You may have heard that investing in art can not only help you diversify your portfolio, but it also provides a hedge against inflation that’s independent of the stock market.What’s more, long-term returns are in line with what you can expect from bonds.But perhaps you think, owing to a spate of recent high-profile art sales that involved hundreds of millions of dollars, that the market is inaccessible. That’s far from true.
In any case, to help you get started, here’s what you need to know about how to invest in art.
First, it’s okay if you enjoy art and wish to also invest in it. Some people wrongly assume that the two are mutually exclusive. And as we say, using artwork to diversify your investments is a wise move since you’re protected against inflation and market volatility.This means that when traditional assets such as stocks and bonds don’t perform well, alternative investments like art usually hold up.
While there’s risk with any investment, you can also expect solid returns over time. But don’t think you need to be uber-wealthy to penetrate the market because that’s not so. For example, online art sales hit $12.4 billion last year – double 2019 levels, according to the UBS Art Market Report.
Is it Difficult to Invest in Art?
There are multiple avenues through which you can access and buy art. Traditionally, investors go through an auction house or dealer, or use art fairs. But remember those recent record online sales? Yes, technology has very much helped to expand the art market, which, in turn, improves liquidity. Using platforms such as Yieldstreet permits you to break into art investment by purchasing and unloading small shares of disparate kinds of artwork, meaning you don’t have to hand over a large sum for a piece of fine art.
What About NFTs?
Non-fungible tokens, or NFTs, make up a new space in the online art market. With these digital forms of traceable and verifiable artwork, you get digital integrity that cannot be supplanted. Further, art NFTs avail artists of the opportunity to sell their work straight to consumers, and they give individuals access to these works in an open marketplace.
And because art NFTs are propped up by blockchain, investors can easily do business. What’s more, blockchain fosters authenticity and transparency.
How Can I Buy an Art NFT?
There are multiple ways:
- Check out an NFT marketplace. You can go to websites and purchase directly from artists, or to an NFT marketplace.
- Create a digital wallet. You should fund a digital wallet that you can use to make purchases, regardless of the platform. You can also use Ether tokens as payment.
- Make a bid. Once you’re all established, you can scroll through the site and bid on the piece that piques your interest.
Is There Other Advice About Buying Art?
Yes. Do research on your favorite artist to learn how they’ve established their brand and whether their growth rates are sustainable. You also want to check demand from collectors, and invest in works produced by artists who have a forward-thinking vision of how they hope to add value to their art.
Now that you know how to invest in art, you can proceed to diversify your portfolio without worrying about inflation or market volatility. The alternative investment platform Yieldstreet, which seeks to help people produce income independent of traditional public markets, offers vetted investment opportunities across asset classes, including art. To help you break into the art market, we suggest you give Yieldstreet a look.