Protecting your art investment during a recession

By Judith A Tartt

During a recession, it is vital to protect your assets. If you’re an art investor, you may be wondering, “How can I protect my art investments during a recession?” Following are three steps you can take to do so.

Three Steps to Protecting the Value of Your Art Investments During Troubling Economic Times

1. Don’t Panic and Sell: One of the things that happen during a recession is that your assets can lose value. This limits your ability to sell it to generate income if you should need to. And, like a real estate investment, who wants to sell in a recessed market?

In this case, the best way to protect your art investments during a recession is not to sell. Instead, look for ways to cut expenses and hold onto your investment for when the market corrects itself, which leads to the second way to protect your art investments, staying liquid.

2. Sustain Liquidity: As alluded above, some may find it necessary to sell their art investments during a recession to make ends meet. This is usually because they don’t have enough cash on hand to cover expenses for an extended period of time.

Many think of art investors as rich or well-to-do. And, some are. Many, however, are average working folk who’ve been lucky enough to sock a few hundred or a few thousand dollars into a piece of art – this is all an art investment is.

As ordinary working folk, art investors should follow the financial planning advice almost everyone who’s not Bill Gates rich should follow – keep enough cash on hand to cover six to eight months of expenses (or more if you can afford it).

This way, you won’t be forced to sell an art investment you’d rather keep – and watch appreciate – for years to come.

3. Don’t Over Invest: As in, don’t pay too much for a piece. As an art investor, how do you prevent over investing in a piece – especially if you’ve fallen in love with it?

Quite simply, you learn about the artist, specifically: (i) are they represented by an agency; (ii) what have their other works fetched; (iii) what are some of their recent showings; and (iv) what do their art reviews say.

Knowing this type of detail will give you a clear indication not only of the current value of the piece, but its likely future value as well.

Over and beyond this, get an official appraisal from a qualified, certified art appraiser.

Protecting the value of your art investments during troubled economic times is not hard. It’s the same as protecting any of your assets – pay attention, don’t panic and sell, and keep ready cash on hand to handle day-to-day living expenses.

If you do these things, you can ride out volatile markets – and profit from your art investments during boom times.

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