Why you should invest in art — and artists
Updated: Jul 13
Imagine this: you spent your life working for the post office, never having earned more than £23,000 a year.
You lived for 50 years in a small one-bedroom flat with your spouse, a librarian. You never travelled and most days ended with a TV dinner.
You had no formal art training, but you did have a passion for the subject, particularly contemporary works.
The little money you earned, you spent buying inexpensive pieces directly from artists. It became all-engrossing to the point that there was little room to even put the works in your flat. Several decades pass.
You are now sitting on one of the most significant collections of modern art in the world, spanning 5,000 pieces and worth countless millions.
Sounds unbelievable, doesn’t it? Yet this is exactly what happened in the case of Herbert Vogel and his wife Dorothy, an ordinary couple from New York, who collected artworks from creators before they became famous — including a collage from Christo in exchange for cat-sitting.
You get the point. Art can have huge investment potential and its opportunities are not limited to the elite few in the know.
While collecting might carry a cachet that suggests an exclusive world, whose inhabitants trade blue-chip artworks that regularly set auction records, it has in recent times become much more mainstream.
The accounting firm Deloitte estimates that by 2026 over $2.7 trillion (£2.17 trillion) will be invested in collectible assets, of which the largest part will be art objects.
And to place that into some context, in 2022 more than 85 per cent of wealth managers recommended art as a way of diversifying their portfolios.
But how do you buy art and how can you make money out of doing so?
The first rule? Forget about making a big return on your investment — because art can never be a guaranteed path to riches. Even those artists whose star has risen can be reassessed (repriced, if you like) and see their sales potential decline.
With that caveat, it is always best to buy something you enjoy looking at. When the artist that you have chosen doesn’t become the next Tracey Emin, at least you have an aesthetic piece that gives you pleasure.
Here are some more tips to bear in mind:
Do your research
Educate yourself on the art market, the artists you’re interested in, and the types of pieces that tend to appreciate in value.
There are many resources available to help you with this research, including books, online articles, and art market reports.
Set a budget
Prices can vary greatly from a few hundred pounds to millions. So set a limit on what you can afford to spend. This will help you avoid splashing out at auction on that David Hockney.
The golden rule is always to invest within your means.
Choose your art style
Decide on the sort of artwork you’re interested in. Some categories, such as contemporary art, tend to have a higher potential for appreciation, while others, such as antique or historical artwork, may have a more stable or predictable market.
Build relationships with galleries and dealers
One way to stay up to date on the art market and gain access to valuable artworks is to establish good relationships with those in the know.
These professionals can provide insight into the art market, introduce you to emerging artists, and help you acquire sought-after artworks.
Go to the fair — and the auction
Attending art fairs and auctions can also be a great way to stay informed about what’s out there and provide opportunities to acquire valuable artworks.
These events can provide a platform to see a wide range of artwork, network with professionals and gain insight into market trends.
In London, such fairs will range in exclusivity and price from Frieze to the Affordable. Many countries will have their own similar events.
Take a chance on emerging artists
Investing in emerging artists can be a great way to buy into a possible rising star at the ground level, while also supporting up-and-coming talent.
However, do some background research and consider the potential for appreciation in value over time.
A good way to identify new talent is to attend the final-year shows of top art schools. Sometimes it’s possible to pick up on the buzz surrounding one or two students’ works. Buying directly from them at this stage could prove a very shrewd move.
Once you’ve identified an artist whose work you admire, building a relationship with them directly, visiting them in their studio can help provide further valuable insights.
Not only do you learn more about them as people and creators, their motivation and mission, you may also gain knowledge of what’s in the pipeline.
Support your local sheriff
Well, not literally. Buying an artist's work provides them with financial support which means they can continue creating more artwork.
This happy circle enhances all our lives. Art contributes to our wellbeing and promotes communication between cultures.
It enriches us by sometimes holding up a mirror to our society and sometimes challenging it. Enough said, it's a good thing in itself.
While it is by no means certain — even following these tips — that you will establish a collection to compete with the Guggenheim, the artworks you buy will provide more than just financial rewards. To discover more of those other benefits, you’ll need to read my previous blog post. Meanwhile, happy art-buying!