How to Profit From Investing in Art: 5 Tips

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It is true when they say that there pretty much is a market for everything in this world. That being said, you have to ensure that you are playing the market correctly if you want to make some money off of it. Art is no exception to this and there are plenty of people who collect art solely for the reason of making money off of it in the future. While it might seem like a no brainer, there are plenty of things that you have to consider if you are planning on investing in art. Small subtle things can either make the difference of a piece being worth thousands if not millions of dollars, and being completely worthless. Here are some tips on how you can profit from investing in art.

Find A Platform

The first thing you are going to want to do if you plan on investing in art is find a platform where you can talk and deal with other like minded people. If you don’t know where the market is, how can you go about exploiting it for your own personal gain? There are plenty of websites out there that allow you to not only list your own art onto the website, but also allow you to get part ownership of pieces of art. That’s right, with some major pieces of art, you don’t even have to purchase the whole thing. Websites such as Masterworks art investing allow you to find a piece of art that you are interested in and then purchase a part of it. Why is this useful?

There are major pieces of art out there that people know are going to increase in value over time. The only thing stopping people from making these purchases is the high barrier to enter in regards to the price. By being able to buy a partial bit of a painting, you can cash in on the fact that it is done by a big name and generate profit off of it. While you won’t make as much money as you would if you owned the whole thing, you will still show some profits.

Although there are plenty of marketplaces out there for art investing, you do have to expect to wait a while before something of yours sells. Paintings can sometimes be on the market for several years before they are purchased by another investor. This means that while you have the potential for massive earnings, you have to remain patient and calm throughout all of this. Find a platform to invest with if you are planning to profit off of art.

Watch Out for Fakes

Art is one of those mediums that are heavily faked. At any given point there might be a few fakes of a famous painting circulating in the world gallivanting as the real thing. To the untrained eye, it can be almost impossible to spot a fake. The only thing you have to go off of is a signature, and even that can be forged perfectly with technology that people have today. If you are ever planning to purchase a piece of art, especially a major one, you need to have it inspected so that you can verify that it is the real thing. 

There is nothing worse than spending thousands of dollars only to find out you now have something that is completely useless. This happens more often than you would think in the artworld, therefore you have to be extremely careful whenever you are purchasing art from a seller. Always ask for a certificate of authenticity as these are handed out to prove that they are the real piece of art. With so many fakes out there, you need to make sure that you are buying the real thing.

Invest For the Long Run

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If you are thinking getting into the art business is going to be similar to day trading, you should look elsewhere. The art market is slow moving, and while things will increase in value over time, it will take years for you to show any meaningful profits. Don’t instantly try to flip art you have, instead let it sit and collect. After a few years, you can list it on the market for a higher price and wait for someone to purchase it.

Be Careful

When it comes to valuing art, people often look at who the artist is and how much similar works of art have been going for in an auction. Be careful with this as there are many things out there that can influence an auction price and result in it being heavily skewed. That does not mean you should throw out the price you see, but it is just a reminder that there is more to a piece of art than the auction price eludes to. First time buyers might overpay causing an inflated value, while a piece of art simply might not be popular at a certain auction resulting in it being undervalued Always be cautious and ensure you are doing your research regarding art.

A Lack of Volatility

With many investments in today’s day and age, there is a degree of volatility and risk to them. Look at the stock market for example where prices rapidly fluctuate depending on what is happening in the world. With art, you are picking a safe investment that is always going to have some value. As mentioned earlier, the low volatility means that it will take some time to accumulate value, but it is something where you don’t have to worry about your money disappearing. Sometimes safe investments can be the best investments to make.

These are all things that you have to know if you plan on investing in art to make a profit. Find pieces of art that you are generally interested in as well, as they can help to add atmosphere into your own home while you wait for them to accumulate value. After a few years, you might want to try your luck at an auction or online to find a seller. How do you plan on making money investing in art?

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.