Essential Insights for Buying Art in 2024

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Buying art can simply be a passion-driven experience, finding a piece you love or know would fit perfectly in your home, and buying it regardless of your assessment of it as an investment. But art as an investment can be used in a strategic way to build your asset portfolio.

As the Federal Reserve’s elusive stance on potential interest rate decreases in 2024 causing uncertainty and erratic behavior in traditional markets, alternative assets are gaining appeal as safe havens for parking cash. This shift is driven by the fact that alternative assets often exhibit a lower correlation with major economic events and stimuli, including policy announcements from entities like the Federal Reserve. This stands in contrast to traditional assets like stocks and bonds, which can be more directly influenced by such events. Investors are increasingly drawn to alternative assets.

If you’re looking to purchase art in a strategic manner, what should you be looking for in a purchase beyond your own taste? Navigating the diverse art world requires narrowing your focus by selecting a specific genre or time period of interest. To aid in your search, consider collaborating with an art advisor or an art-focused investment company. These professionals can assist in determining the fair market value of art pieces, ensuring a wise investment.

Once you’ve identified your area of interest, be clear on the type of art you’re acquiring. Originals, the one-of-a-kind pieces, carry the highest price and offer the potential for significant returns. Prints are more affordable, but less likely to yield substantial profits, though limited editions of prints tend to hold more value. High-quality prints, like giclées, closely resemble the original and may be more expensive. Then, of course, mass-produced copies lacking a limited run are the most affordable but their value is also least likely to appreciate.

Before investing in art, be aware that art should only represent a small portion of your overall investment portfolio. It’s more of an extra than a primary asset. While you might see some profits, relying on art for substantial returns is unlikely and always think of art investment as supplementary, similar to real estate. Fine art is a non-liquid or illiquid asset. Unlike stocks or savings accounts that can quickly generate cash, selling art takes time.  Don’t depend on it for consistent income. Also, be mindful of taxes on any gains, as the IRS treats art as a collectible.

For those of us diversifying our portfolios, getting into art is a fun way to add to your assets, showcase your taste, and enjoy the experience of collecting pieces of true beauty. Investing in art in 2024 can be a fulfilling and potentially lucrative venture and has proven to be relatively stable during economic downturns, often maintaining or even increasing in value when other assets decline.