I rarely have time to watch television, but about two weeks ago, I found myself at home with a little bit of free time between tasks and appointments. I decided to return a movie I started to watch on a flight on our recent trip to Ghana.
The movie “The Lost Leonardo” is a documentary about the Salvator Mundi. A painting sold for a record-breaking $450 million.
It’s a fascinating tale about the art world and deal-making. I thoroughly enjoyed the movie and learned a few things about the art world that I wasn’t aware of.
It reinforced an interest I have in art and how you can use art to diversify an investment portfolio.
Most people think investing in art requires shelling out large sums of money and that investing in art is only for the ultra-wealthy.
Historically, that sentiment has been accurate, but some companies are working hard to bring fine art investing to the masses.
If you’ve attended one of our investment workshops, you’ve probably heard me mention the inclusion of art in your portfolio.
You can go the traditional route and find pieces you like, buy them and store them for safekeeping.
Another way to invest in art is by investing in contemporary fine art through a company called Masterworks.
Masterworks offers buyers/investors the opportunity to buy fractional shares of fine art pieces.
I’ve followed the company for a couple of years. Over that time, they’ve offered opportunities to invest in works by renowned artists such as Jean Michel-Basquiat, Andy Warhol, Banksy, and Kaws.
How It Works
You have to apply for a membership to join the platform. Once approved, you can look through current offerings and buy shares in ones you find appealing.
You can purchase a fractional share for as little as $20. Once invested, your money is tied up with the company and the artwork until either they sell the piece or you sell your shares using their secondary marketplace.
Investing in art can have a good ROI. Fine art investments have returned an annual return of 14.1% compared to 9.5% for the S&P 500.
While that return is lovely, investing in art is extremely risky. There is no liquidity or cash flow. When you invest in a piece, that’s it. Depending on the demand, you can attempt to sell it on the secondary marketplace.
But it could be a good investment if you love art or are simply interested in diversifying your portfolio.