HOW TO INVEST YOUR MONEY IN ART AND GENERATE A GOOD INCOME?

Investing in art is an excellent way to diversify your portfolio and generate attractive income.

But isn’t that reserved for the richest?

Clever new technologies now make it possible to qualify this idea.

But what art are we talking about?

And where to start?

After investing in real estate , cryptocurrencies, or even investing in start-ups , I invite you to discover how to generate interesting income with art.

Here’s how we’re going to do it:

1) WHAT FORM OF ART ARE WE TALKING ABOUT HERE?

Let’s agree on our topic of the day: investing in art!

But not just any art.

Some media can be considered art:

  • Antiques
  • Antique furniture
  • The vast category of collectibles (stamps, coins, perfumes, watches, etc.)

Let’s leave these forms aside for today: they deserve their own article.

Today, I especially want to talk to you about painting .

2) WHY CHOOSE ART AS AN INVESTMENT PRODUCT?

Art is an interesting investment category for three reasons

TO DIVERSIFY YOUR PORTFOLIO

If you’re already saving a little, you already know the crucial importance of diversification.

But if you’re just starting out and you also want to optimize your savings , here’s a quick reminder on this subject.

Investing involves risks.

Only invest what you are willing to lose .

So why talk about diversification?

I always use the same image, because it is easy to visualize:

Imagine you are selling eggs.

You have to collect them from your henhouse to take them home, to put them in boxes.

If you put all your eggs in one basket and you stumble…

…the basket escapes you, the eggs fly away and fall: your harvest is lost.

When you invest, it’s the same principle.

If you put all your investment savings into a single product or stock, you are playing with fire and that is not a good way to manage your money .

The moment the stock crashes, you’ve lost your entire investment at once.

Not only do you not receive any interest, but you also lose your initial investment.

To avoid this kind of disappointment, I’m going to give you a little tip!

Open a PEA, use your life insurance, invest a little in a cryptocurrency , in real estate…

In a word: diversify!

BECAUSE ART IS A SAFE BET

It is said that art is “decorrelated from financial markets”.

But what does that mean?

This means that the art market is only slightly linked to variations in the price of financial markets: these two markets do not follow the same course.

While traditional financial markets are collapsing, the art market remains relatively stable.

When there is inflation, the cost of living increases, but so do the prices of works of art.

If inflation gets worse, it’s your cash that loses value.

Art is therefore a protection against the ups and downs of the financial markets and against inflation.

Its value does not decrease depending on them, it is a market which does not experience much crisis: it is therefore a good refuge for investing calmly.

TO ALSO DIVERSIFY YOUR INCOME

Diversification doesn’t just apply to your investments, but also to your sources of income!

Investing in art means adding an additional means of income, in addition to your salary, rental income, your freelance work or your side-projects .

You provide yourself with an additional security safeguard, in case you lose one or more sources of income.

Say “diversification” ten times if necessary and keep in mind that the most important thing is to:

to diversify !

3) WHAT ARE THE RISKS OF INVESTING IN ART?

If it weren’t for some risks, it would be too good to be true.

Here is the list of major risks and disadvantages of investing in art:

EVERY INVESTMENT INVOLVES RISKS.

As mentioned above, just remember to only invest what you are willing to lose .

IT IS A VERY ILLIQUID MARKET.

This means that the works you own may not be easy to sell.

Let’s say you bought a painting that you like.

Bad luck, you fall ill and can no longer work.

Suddenly you have no income, and you need resources.

If you don’t find a buyer, you won’t be able to withdraw money from your painting.

CONSERVATION OF WORKS

If you display the painting you purchased at home, be careful.

A degraded work is equivalent to seeing your investment lose value.

A painting will be damaged if it is exposed daily to sunlight, temperature changes, or worse, humidity.

So you will need to take precautions to ensure that this does not happen.

IT IS A DIFFICULT MARKET TO ACCESS

A little later in the article, I present a way to get around this difficulty.

Unless you are an art connoisseur yourself, spending your time in galleries or auction rooms, be wary .

To find works that will be good investments, you need to have a solid knowledge of art, its market, the artists…

Don’t let yourself be influenced by good salespeople.

In any case, don’t buy a painting that you don’t like yourself .

If you like a painting, chances are others will too.

In case you want to resell it, you will have a better chance of finding a buyer.

4) MAKE YOUR FIRST PURCHASES

Well, I hope I haven’t discouraged you!

