Art, unlike any other commodity, appeals to us for reasons far beyond what it’s worth financially. Art involves emotions or passions, and with ownership comes pride, prestige and pleasure. Yes, the art that you love pays a dividend every day! Can you really say that about your monthly investment report? Why not put at least some of the money earmarked for your RSP towards art?
My philosophy about acquiring and investing in art is, with the proper guidance and knowledge, beautiful art can also turn out to be a sound investment. As I tell my clients, “buy for love, but keep an eye on the investment potential.”
As with everything, there are investment experts who advise for and against buying art. The problem lies in expectations. Art cannot be measured against other traditional investments such as stocks or real estate. Artworks are distinctive, emotional, unique and don’t fall into any traditional analysis process.
But art also has some inherent properties that limit its ability to be viewed as a formal investment strategy. First of all, it is not a liquid asset and there is not a readily available marketplace to sell your assets in an easy and efficient manner. In addition, there are some very substantial costs involved in the disposal of art compared to other assets, when you take into account dealer markups and auction house commissions.
There are some hidden costs to having art such as insurance, storage, conservation and transportation that are not required with other equities. The vast majority of art is definitely a “buy and hold,” long term investment that often takes many years to dramatically increase in net worth. So where does art fit into the world of investments?
The best way to invest in art is to buy only the art that you would love to own. With this investment strategy, you can never lose, because you will have something you love regardless of its value in the outside world. The truth is there is great art everywhere and it is not always in relationship to its price.
Alan Bryce is the author of “Art Smart: The Intelligent Guide to Investing in the Canadian Art Market”, and owns the largest private collection of Canadian painter Doris McCarthy’s art. He currently consults with individuals and buys, sells and rents Canadian art. He can be reached at 416.691.4231 or via www.passagesart.com
Art Smart is a comprehensive guide to the Canadian art market. This informative volume covers the inner workings of the art world, from dealer secrets to expert strategies on buying and selling.
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