Masterworks sponsored this post. All opinions expressed are mine.
Diversification is the key to financial and investment success.
Art and collectibles are often overlooked when discussing stocks, bonds and real estate.
According to Deloitte 88% of fund manager recommend allocating funds to art. This trend seems to be changing.
The Wall Street Journal reported that “While the S&P 500 declined 5.1% in 2018 the art market returned 10,6%.” Art outperformed gold, real estate and classic cars as well as the S&P 500 in 2018.
Art has caught my attention as I continue to save and invest money.
Read this: Art in every Investor’s Portfolio
Table of Contents
Art Investing: Traditional Methods
Masterworks are the best way to invest in fine art.
Is art a good investment?
Art Investing: Traditional Methods
While there are some great resources available, it hasn’t been easy for most investors to get started.
We’ll quickly go over a few ways to invest in art.
You can spend up to 7-8 figures
You can buy the art of well-known artists who are in constant demand and whose value is increasing. These art investments range from $2mm to $20mm!
I’m certain we all have some money lying around to invest in artwork, right?
Take a chance with up-and-coming musicians
There is no way to predict the value of art by up-and coming artists.
Prices and art are subjective, depending on the artist, the market, and any future demand.
It’s like investing in new stocks — not the best way to make money.
There is nothing wrong with investing in art that you like. Just know that it will most likely not be a large return on investment.
Art Investment Funds
A “fund” is another way to invest in art. These funds are managed privately by an art investment or advisory firm that receives a fee for the management and a percentage of any return.
They are only available to accredited investors and not the general public.
According to Investopedia’s definition, you must earn more than $200,000 per year, or $300,000.00 for a joint income for the past two years, with the expectation of earning that same income or even higher in the current calendar year.
It is not necessary to be a multi-millionaire at this stage, but it excludes a large majority of people who might have an interest in art.
According to the traditional methods, the majority of us won’t be able ever to invest in artworks that will appreciate the most. It was not until recently that the art market began to change.
Masterworks are the best way to invest in fine art.
After you have a basic understanding of investing in fine arts and the various traditional methods, I would like to introduce you to Masterworks.
In the digital age, it is easier and more fun to invest in art.
Masterworks, the first of its kind, is an art investment platform that lets you invest in some of the most valuable fine arts, such as works by Andy Warhol and Claude Monet.
Imagine it as a real estate crowd-funding platform where you can get a piece of an asset for a fractional cost.
Prior to now, only the extremely wealthy could afford to invest in famous art.
Masterworks, however, allows investors to buy shares (or interests) in a work of art with as little money as $1,000. This is similar to how investors can purchase shares in publicly traded companies.
It works in just a few simple steps
- Masterworks purchases the painting. Their team of experts in the art industry purchase multi-million dollars works of art based on historical appreciation rates of 9-15%. The team purchases them at a price below fair market value using established auction house relationships and auction guarantee strategies.
- Masterworks will file an offering at the Securities and Exchange Commission and then respond to any comments made by the SEC to qualify the offer. They do ensure SEC compliance.
Be sure to check that any platform you select is SEC-compliant and adheres to regulations.
- Investors will be able buy shares at $20 each once the SEC and FINRA have reviewed it.
- Masterworks publishes timely content and provides updates to shareholders. It also uses analytics and data in order to bring transparency to the largest unregulated market in the world.
- This is an investment strategy that will last up to seven years. A collector may make an offer at any time to purchase a painting you have invested in. This will trigger a vote with all shareholders to sell the painting. If a majority vote is cast to sell the shares, you will receive your share (after deducting the costs, as specified in the Offering Circular).
Masterworks art investments are long-term and not liquid.
It’s pretty cool that the team wants to facilitate sales or trading through brokerage relationships. This is similar to how platforms such as Vanguard work. It will take some time to set up a trading platform for art shares.
It’s exciting to see that they’re trying and pushing for an art investment brokerage platform.
Learn more about Masterworks and the years of experience they have in purchasing art.
Is art a good investment?
In the past, investments in fine art have shown solid returns. They can also be valuable assets to your portfolio.
Art is an excellent collectible, and the value of these collectibles increases or holds as they age or become more rare or sought-after. Check out this chart from Artprice. It’s the closest thing the industry has to benchmark.
Investing in art: A modern way to diversify your portfolio
Masterworks’ revolutionary art crowdfunding platform allows anyone to diversify investments with a lower entry barrier. Art investments are not just for the super-rich.
