Investing in art – A starting point

If you are curious to invest in something else than real estate or stocks, art might be an option. Previous investment experience (in real estate or in financial markets) will most certainly determine your approach when exploring Art investments.

For example; if you are fully focused on short term profits, in which case your investment approach resembles speculation, than you are able to use this approach in what ever investment field. It may be more difficult because of the money (and time) that is required but real estate speculation or speculative stock trading is done by a set of familiar rules. And so will it be when investing in art.

If your (financial) investment approach is more fundamental and you are more committed to a specific way to invest and concerned about the companies to invest in, than this will lead to a different investment game. Especially when focusing on art.

This commitment is what makes art worth while to invest in. You could be committed to creativity in general. In that case you can’t hardly do anything wrong, because you could defend every investment with your own story – “this painting is special. I know the artist is not very well known, but that’s exactly why I’ve bought it.” You invest because of your own judgment and according to your own criteria.” 
This kind of investment approach resembles the stock-picking method in financial investments, you buy what others ignore.

The next thing would be to follow the market, and search for (popularity) trends of artists. This is much less fundamental and resembles technical analysis; stock A is rising and you imagine that it will continue to do so. For a while. This requires little knowledge is provides a good starting point for next steps in which you may broaden your investment scope.

As in the financial investments area, there is also the art-investment guru. The advisor who knows all the ins-and-outs about investing in art. He or she will first (have to) ask you what your preferences are, because also that is not different from financial investments; it starts with the question, “what do you want.”

Buying an Art investment Fund is probably the best thing to start with. It offers you a lot of information and while having set your first steps in art-investments, you can think of what you really want. Probably something different; well, it is.

© 2006 Hans Bool


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