Tips for First Time Art Investors

In the current economy, making an investment in fine art is a very good idea- if you know how. As this article states, 'buying an unknown artist's work for under $100 and realizing a fortune after the artist is recognized is an exciting fantasy. The realities, though, may be quite different.' Buying art solely as an investment is riskier, in many cases, than the stock market. Most art decreases in value. Over 95 % of the first one-person shows in New York (or any major city) in any given season are from artists never heard from again. With those cautions in mind, here are some ways to enter the art market: Buy art only because you "experience" the work, have a strong reaction to it, and want to live with it. That way, if it goes up in value, you have everything to gain. If the value doesn't increase, you have the pleasure of living with it. Also, as some seasoned art dealers would advise, “our philosophy is buy what you love, but know what you’re buying,” says Russell Singler, owner of Art You Grew Up With. Although it is an excellent option for investment diversification, Ruth Knowles of The Fine Art Fund says they typically tell investors not to put more than 5 per cent of their net worth into art, as it is a long-term investment, which can be relatively illiquid – depending upon how you invest in the market. She also points out that it’s a very large and diverse market: “The top 10 per cent of the contemporary market will behave very differently to the bottom 25 per cent of the contemporary market.” Photograph of "Pensándolo II" by Mexican artist Juan Sebastián Barberá Durón.