Films and similar shows tend to indicate that investing in art is for rich people. While this might be true, anybody can capitalize on the art market.
Like stocks and bonds, the art market also appreciates and depreciates. However, this is one of the most lucrative investments. In fact, the art market might be beating the stock market, according to an article on Forbes.
So, if you are looking to grow your portfolio, putting your money in the art market might be the best idea. Below, we explain how you can make money in the art industry.
Go for Fractional Shares
Art is expensive. This has deterred some people from capitalizing in the markets as they lack hundreds or thousands of dollars to buy a piece of art. However, the high cost of entry is no longer an issue.
Thanks to companies such as YieldStreet and MasterWorks, you can invest in the market even with a smaller budget. These companies buy and sell art, divide the amount into fractions, and sell it to investors.
In other words, you don’t have to spend thousands or millions of dollars to buy a piece of art. Instead, you can spend as little as $500, a fraction of the total price, and earn profits once the companies sell the art.
So, if you are a beginner investor, you can work with MasterWorks, as it allows you to invest a minimal amount. This amount is divided into shares priced as low as $20 each. In case you want out, you can use the company’s exclusive market to sell your shares.
If you have a bigger budget, such as $10,000 and above, you can work with YieldStreet. While you can still invest $500 with this company, you will get better returns for investing over $10,000.
Starting budget
Some traders buy stocks, some commodities and some – artworks. Do you now believe you make some money in the art market? With as little as $500, you can start making money from a piece of art worth millions.
Art trading goes the same way as with online trading financial derivatives. For example traders can make profits on both rising and falling prices of an underlying asset. In addition they use leverage of up to 200 times their funds in order to increase potential gains. So, choose your preferred market investment method and start making money.
Buy Art and Sell Later
Another way to venture into the market is by buying art and selling it later. You must do your homework prior to buying art. That way, you are assured of a good investment.
In other words, it is crucial to purchase art that appreciates. The best investment should give you at least a 7.6% profit.
Selling this type of art can be challenging unless you have a good network. This is because it is difficult to find someone who knows and values your piece’s worth. However, you can sell it through a fine art sale house.
But, you will not pocket the entire profit. Usually, an auction house can take 5% of the 25% of the sale price.
These are several ways of determining whether your investment is worthwhile. For example, you can find more about the art piece, the artist, or the art dealer. This information you get can tell you whether the piece is likely to appreciate or not.
For example, if a piece of art has the artist’s autograph, it is likely to increase in value. You can also look at the price of a similar art from other auctions to determine your new selling price.
Art Flipping
You must have heard about a house or car flipping. Art flipping is similarly lucrative. This is a process of buying art, hoping to resell it in five to ten years.
This form of investment is for people feeling lucky or having data to rely on to predict the price of a piece in the future. In other words, art flipping does not always guarantee profit. You might buy a piece today expecting to make a killing only to lose thousands of dollars. However, if you are lucky, you will sing to the bank.
Some arts have appreciated by over 450%. For example, the Basquiat painting by Jean-Michel was sold for $9 million between 2005 and 2012. This was a 450% price increase.
Art flipping is flawed as it promotes the hiking of prices. This hurts upcoming artists. This is because the art enters a new market, robbing the original artist of any profits from sales. However, if this is not a problem for you, you can make a killing here.
