock market and economy rise and fall, and an investor can lose every dime they've put in. With art investing, unless your piece is physically damaged or destroyed, you still hold some value in your portfolio.
The tangibility of your portfolio when art investing is not always a positive attribute. Investing in standard stocks and bonds can be a short term investment with quick turnaround. Art investing is different because it is more difficult to buy and sell; you can't just sign onto a website or make a call to your broker. Your portfolio may contain many classic and valuable works of art. Without a buyer, it could take much longer to sell your assets. The liquidity of art investing is much less than financial investing.
Additionally, buying artwork is much more involved and can take more time and research than the financial market. You may look into a financial security and find out if it is reliable before you invest in it, but the level of examination with art investing is much greater. Before you invest in a piece of artwork, you will want to find out about its history, the artist and his or her background, and the dealer you are purchasing from. The legwork in art investing is much more involved than in traditional investing.
For some, however, the research that comes with art investing is the best part. Art investing is something that everyone can do, but that art lovers truly enjoy. Finding out about a painting or sculpture is not work for these people. They purchase the items as a way of adding culture to their atmosphere. Any profits made from their purchases are simply icing on the cake.
One difficulty in the research and work involved in art investing is due to the large amount of fraudulent pieces that have infiltrated the market. Anyone interested in protecting their investment and their finances must have a keen eye for originals and counterfeits. If you are unable to spot them, then you must be willing to pay experts to do it for you. Either way, you will soon find yourself in the midst of a scam if you trust every proposal that comes across your desk.
There will be advantages and disadvantages to any type of investments you consider. Art investing fundamentally similar to the other methods of investing, but there will always be vast differences. The best way to hedge your losses and protect yourself from the drawbacks of art investing is to diversify your portfolio with other types. A well rounded portfolio that includes both financial and art investing items will provide a sound financial future
