With the inflation rates globally rising alarmingly over the past year or so, all of us have been looking for ways to be more financially literate and responsible with our money and investments. As a professional artist and someone who has been dedicated to expanding their financial knowledge, I have always been fascinated with art’s relationship with the world of finance. It should come as no surprise that art is often purchased because of its potential monetary value than its artistic value. Art is a class of assets on its own.
So, in this blog, we will be taking a look at why investing in the art market can help you hedge yourself against inflation and aim towards greater financial independence.
Diversification of your investment portfolio
Diversification is the first piece of advice one gets when getting into investing and the same applies for art investment. Therefore, we have to diversify and hedge our investments risks and inflation by investing in different asset classes and art is one of them. Even when purchasing art, art collectors have to be mindful that artists can fall in and out of trends and the value of their work is definitely impacted by those changes. When you’re invested in a single artist or a single artwork, if the market for that specific artist or genre goes out of style, you have complete exposure to that depreciation in value. So experienced art collectors buy artworks by a variety of different artists.
Additionally, acquiring a diverse portfolio of artworks, focusing on incomparable examples of an artist’s most recognizable work, from the most important period of their career, is another way to maximize investment returns because these works are most likely to achieve the highest prices when it’s time to resell. It is also important to focus on artists with strong markets and career trajectories.
Art is tangible
As a durable asset, art is by and large a commodity that most people connect with and have some sort of understanding of. Often investors make the mistake of investing in products they don’t know a lot about, but art is something that people cherish and have a subjective appreciation of. There are many works of art that are highly valued but are not universally adored and art sellers and investors have the additional benefit of being able to actually look and “touch” their investments on a daily basis in a way not available with stocks and bonds.
As mentioned in my previous blogs, you do not have to be wealthy to purchase art or make art investments, it is a safe haven for anyone looking for a valid refuge from inflation. Multiple studies have shown how physical artwork and digital artwork (thanks to NFTs) can bring long-term financial benefits regardless of other asset classes.
A possible passive income stream
In the world of art dealership, there are many possible ways to create passive income streams using the artworks that you have collected. One popular way is to loan your collected art to auction houses or museums to promote that particular artwork and increase its value. This is a well kept secret amongst collectors who are able to beat inflation and create a sizeable revenue for themselves by frequently shipping out their collected items to exhibitions all around the globe.
These are some of the ways that art can help you give inflation a beating and help boost the value of your art investments. As passionate one can be about art, we also have to acknowledge and take advantage of the financial perks that collecting art comes with. So, start looking into investing art and how that can help in securing your financial future!
Shop my artwork collection here.
Check my digital artwork collection here.