Diversification is important for an investment portfolio. We all know the value of investments go up and down from time to time. It is always a good idea to diversify your investment to balance out the gain and loss of different investments in your portfolio over time. That’s the perfect reason to invest in art. According to Bloomberg, art, like gold, ostensibly represents a financial safe haven during turbulent times. If you choose the right art work to invest in, the return on investment can be explosive and easily beat gold.
Why Invest in Art?
In 1958, “Salvador Mundi,” a painting created by one of the most famous artists in history, Leonardo Da Vinci was sold at a Christie’s auction for only US $60, because it was considered to be a copy painted by Leonardo’s follower, Bernardino Luini. On November 15, 2017, the painting was sold again for over US $450 million to Saudi Arabia’s crown prince Mohammed bin Salman. It sets a record for the world’s most expensive painting ever sold in an art auction. This is a whopping 749,999,900% (7.5 million%) increase in value from the initial US $60 purchase price the original buyer paid for the painting. For savvy investors, the painting earned a CAGR (Compounded Annual Growth Rate) of 30.77%. That is huge, even compared to Warren Buffet, who has achieved a CAGR of 19% over 50 years making him one of the most successful investors in the world. Investing in art can be highly profitable. However, you must choose the right artists to buy from.
Which artist to invest in?
Here are a couple things you need to consider if you want to invest in art:
- Is the artist well-known? For example, has his or her art been seen in different media?
- Is he or she continuously producing?
- Is his or her style recognizable?
Don’t miss out on the up and coming artists. Although investing in famous art by well-known artists is the safe and obvious choice, you will likely pay more for each piece you purchase and surely won’t replicate a CAGR of 30.77%. Alternatively, you could invest in art by up and coming artists. Investing in up and coming artists has several advantages.
- Lower investment cost with higher return on investment value
If the up and coming artists you invest in blow up, the explosive growth in value could be compared to when investors bought bitcoin for just 200 dollars a coin and watched its value grow exponentially.
- Avoiding fake art
According to Artnet.com, Switzerland’s Fine Art Expert Institute estimates of over 50 percent of art circulating on the market is forged. Investing in art from up and coming artists ensures you’re less likely to buy a forgery, because there is most likely no forgery of their work out there yet, before they blow up.
Here are a couple artists you should invest in:
- Takashi Murakami: Murakami is a Japanese contemporary artist know for his colorful cartoon characters in his works.
- Yee Wong: Yee is an extremely talented Asian-American contemporary artist. She is also named the artist to watch this year. This artist has tremendous potential. You should pay attention to this rising star.
- Shepard Fairey: Fairey is an American contemporary artist known for his “Andre the Giant has a Posse” (…OBEY…) sticker campaign.
- Kusama Yayoi: Yayoi is a Japanese female artist who is known for her famous polka dotted art works.
- KAWS: KAWS is a pseudonym used by famous American artist named Brian Donnelly.