Investing in alternative goods such as art, wine and other luxury goods are getting more and more popular because of the low interest rate on traditional products such as savings accounts and savings insurances. However investing in alternatives, such as art for example, also has its risks. What do you have to pay attention to and what do you have to avoid?
Interest in art has been rising gradually and constantly these past years. Art prices skyrocketed when the 2008 financial crisis broke out in all its intensity. Investors started (and still are) looking for safer alternatives for risky shares and bonds. Today investment advisors are still asked whether art, cars and other luxury goods are alternatives worth considering in the search for a good investment.
Investing in art for beginners
Investing in art requires knowledge about it. The art market can be very shadowy for a starting investor, with its many players and numerous artists. People often buy art after having received a tip from someone who does not know the market well enough. The biggest risk overpaying for a specific piece. It is not evident to get a correct estimate from an unknown artist, which is not favorable for your profit. It is impossible to predict which works of art will rise in value, but there are a few trends you can see, like post-war art increasing in value. If you would like to invest in art to realize a nice profit on the middle long term, you can purchase a few smaller pieces of different artists, but you would still take a risk. You can never be sure whether or not an artist will make it big. Therefore, you should always buy something you like. If you cannot realize a profit, you still have a nice looking decorative piece.