Written by Daisie Team

Published on 11 July 2023 7 min read

Investing in art is a great way to diversify your portfolio and bring a touch of sophistication to your investment strategy. Art as an alternative investment has gained considerable popularity among investors. With a low correlation to the equities market, art can offer a desirable risk and reward ratio, making it an attractive addition to your investment portfolio. But how do you start investing in art? Let's explore the first step: understanding the art market.

1. Explore the Art Market

Entering the world of art investment can feel a bit like stepping into a grand, intricate maze. But don't worry, with a bit of guidance, you'll find your way. Here are some key steps to help you start exploring the art market.

Define Your Interests

Art comes in many forms and styles, from classic Renaissance paintings to contemporary digital art. As a potential investor, it's important to identify what kind of art you are drawn to. Are you captivated by the romantic swirls of a Van Gogh or intrigued by the bold colors and shapes of a Kandinsky? Knowing what you love will give you a starting point in your art investment journey.

Study Art History

Art isn't just about pretty pictures—it's a rich tapestry of human history and culture. By understanding art history, you can better appreciate the value and significance of different works and artists. You don't need to be an art scholar, but a basic understanding of major art movements and influential artists can be invaluable in your investment decisions.

Attend Art Fairs and Exhibitions

Art fairs and exhibitions are fantastic opportunities to see a wide range of art in one place. They give you a chance to observe trends in the market, spot emerging artists, and even meet other art enthusiasts and investors. It's like a grand buffet of art where you can sample different styles and periods until you find what satisfies your palate. Plus, they're often held in great cities like New York, London, or Paris, so you can combine your art investment research with a bit of travel.

2. Build a Network

Success in art investment often comes from knowing the right people. Networking in the art world can provide you with valuable insights, advice, and opportunities. So, how can you build your art network?

Connect with Art Collectors

Art collectors can be a goldmine of information. They've been where you are and can offer advice based on their experiences. They might also be willing to introduce you to key people in the art world or tip you off about upcoming sales. You can meet art collectors at art fairs, exhibitions, or even local art events.

Befriend Art Dealers

Art dealers are the gatekeepers of the art market. They know which artists are hot, which are not, and which are on the verge of breaking out. Befriending art dealers can give you an inside track on potential investments. But remember, art dealers are professionals, so always approach them with respect and integrity.

Join Art Clubs

Art clubs can be a fun and social way to immerse yourself in the art scene. They often host talks, exhibitions, and even art trips. Joining an art club can enrich your understanding of art as an alternative investment and introduce you to like-minded individuals who share your passion for art.

3. Select Your Investment

Once your network is in place, it's time to start considering specific pieces for your art portfolio. Here's how you do it:

Choose Art Styles

Art comes in a broad range of styles, from classical and impressionist to pop art and abstract. As a new entrant in the world of art as an alternative investment, it's important to understand which styles resonate with you personally and which have the potential for good returns. Read about different art movements, visit museums and galleries, and take note of which styles speak to you. Remember: investing in art is not just about potential financial gain—it's also about personal satisfaction and enjoyment.

Pick Artists

When you've identified the styles you like, it's time to look at artists. Some investors focus on established artists, while others prefer to discover emerging talent. Both approaches have their merits. Established artists often come with a higher price tag but can offer more certainty in terms of value, while emerging artists can be a more affordable entry point into the market with the potential for high returns if they take off. Research is key here: learn about artists' backgrounds, their inspiration, their reputation in the art world, and how their work has been received.

Analyze Art Value

The value of art isn't simply about price—it's about potential return on investment. You'll need to consider factors such as rarity, condition, provenance, and current market trends. Is the artist's work in demand? Has it sold well at auctions? Are there any red flags in its history? You'll also need to think about your budget and whether the potential financial gain is worth the initial outlay. Remember: art as an alternative investment should be part of a balanced portfolio, so don't risk more than you can afford to lose.

