If you love art, making money from it is a dream. Investing in art allows you to diversify your portfolio while doing something you enjoy. Art appreciates over time. Even when the stock market crashes, fine art investments aren’t affected. Its value may even continue growing. Even though the market has been through its fair share of ups and downs, the returns have remained relatively consistent. Based on a 2020 report by Art Basel and UBS, the market was worth $64.1 billion. Here are a few things to know about paintings in 2021.
1.You Can Flip Them
Did you know that you can flip your paintings just like cars and homes? You can buy and resell them for huge profits within five years or more. It is a lucrative investment. The Michael Basquiat painting, for example, was sold at auctions three times between 2005 and 2012. In the end, it fetched $9 million and a price increase of about 450 percent.
Most paintings will resell for a much higher price than the buying price. Even though profits aren’t guaranteed, they are likely.
Even though the practice of art flipping is generally frowned upon, it can help you make lots of profits. The practice hurts young artists by causing prices to spike. Once the painting hits the secondary market, the original artist won’t make profits for its sales.
2.Collecting and Selling
When you buy paintings, you may choose to pass them down to your loved ones or sell them later. If you decide to sell them, you are likely to earn returns of about 7.6 percent. If you choose to invest in art, some of the best places to start selling are art auction houses, art fairs, and online. Buyers will be happy to pay for high-quality pieces from reputable art dealers.
When you buy a painting, caring for it will preserve the quality. Invest in restoration to improve the longevity of your painting and stop degradation. Insuring it may be a good idea as well. When you are ready to sell, consider getting an appraisal. Check the average sales at open auctions and verify the signature on the painting.
3.Diversity Is Everything
Even if you only like specific paintings, diversity is everything for an investor. It makes it possible to boost your income even when dealing with small collections. Collect a variety of high-quality pieces. It doesn’t matter if they are contrasting or cohesive. They make for a higher value collection. Currently, contemporary, post-war, and impressionism pieces are your best options. Chinese fine arts are trendy too. Collect them if they match the style and historical preference of your collection.
4.Focus On Unique Truths
In 2021, collections aim to answer unique questions and provide modern answers to old questions. When collecting, ensure that you keep up with this trend. Use your display to explore historical truths without losing the aesthetic touch. The truth is that the value of individual pieces doesn’t match the total matured value of a whole collection.
Use your lens when creating a collection. It is vital to create a group of works that help others see the world through your eyes. Please give them the perspective that can only come from putting specific paintings together. Tell the story of how arts have improved your life and the world in general. In the end, your painting collection is a new language. It helps you tell unique stories without words.
5.Financial Risks Are Always Present
Usually, the ROI for art investments ranges from one to 19 percent. If you choose to invest in paintings, think of monetary rewards as just half of the complete return. Collecting paintings is a long-term commitment. The gains will increase towards the end, just like stocks and other assets. Other types of gains include personal satisfaction and social awareness. You can enjoy significant gains from collecting paintings even if you don’t end up liquidating them.
6.First Claims Are Excellent Investments
Being the first one to claim paintings from unknown artists may be an excellent investment. You may soon end up with a highly sought-after collection. It is also a great tip if you want to support new artists.
With age, esthetics enthusiasts pay large sums for private collections. However, this doesn’t mean buying from any random artist that you meet. Do some research and identify new artists with potential. Invest in them while their prices are still low. When they finally become big names, you can sell their paintings for huge profits. You also get the privilege of watching great artists all through their life cycle.
Some investors go as far as mentoring their favorite small artists. Even though the risk of loss is always present, it is outweighed by the potential profits. Most artists will reach their peak by the fifth or sixth exhibition.
7.Represent Yourself
Your painting collection in 2021 must represent you, your interests, and your personality. Collections can be the window to your artistic side. They are more than just assets. Paintings do not change as you add them to your collection. Therefore, it is vital to think of the whole collection rather than individual paintings. Determine if they convey an authentic message about your personality and values. Thinking beyond the financial aspects of a painting collection will separate you from other investors.
8.Do Whatever Works
What works for one art investor won’t necessarily work for another one. Do not be afraid to try out new things until you find a strategy that works for you. While some people collect paintings as a hobby, others think of them as assets. Even though it may be okay to use tech tools, historians, and advisors, nothing is more important than your intuition.
As an investor in art, you must have a holistic view of things at all times. Consider future rewards just as much as present ones and note that art investments yield more than financial rewards. All your assets play an essential role in the collection and must be treated as such.
The art market has been doing well over the years, and you can be one of the beneficiaries. Important tips to improve your profits include using your collections to represent yourself, diversifying your collection, and being aware of the financial risks.