Invest in art and collectibles – Full guide to making money

Want to start earning money by investing in art and collecting?

You would be right, given that the industry is up 8 percent over last year and auction house sales exceeded $7 billion.

Many people think it is a way to get rich used only by the rich, but there is much potential even for small investors like us.

In this comprehensive guide on how to make money from artworks, we will look at the best strategies for getting into art investing.

I will provide you with a panoramic overview of buying and selling art, discuss what makes some pieces more valuable than others, and find out where you can find verified, quality pieces without spending a fortune.

Investing in art and collectibles: how does it work?

It is important to understand how this market works before making an investment, only then can we start investing.

Since high capital is needed, we need to have as much information in hand and gain as much experience as possible by attending exhibitions, art galleries, auctions and trade fairs.

How to make money from artwork

The gain through investment in art and collectibles is given by the difference between the purchase price and the sale price.

Being unique goods, they have a value that does not follow market trends. They are based only on supply and demand.

Consequently the indicators to keep in mind and analyze are often not found on the Web, but in the circles where these topics are discussed.

Why invest in artworks

There are two basic reasons why people invest in art:

• love
• gain

Love of art and collectibles

Art is one of the passions that most fascinate people, as it goes to the core and brings our emotions into play.

This is precisely why the investments that are made with this purpose serve to guarantee a piece of something we like and, at the same time, to support the author who created the work.No of the investment

Gain from investment

Other people prefer to invest in works of art as a form of financial investment because the value can increase over time and have good interest.

These two modes could coincide, or you could purchase collectibles sometimes with one purpose and sometimes with another.

L’importante è non mescolare mai le due modalità, altrimenti rischieremmo di lasciarci trasportare dalle emozioni e spendere più soldi del dovuto per qualcosa che ci porterà inevitabilmente ad una perdita.

One platform that makes it possible to invest in art easily is Singulart, as it connects artists and buyers (or investors) by acting as an intermediary.

How the art and collectibles investment market works

The art market has a very simple operation, we can say that it varies according to the point of view of the people in charge.

The 3 factors that go into the value of the work are:

• Conservation status
• Notoriety of the author
• Trend of the moment

Conservation status

Whether it is investments in luxury watches or Pokemon cards, preservation plays a fundamental role in keeping their value high.

This is the main feature, in fact it may overshadow the other two in that many prefer a divinely preserved object rather than ruined but appreciated works of art by enthusiasts.

As the percentage of items in perfect condition physiologically continues to decline (due to accidents and other reasons), just by keeping it as new we are already making our investment gain value.

It is also much easier to resell it when it is perfect than to go and list a whole series of defects that may put off the buyer.

Notoriety of the author

The more famous and respected the author is, the more his works will be worth and in demand.

This aspect is quite obvious but it is fair to mention it to clarify the concept.

If an artist is well-known and has a long track record of producing artworks behind him, the market will go to appreciate each of his released projects.

Investing in art and collecting also means buying objects that we don’t necessarily like, but everyone else does.

Trend of the moment

The taste for beauty is a subjective and human thing, which is precisely why it will change with time.

We may be looking at works of art that the market is not yet able to appreciate and that will gain much value over the years.

In investing, one must therefore know the field of art and collecting but also be guided by intuition and experience. If we can predict a trend, the gains we can make will be great.

Conversely, we may invest in a highly valued work and add it to our collection only to find out some time later that it has lost much value.

The availability of the item also plays a key role. The fewer pieces that exist, the more they are worth. If only one has been made, the value takes off.

How to invest in paintings

Investing in paintings can be an excellent choice for those seeking a way to diversify their portfolio by adding tangible assets with some liquidity.

The first step is to study! In fact gaining knowledge about art in general and the specific artists in whom you are interested is a fundamental thing to do.

If we are not inclined to this, we can turn to consultants already trained in the field who can give us, from time to time, targeted suggestions to make us make the best choice.

