Savvy investors diversify their investment portfolios, so they minimize risk. After all, if you invest exclusively in the stock market and there is a downturn in the economy, you may lose some of your money, especially if you’re not in the stock market for the long term. However, you can diversify by investing in precious metals, real estate, and even art. Of course, if you choose the latter, there are pros and cons of investing in art, but that is the same with any investment.
A Convenient Way to Invest in Art
Investing in art doesn’t necessarily mean purchasing the art. Some investors choose to invest in an art-based investment fund. You can find these in the United States as well as England.
The Pros and Cons of Investing in Art
However, if you want to purchase the art yourself, educate yourself on the pros and cons of investing in art.
Pros of Investing in Art
Enjoy the Artwork
One of the best bonuses of investing in art is enjoying the work yourself, especially if you have it in your home. Unlike a stock investment you never see or touch, the art piece you purchase is yours to enjoy for as long as you own it.
Impervious to the Whims of the Stock Market
When the stock market goes down, your investment in art likely won’t. Art is not subject to the whims of the stock market, which makes it an excellent investment to diversify your portfolio.
Further, according to the BBC, “art appreciated in value by a modest 3.97 percent per year, in real US dollar terms, between 1957 and 2007.”
Cons of Investing in Art
Unfortunately, the cons of investing in art outweigh the pros.
Expertise Is Needed
Before you invest in art, you need a level of expertise. Con artists are in the art field, so you need to know that you’re buying authentic work and the price you pay is fair. Unfortunately, an art novice is vulnerable to scammers.
Not a Liquid Investment
Further, art is not a liquid investment. Therefore, selling your pieces may take time, which can be challenging if you need money immediately.
Must Be in the Right Conditions
In addition, art, especially older art, must be stored in the right conditions so the piece is not damaged. You’ll need to monitor temperature, humidity, and light to keep the artwork in pristine condition.
If you choose to hang the art on the wall, you’ll need to invest in insurance as thieves will find your home and art collection attractive.
Investing in art can be an excellent way to diversify your portfolio. However, this is a finicky investment. You’ll need to know about art, have the funds to buy it, have the means to store it, so it does not get damaged, and understand that the investment is not liquid. For all of these reasons, often only the super wealthy invest in art.
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