Are you looking for alternative investment options? Something different than your standard mutual funds, stocks, 401(k), or even index funds? Alternative investments allow you to diversify your portfolio in an even bigger way, increasing the security and your chance of a better return.
Art has become a popular alternative investment option for many. Make no mistake, though, that art investment is not anything new. Many people invest in art without even realizing it. Take a look at some of the artwork you have around your home. All of those pieces could be an investment down the road.
As with any investment, there are risks to investing in art. Does that mean it’s not a good investment? Not necessarily. However, it means that, as usual, you should do your research and weigh your options to see if investing in art is good for you and your family.
The hard part about art is that it’s subjective, meaning that it’s based off an individual perspective. What you may like and think is worth millions could be worth nothing to someone else looking at it. If you have enough people that feel that particular piece isn’t worth anything, then you’ve likely picked the wrong investment.
With that said, though, art can be a powerful investment, when done correctly. Recently, companies like MasterWorks has made art investment more readily available to everyone around the world, not just those with millions of dollars. Now, you can buy shares of a piece of art like you would for a public company.
At the end of 2018, The Wall Street Journal named art, wine, and cars as the best investments of the year. The art market showed a 10.6 percent return while other investments fell several percentages. Art continues to grow in popularity, making it more and more powerful each year.
Art Moves Slow
The stock market is usually considered to be highly correlated, meaning that stocks move with the market and react to what happens in the news each day. A correlated investment can be quite risky due to instability, uncertainty, and how quickly it can move.
Art, however, is non-correlated. Masterpieces don’t follow a market, they don’t typically change value drastically depending on the latest news story of the day, and many pieces often increase in value at a steady rate (even if the market is going down).
Art is Everywhere
The great thing about art is that it’s global. Everyone knows what art is, even if you don’t like half of it. Unlike the stock market that is limited to the region it’s in (i.e. stocks bonds being limited to the United States), art is a global community. You can buy something from one country and sell it to a completely different country across the world.
So, if your home country’s market isn’t performing so well, you could still succeed in your art investment by looking for potential buyers somewhere else in the world.
Art Usually Wins
Art performs in the stock market every year. While many are unsure as to how the stock market will perform in the coming years, you can almost guarantee that the art industry will hold out.
The art market often outperforms the stock market, and the coming years will most likely stay the course. To top it off, during a volatile stock market, that is when many investors will turn to tangible assets like art to invest in.
Year after year, researches see an increase in the popularity of art investment, and that will likely continue.
Art is a powerful investment. Does that mean you should invest in it? That will come down to personal preference. It is, though, a good alternative investment to add to your portfolio if you’re looking to diversify.
Disclaimer: This content does not necessarily represent the views of IWB.