It also begins to keep track of auctions and market sales to get an idea of the pricesof the works of the artists you are keeping track of.

We will also be able to identify, ahead of others, eventual market changes. By acting in these terms we will always be clear which artist and which artworks are the focus of market and investor interest.

When we feel ready, it is time to make the first purchase.

To buy an artwork we have 4 options:

• Directly from the artist
• From an auction house
• From another collector
• From art funds

Of all of them, as we are going to see, the most feasible and safest is to go through an auction house that provides us with all the necessary documents and lets us operate in a controlled environment.

Let’s go through them all in detail.

Buy Directly from the Artist

Buying a work directly from the artist means skipping all the middlemen and going to talk to the person who creates the object.

This can save us a lot of money, but it is not something that is feasible for everyone.

In fact, artists are not in the habit of providing, along with the work, all the necessary documents attesting to its authenticity.

Without all the papers in order, it will be virtually impossible to resell the work, especially at a good price.

Evaluate whether this is a risk you can afford to take or whether you prefer to go down more expensive roads but with safer results.

Buying From an Auction House

Buying artwork at auction is the most popular and widely used way to add a piece to one’s collection that we like and that we think will increase in value.

The auction houses take care of certifying and checking the item in every aspect, so by doing so we will have all the necessary guarantees that will allow us to resell it without problems at a good price.

Buying from another Collector

One will hardly be able to buy works from some other collectors without being well-known people in the field.

In fact, most of them prefer to go through intermediaries who can maximize the return on the investment.

It is not possible to know how large the secondary market for the works is, as many collectors keep their collections secret and show them only to close acquaintances.

This means they could sell them, lose them, or have them stolen from them without the market or the media knowing about it.

This thing in fact could have a great impact on many aspects, including market confidence and the prices of that author’s works.

Buying from art funds

Art funds are privately managed investment funds that offer returns from the purchase, management, and resale of works of art.

The 3 main art funds are:

• Fine Art Group
• Artemundi Global Fund
• In Art Fund

These are not platforms to which you just sign up, deposit money and proceed to invest.

You have to get into the business, make yourself known, and be prepared to invest substantial amounts of money in art to sit at the big boys’ table.

Alternative investment: financial markets

Investing money in any market can bring returns if we know how.

The main alternative to investing in art is investing in financial markets.

Stocks, ETFs, and other instruments are less physical than collections or artworks but are much more liquid and have low volatility.

If you are very exposed to the art market, a good advice is to diversify and include in your portfolio some ETFs that can lower your degree of risk, volatility and at the same time increase your cashflow.

In fact, by choosing one that pays dividends, you will be paid periodically without having to do anything else.

Small collectors’ market

Small collectors who start with little capital and little experience tend to avoid major situations such as auctions.

There are two environments where one can begin to make acquaintances and invest in art in an amateur way without the fear of being judged.

The best places for small investors in art and collecting are:

• Art fairs
• Specialty stores

Art fairs

Art fairs are temporary events that serve galleries and other collectors to showcase their works.

These are perfect situations for small collectors, as they will be able to see a wide range of artworks and begin to figure out which one may be of most interest.

More importantly, we will also be able to get to know and begin to have relationships with artists, fans or investors.

Specialty stores

There are specialty stores that sell artwork, often at more affordable prices than art galleries or auction houses.

One must always keep in mind the need to have all documentation, which may be missing or false.

Concluding on invest in art

If you are thinking about making money from art and collecting, know that there is a lot of potential for small investors.

You could write a new finance page within your portfolio, but be aware that you will need large amounts of capital even just to take your first steps and purchase your first products.

Among the advantages that technology offers us, we have the presence of a platform to which we all have access, namely eBay.

It may sound absurd, but within it we can find real bargains on listings by people not experienced in the world of investing.

Clearly to start with, then we will have to grow and have more degree ambitions.

Are you interested in investing in art or studying the market? Let me know in the comments or by email at info@diventeromilionario.it.