How Investing in Art Protects You from the Volatility That Affect Equity Markets
Artworks from renowned artists are now considered investment class assets alongside gold, stocks and equities. Investing in fine pieces of arts can give you a return of 10% or more annually. A survey done in 2018 found that the art market was worth 67 billion dollars and growing. Savvy investors and ultra-rich individuals are now buying art in order to store value and protect themselves from the volatility of the stock markets. In this article, we share with you how art investment is safe and can protect you in times of crisis.
Globalization and the rise of the new elite in emerging markets like China, India and Brazil has made art to be considered an investment-class asset. Wealthy individuals now have capital circulating around the world looking for profitable ventures. Artwork from famous artists has emerged as a new form of investment that attracts big money.
A piece of art from a master artist can cost a fortune. For instance, in 2017 a painting by Leonardo Da Vinci called Salvatore Mundi sold for US$ 450 million in New York. It was the most expensive piece of artwork ever sold. In 2019, another high-profile painting by Claude Monet done in 1890 was sold for US$ 110 million at Sotheby’s. At a Christie’s auction, a Jeff Koon’s stainless-steel rabbit was sold for US$ 91, which was the most expensive piece of art by living artist ever sold.
Modern art from artists like Van Gogh, Klimt, Monet, Chagall, Leger, and Kandinsky have sold for 11 to 80 million dollars. Artwork from contemporary artists like Andy Warhol, Roy Lichtenstein, Gerhard Richter, and Mark Rothko have sold for 20 to 110 million dollars. Buyers of the expensive artworks are elites, which shows that art is safe investment.
If you are not a multimillionaire or billionaire, monart (www.monart.art) allows you to participate in this growing art market by purchasing shares of collections of great artworks or even shares of individual artworks starting at 100 euros or $110!
You can protect your assets from the recent huge downturn in the stock market by investing in art! A recognized safe asset class. Join monart today to do so.
Art as A Safe Investment
Owning art was a preserve of the elite for centuries. Only aristocrats, governments, churches and very rich businesspeople owned art. Art was expensive and displaying one in your living room was a symbol of status. The economic growth after the second world war increased the number of ultra-rich individuals. It also transformed art business from a niche market to an international trade. Today, most wealthy individuals invest in art.
The demand for fine arts has gone up over the years. This has attracted the attention of players in the financial industry. Investors in the fine arts have sensed a market with profits. There’re thousands of novice art buyers joining the trade every day. Consequently, financial institutions are now providing fine art services such as research, valuation, facilitating transactions, lending, and inheritance planning. Furthermore, there’re many institutions that provide art funds.
Before you invest in fine pieces of art from www.monart.art to protect yourself from the inflation in the equity market, let us share with you what is considered investment-grade art.
Masterpieces are famous, fine artworks from the grandmasters like Da Vinci. These fine artworks are golden to museum and private collectors. Masterpieces are often sold for hundreds of millions of dollars. For instance, the recently discovered “Salvator Mundi” by Da Vinci sold for a whopping 450.3 million dollars in 2017. “The Women of Algiers” by Picasso went for $179.4 million in 2015. In 1990, the “Portrait of Dr. Gachet” by Van Goh sold for $2.5 million dollars.
These are fine artworks priced over $250,000 and up. Artists who produced these types of paintings are established with numerous awards. Their works also feature in prominent museums shows around the world. Moreover, most of the artists are deceased and this ensures that the supply of their works is limited. The ultra-rich prefer investing in blue-chip artworks with the help of consultants. The artworks are sold in major auctions and include the works of artist like Francis Bacon, Helen Frankenthaler, and Gerhard Richter.
Artworks from Mid-Career Living Artists
Artworks from these artists go for around $50,000. Artworks from mid-career living artists fetch good amounts because they have been recognized with awards. These artworks are in the hands of private collectors and a few museums in the most-respected galleries. Most collectors see the works of Nicola Tyson and Rudolf Stingel as fitting this group.
This group is made up of younger artists who are just venturing out. The works by these artists go for $10,000 or less. Collectors buying art from emerging artists seek to make profits when the artist grows and becomes a master. Artworks by emerging artists are not displayed in museums, but are recognized by art magazines like Frieze and art critics.
Art Investment in Times of Crisis
Diversifying your portfolio is the best way of protecting yourself from the inflation associated with equity markets. Diversification enable you to balance risks. When one of your portfolios is affected, the other cushions you. The most common backup to stocks, bonds, and mutual funds are gold and silver. However, the prices of precious metals are also affected by market volatility. Fine pieces of artworks have emerged as the best potentially lucrative alternative to traditional assets.
Investing in art is becoming popular. For example, 55% of wealth manager reported that their clients asked for help with investing in art and collectibles. If you planning to invest in art as in order to protect yourself from volatility, there’re number of things you need to know.
Define Your Niche of Investment as An Art Trader
Defining your niche as an art investor means identifying the exact type of art, you’d like to invest in. This entails making decision on whether to go for masterpieces, blue-chip art, or artworks from emerging artists. When defining your niche, you should also consider the type of art you’re interested in. You don’t need to have a degree in fine arts to invest. You only need to know the basics such as mediums, artistic eras and styles.
Know the Financial Aspects of Art Trading
After identifying the type of art you’d like to invest in, it’s important to know the financial aspects of owning pieces of artworks. The main thing you should consider is the amount of money you’re willing to invest. In expensive art markets, pieces of arts can be sold in auctions for millions of dollars.
A survey done from 2018 to 2019 by Artprice, a leading online platform for information on art market has shown that the contemporary artwork market is expanding. The report indicates that 3% of the contemporary artworks were valued for more than $100,000. Fifty percent of the artworks sold were valued for less than $1,000 each.
If the amounts mentioned above are not realistic for your current budget, don’t worry. You can go for lower cost alternatives, for example, buying affordable art from monart. Platforms like monart enable art investors to access the works of upcoming artists and established artists. The prices are affordable for novice art investors.
New investors can also opt for art mutual funds because they have a lower barrier to entry. Some art funds allow people to buy shares with as a little as $10, 000. If you buy into an art fund, you’ll not own individual pieces of arts, but get returns on your investment. Furthermore, you get to diversify your portfolio.
A study by Deloitte found that the biggest risk to art as an investment is political and economic uncertainty at the global level. However, art is not directly correlated to traditional investments such as stocks and bonds. This means that artworks have the potential to remain stable or appreciate in prices. For example, statistics indicate that on average, artworks have a return of 7.6% or more annually.
Historical data indicates that investing in securities like stocks delivers an average return of 9.8% annually. Nevertheless, if you consider the correlation between the higher returns and the risks, a bullish market can turn into a bear market any time. This happens when there is a rapid shift in economic conditions globally. Art insulates you from the factors that ravage stock prices.
Investing in art is a sophisticate endeavor that should never be done on whims. Before investing in art, take time to get to know the market and the return you expect from the investments. You should remember that you may incur additional costs like the cost of framing, auction fees, sales tax, and storage costs. It advisable to hire a professional examiner before purchasing art, especially high value art. Moreover, you may need insurance to protect your investment.