How to Invest in Art for Beginners

Remember the days when investing in fine art was reserved only for upper-class individuals? You know, guys in monocles and ladies in fur. 

Okay, we’re exaggerating, but you know what we mean. Luckily, the stereotype that art investments are the domain of only those with proper art education and certain economic status is long gone. That’s correct. Investing in art has entered the mainstream. 

So, can anyone now start investing in artwork? In theory, yes. In practice, it’s not that easy. 

While art investments have become much more available, for them to yield the expected results requires some time spent on research and planning. Knowing a thing or two about the art world and art investing is also a bonus. We can help with the latter.

Read on, discover the basics of investing in art, and learn the best ways to get started. 

Fine art as an investment

First things first, let’s address the elephant in the room - is investing in art even worth it? 

It’s a natural question to have, especially since we’ve already mentioned that it requires time, research, and some general industry knowledge. But isn’t that the case for other classic and alternative investments, too? 

Art investment offers a unique blend of financial and emotional rewards. For beginners, it’s an exciting way to diversify a portfolio while indulging in personal taste and creativity. Here are some key benefits:

• Tangible Asset: Unlike stocks or bonds, art is a physical asset you can enjoy in your home or office, making it both a financial investment and a lifestyle enhancement.

• Portfolio Diversification: Art isn’t tied to the stock market’s ups and downs, making it a great hedge against economic volatility.

• Long-Term Appreciation: High-quality art has a history of increasing in value over time, especially as demand grows for emerging or established artists.

• Emotional Connection: Investing in art allows you to purchase pieces that resonate with you, creating a personal connection to your investment.

• Status Symbol: Owning art can elevate your social standing and enhance your personal brand, positioning you as a cultural connoisseur.

 

Types of art to invest in

Investing in art offers a variety of options, each with distinct characteristics, benefits, and challenges. Here’s a closer look at three key types of artwork you can invest in:

Old Masters

Old Masters refers to works created by legendary artists from the Renaissance through the 18th century. By Masters, we mean such legends as Leonardo da Vinci, Rembrandt, Michelangelo, Breugel, etc. 

These pieces are often found in prestigious auctions and are recognised globally for their historical and cultural significance.

The key advantage of investing in Old Masters is their long-term stability. These artworks are recognised for their enduring appeal and scarcity, making them a relatively safe and reliable investment. Their historical significance adds to their consistent demand in the market, which helps maintain or even increase their value over time. 

However, the high entry cost is a major drawback. Old Masters are often priced in the millions, making them inaccessible to most investors. Additionally, the market for these works is highly competitive and limited, which makes it difficult to find the right piece for purchase.

Blue chip art

Blue chip art refers to works by well-established artists such as Picasso, Warhol, or Monet. These pieces have a proven track record of market success and are widely recognised by collectors and investors.

One of the biggest advantages of blue chip art is its steady appreciation. These works typically grow in value over time, offering a safe and secure investment option for those looking for long-term financial gain. Additionally, the liquidity of blue chip art is a key benefit, as these pieces are often easier to sell due to their consistent demand. 

However, similar to Old Masters, the high cost of entry can be a barrier for many investors. While blue chip art offers reliable returns, the growth potential is usually lower than what can be achieved with emerging artists, making it a more conservative option.

Up-and-coming artists

Investing in up-and-coming artists involves identifying and purchasing works by emerging talent early in their careers. The goal is to invest before the artist gains widespread recognition, with the hope that the value of their work will rise significantly over time.

The key benefit of this approach is the potential for high growth. If an emerging artist gains success, their works can appreciate dramatically, offering substantial financial returns. Additionally, works by up-and-coming artists are generally more affordable, providing a lower cost of entry compared to established names. 

The thing is, however, that investing in emerging artists comes with a higher degree of risk. There’s no guarantee that these artists will succeed, and their value could remain stagnant or even decline. The market for emerging artists is also less predictable, making reselling the artwork more challenging if the artist’s career does not take off as anticipated.

How to invest in art

Investing in art is about more than just choosing the right pieces. It’s about deciding how you want to invest, whether through direct ownership or innovative approaches like art investment funds. Let’s break down your options:

Art ownership

You can go the traditional route and buy physical artwork through the primary or secondary market. 

• The primary art market offers fresh works directly from artists or galleries, often with more risk but a higher potential for appreciation if the artist becomes more recognised. 

• The secondary art market involves previously owned art, typically through auctions or galleries, where prices reflect established market value but tend to be higher, especially for well-known artists.

Direct ownership usually requires a long-term commitment, research, and significant capital. While the rewards can be high, it’s a more complex path without expert guidance.

Art funds & fractional shares

Art investment funds, like those from Splint Invest, allow you to invest without purchasing individual pieces. These funds pool money from multiple investors to build a diversified portfolio managed by professionals. This approach reduces risk and lowers the barrier to entry for those without deep art knowledge or large sums of capital.

However, art funds are less liquid and often operate on fixed terms, with profits distributed at the end. Researching the fund's performance and the expertise of its managers is key before investing. 

You can learn more about how our art fund investments work here: Why Invest in Art? Transform Your Portfolio with Masterpieces 

Art investment pitfalls to avoid

If you want your art investment to have a chance of yielding some great returns, do everything you can to avoid the following pitfalls: 

• Lack of research: Failing to thoroughly research the artist, market trends, and the artwork's history can lead to poor investment decisions.

• Overpaying: Avoid getting caught up in bidding wars or hype that can drive prices above an artwork’s actual market value.

• Ignoring authenticity and provenance: Always verify the artwork's authenticity and ownership history to avoid purchasing fakes or stolen pieces.

• Underestimating costs: Remember to factor in storage, insurance, and maintenance costs, which can eat into your returns.

• Expecting quick returns: Art is typically a long-term investment, so be prepared to hold on to pieces for years before seeing significant appreciation.

The art of art investing

And that would be it. As you can see, diversifying your investment portfolio with art is much easier than some might tell you. All it takes is creating your Splint Invest account!

Through our platform, you can access the best art investment opportunities, pre-vetted and managed by the leading industry experts. Browse our available art funds today and tap into the incredible potential of art investments!