Diversify your investment portfolio
So is investing in art a good way to diversify your investment portfolio? And how should you invest in art? What makes art a good investment?
First Answer:
- If you are new to art collecting then your journey is just beginning and yes art collecting is a great vehicle to use on your way to diversifying your overall investment portfolio. I will come back to this later in this post and further posts in the future
Second Answer:
- It may seem a little daunting for some who are starting out for the first time into the mysterious world of art collecting but it doesn’t have to be! believe me I know where you’re coming from but the truth of the matter is that these days it is relatively easy and not that hard considering all the online resources available to you – no need to have a complete library of art books nor do your need an arts degree to start on your art investment path, the only hurdles you will find on that journey is time it takes and of course money! but with a little patience and a willingness to learn you can lean to collect art just like the best of them there has many examples in history that can account for that so the best way to invest in art is to make a start so start researching today you first step maybe just reading this post
Third Answer:
- So what makes artworks a good investment? Art has continued to line the walls of collectors worldwide for centuries Henry the eighth was a collector, did you also know that Rembrandt was himself an avid collector amassing a collection during his lifetime of contemporary art as well as older works, the collector market has never been stronger steadily growing and is now thought to represent over 400 million serious collectors worldwide a lot of them collecting all types of artworks, people everywhere today are looking for alternatives to diversify their portfolios and create better life outcomes just having money tied up electronically is not the only answer, why because art has no correlation to the stock market meaning paintings can go up in value even when the market crashes making it a good diversification for an investment portfolio, more people today are purchasing art for the home or office space giving them an added bonuses of the aesthetic pleasure hanging a great artworks brings into their lives, the possible tax Breaks, plus the possibility of a return on investment.
So which art represents good investment quality? I personally can’t answer that totally for you because for some it’s purely how art makes them feel also how it contributes to their well being – and for others it’s both how it contributes to their well being and also from the possible investment return, only you can answer which way you should go.
To answer what art represents good investment quality first there a few things you should keep in mind, not all artist are going to show price appreciation in fact a lot don’t – artists come in or out of fashion depending on to some extent on the trend in home design so particular styles struggle well other styles flourish, the art market environment itself is also like most markets it is affected by changes in supply and demand for example demographic downsizing as we have seen with the baby boomers retiring, this downsizing effectively flooded the market resulting in downwards pressure on prices, the changes in government policy also affected supply, we seen this in 2011 in Australia with what the sweeping changes SMSF had on the local market, these changes also brought a flood of supply to market thus again resulting in downward pressure on prices with some sectors of the art market temporarily effected and other sectors still to recover. Fundamentally all these changes and others affect how prices behave with swings in the upwards or downwards direction, so in many ways the art market is not unlike any other investment in that it takes prudence to getting it right not easy to accomplish but not out of reach for the discerning investor.
Another point to remember when buying for investment, is to buy art with an investor mindset, give yourself a margin of safety, look for works by artist that show at least price stability, you don’t want to buy art that’s been in decline for decades, leave those works to brave speculators, all investment no matter which investment should have a track record of price appreciation, at the very least beating the annual inflation rate, so don’t buy with to much emotion attached, if you don’t succeed, sit back and remember tomorrow will bring just as many opportunities, and maybe even a better quality, don’t worry yourself to much if you miss the piece you thought you had to have!
A couple of more points, you are better of sticking to the Australian Art classics, by way of comparison, when it comes to popular music, you can’t go wrong with the Beatles the Beatles have proven they are above fashion and changing musical tastes they are “the original band” and therefore their autographs and memorabilia will always be in the most demand and will command the highest prices it is for this same basic reason I believe you can’t go wrong sticking to Australian Classic Artworks, everyone has heard of Sidney Nolan, Arthur Boyd, Fred Williams, Russell Drysdale and Pro Hart.
And there are 5 key reasons why I think you should buy the Australian Classics Artworks right now
1. The classics do not go out of fashion they have enduring appeal.
2. They have a wider base of potential buyers in Australia, the classics are most likely to draw attention of the wealthy buyers.
3. Over the long term they have shown strong stable rates of growth in value, even though average growth rates for some have stalled in the past decade others have surged e.g. Margaret Olley, so this leaves some of these Australian classics a little overlooked and are now looking very good value I think some now look undervalued.
4. Good quality Australian Art price movements are a simple case of supply and demand. We know their supply is limited and can only decline, so prices are demand driven.
5. According to a recent analysis by Boston Consulting Group (BCG), millionaires currently hold nearly half of all global wealth. They also predict that the total number of millionaires around the world will increase from 22.1 million to 27.6 million by 2023. This is a lot of potential spending power chasing a few rare items. In my view, the next 10 years could see significant rises in the prices of Australian Classics Artworks
NOTE: Some exclusions and limits apply, the above information is for informational purposes only and should not be taken as financial advice you should seek an independent financial advice consultant or tax adviser before proceeding with any financial decision The McCorry Collection Gallery and its directors are not tax advisers or financial advice consultants.