4. Buy Artwork

Once you've identified your preferred art styles and artists and analyzed their potential value, you're ready to take the exciting step of purchasing your first pieces. Here are some avenues you might consider:

Visit Art Galleries

Art galleries are not just spaces to view art—they're also places to buy it. Whether it's a bustling gallery in New York City or a small, local gallery in your hometown, this is where you can see art up close, speak with knowledgeable staff, and potentially even meet artists in person. It's a way to immerse yourself in the art world and make informed decisions about your investments. Just remember to keep your budget in mind and don't let the excitement of the moment lead you to overspend.

Participate in Art Auctions

Auctions can be a thrilling way to acquire art, and they're not just for millionaires. Many auction houses, like Sotheby’s and Christie's, offer pieces at a range of price points, and online auctions can make the process even more accessible. It's important to do your homework, set a maximum bid beforehand, and be prepared for the potential of a bidding war. It's a good idea to attend a few auctions just to observe before you start bidding. This can help you get a feel for the process and the pace, and allow you to see firsthand how prices can escalate.

Buy from Online Platforms

In today's digital age, art is more accessible than ever. Online platforms like Artsy and Saatchi Art allow you to browse thousands of pieces from the comfort of your own home. This can be a great way to discover new artists and styles, and it's often easier to compare prices and do research online. Just remember to verify the authenticity of any piece you buy and understand the terms and conditions of the sale, including any additional costs like shipping or insurance.

5. Manage Your Investment

After acquiring your carefully chosen piece of art, it's time to switch gears and think about how to protect and manage your investment. Here are a few key aspects to consider:

Store Art Properly

Storing your artwork properly is crucial to maintaining its condition and, by extension, its value. Here are a few tips:

Control the environment: Art is sensitive to light, temperature, and humidity. Keep your artwork in a room with stable conditions, away from direct sunlight and extremes of heat or cold.
Hang wisely: If you're displaying your art, make sure it's securely mounted to the wall. The last thing you want is for your investment to take a tumble!
Consider professional storage: If you're not planning to display your art, or if it's particularly valuable or fragile, you might want to consider professional art storage. Companies like UOVO and Crozier offer climate-controlled, secure storage for artworks.

Get Art Insured

Art insurance is a must for protecting your investment. It can cover damage, theft, and even depreciation in some cases. Companies like AXA and Chubb specialize in art insurance. It's important to get your artwork appraised and to keep the appraisal up to date, as the value of art can fluctuate over time.

Plan for Art Maintenance

Even with the best storage conditions, art can require maintenance over time. This might mean a light dusting for a sculpture, a gentle cleaning for a painting, or more significant restoration for older works. Always consult a professional before attempting to clean or restore artwork yourself. Institutions like the Smithsonian offer resources for finding qualified conservators.

6. Sell Your Investment

At some point, you may decide it's time to sell your artwork. Whether you're looking to cash in on an appreciated asset, or simply wish to diversify your collection, selling your art requires careful planning and strategy. Here's how to go about it:

Choose the Right Time to Sell

Just like with other investments, timing is everything when it comes to selling art. Here are some factors to consider:

Market trends: Keep an eye on the art market. If the artist's work is in high demand, or if similar pieces are selling well, it might be a good time to sell.
Your financial needs: Ultimately, you should sell when it makes financial sense for you. If you need the cash, or if you have another investment opportunity in mind, it might be the right time to sell.

Find Potential Buyers

Once you've decided to sell, you'll need to find a buyer. Here are some places to start:

Art dealers: Art dealers have extensive networks and can often find interested buyers quickly.
Auction houses: Auction houses like Christie's or Sotheby's can put your art in front of a large number of potential buyers.
Online platforms: Online platforms like Artsy or Saatchi Art can help you reach a global audience.

Negotiate Sale Price

Finally, you'll need to negotiate the sale price. This can be tricky, as the value of art is subjective and can fluctuate over time. Here are some tips:

Get an appraisal: A professional appraisal can give you a starting point for negotiations.
Consider the market: Look at recent sales of similar pieces to get an idea of what buyers might be willing to pay.
Be flexible: Be prepared to negotiate, but also know your bottom line. You don't want to sell your investment for less than it's worth.

If you're interested in diversifying your portfolio with art investment, don't miss the workshop 'How to Invest in Art' by Ciarra K. Walters. This workshop will provide you with valuable insights and strategies for making smart art investments, helping you grow your wealth through the exciting world of art.