Is Art Investment the Next Opportunity to Consider?
July 23, 2019 (Investorideas.com Newswire) Have you taken a moment to look at your investment portfolio recently? Can you say, without a doubt, that your portfolio is diversified and covers all avenues of possible investments? You have a portfolio manager that watches over it, and each decision made is for the betterment of your investments.
Maybe you do have an incredibly diverse portfolio, or maybe it needs something different. Either way, it's time to take a look at the possibility of investing in art.
It's important to have no just a diverse portfolio, but also one that includes alternative investments. Many of the investments you already have are likely ones that are highly correlated to the market. This means that your investments rise and fall alongside the market. Having a non-correlated investment can help balance everything out, and art is one of those types.
Art investments are not new, so why talk about them now? Many economists worry about the possibility of a looming recession that could happen as early as next year. If that's the case, many portfolios would likely crash with the market. Adding in that non-correlated investment option (art) could be the save that many portfolios in America need if the predictions do come true.
Even if a recession doesn't come for another 50 years, it's not a bad idea to still consider adding art to your portfolio.
Historically, Art Perseveres Through Crisis
During a recession, it takes time for the markets and business sectors to bounce back from the crash. The most recent 2008 Great Recession is an excellent example. The effects of that market crash lasted for years.
However, if you go back and look closely at how art performed during 2008, you'd notice that the industry actually performed quite well. Art is a tangible investment, which allows it to withstand a market crash even when everything else in your portfolio is dropping in price.
If history tells us anything, it's that art is worth the investment.
Buy Shares, Not the Whole Thing
Before, investing in art meant you had to buy the entire piece, which could cost you millions of dollars. In 2018, Leonardo da Vinci's Salvator Mundi sold for over $450 million, and investors continued to outbid one another throughout the year on other famous pieces. The point being that art can get expensive really quickly, especially the widely known pieces from classic artists.
Not everyone can afford to buy a painting by the amazing Leonardo da Vinci. However, many could likely afford to buy a share of one of his masterpieces.
MasterWorks is a newer company that is changing the way we invest in art. Instead of purchasing the entire piece and hanging it in your home, you can now buy a share of a painting like you would buy a share of a public company. This has made art investment more affordable and something that any American can take advantage of.
Art is in Demand
The demand for art continues to grow. It's grown so much in the last few years that a 2017 report on the Art and Finance Industry predicts that it will grow to $2.7 trillion by 2026. Art has been, and likely always will be in demand.
When there is a demand, that can make it a good investment. Demand tends to drive the price of something higher. If you can find yourself an opportunity where there isn't a high demand for it yet, then you've likely hit a goldmine investment. However, it should still require some research to back up your gut feeling.
Ready to add art to your investment portfolio? There are many advantages to this type of investment that make it worthwhile. If anything, though, your investment will help out an artist.
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