Rest assured, here I offer you some tips for investing in art and avoiding making mistakes.

ONLY BUY SOMETHING THAT YOU PERSONALLY LIKE.

I just mentioned it, but it seems to me that it is essential.

There are not only financial benefits to investing in art: enjoy your paintings all year round!

IMMERSE YOURSELF IN THE ARTISTIC WORLD.

If you search on the internet for “how to buy a painting”, you will quickly find commercial sites.

Before scrolling through hundreds of paintings on your screen and buying some, go and meet the artists instead.

Art galleries are there for that, with artists and professionals whose job it is to help you discover art!

Start by refining your tastes and knowledge, this will allow you to make informed decisions when it comes time to purchase.

If you plan to display the artwork in your home, think before investing about where you will hang or store it.

Also take your own decoration into account: will your painting fit in or will it clash with the rest?

NEGOTIATE!

Art galleries are used to negotiating with buyers.

You may be able to get a good price if the owner needs funds quickly, you are paying cash, or the painting has been on display too long for their liking.

If you start to seriously frequent this environment, galleries, workshops and even auction rooms, you will be able to establish relationships with artists and gallery owners.

Another good way to look into art and have more facilities to negotiate attractive prices on the works that you like.

5) BUILD YOUR LONG-TERM STRATEGY WITH MASTERWORKS

What if you bought some Picasso?

Pardon ?

Yes, why not buy some Picasso? Or Basquiat?

Remember: at the beginning of the article, I told you that investing in art is no longer reserved for the very rich.

Entrepreneurs have noted the stability of the art market.

They wondered how to get in without being millionaires and came up with a rather elegant solution.

The concept is simple: just like stocks are shares in a company, Masterworks lets you buy shares in works of art.

There is a minimum bid per work: generally between $500 and $1000, depending on the total cost of the painting.

Certainly, this is not nothing.

But it’s still better than fifty million!

If you have set aside this amount or more, you can therefore buy shares in paintings by great masters.

All eras and styles are combined: Picasso, Warhol, Monet, Katz, Banksy…

Masterworks purchases and exhibits works by great masters and emerging artists in its gallery in New York.

Investors buy shares of these tables all together.

Five to ten years later, Masterworks decides with the agreement of its investors whether or not to sell these paintings.

You then collect the capital gains, minus the fees collected by the company.

Masterworks will take a 1.5% fee each year for insurance and storage of the paintings.

They also take 20% of the total profits generated by the sale of the paintings.

Indeed, these percentages are quite high.

For this reason, I advise you to use this service mainly to diversify your portfolio.

By registering with Masterworks, you have access to:

  • The list of works in which you can invest (you can search for an artist or a particular painting in the field reserved for this purpose).
  • Rising works, their rating and their earning potential
  • Information about the artist, his works and their history
  • A certificate of purchase when you take action!

If you are interested in the concept, here is what you can do:

Start by registering on the platform, and browsing the site.

Take your time !

Don’t rush to the first painting that comes along.

There is no urgency to invest right away.

On the contrary, sit down, think, get a second opinion from your partner, your family, your friends.

The work or works you invest in will be exhibited for many years (you may even have the opportunity to go and admire them in the Masterworks gallery in New York!)

Find out more about the artist and his paintings on the site and from other sources.

If you still have a crush after this study, then start slowly: invest the minimum amount necessary to familiarize yourself with the system.

Then… wait for the painting to be resold and above all, soak it up!

Investing in art is also an opportunity to immerse yourself in history, to feel strong emotions, to fully enjoy the artistic nature of the object and its subject.

A FEW WORDS AT THE END

Investing in art is no longer a practice reserved for a handful of billionaires.

Technology today allows many more investors to have fun buying shares in works they like.

Art is a safer and more stable investment than traditional financial markets.

This is an excellent way to diversify your investment products and protect part of your savings from inflation.

However, it is a very illiquid market, and as always in investing, you must have a long-term strategy.

If you’re hoping to get rich by investing in art, it certainly won’t happen overnight.

My advice: whatever type of investment you want to make, it is better to make informed decisions with a cool head.

Personal Finance taining will help you establish your psychological profile and your relationship to risk.

This training was created with the help of Yoann Lopez .

You will learn how to allocate your savings to strategic investment products based on your personality and personal situation.

To continue to diversify your portfolio even more, I also invite you to continue reading: have you already heard of crowdlending ?

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top