Unveiling the Mystery: Is Art Investment the Right Move for Me?
Art can be a great way to diversify your investments. But investing in art has traditionally been reserved for the ultra-rich. Now, anyone can invest in works from renowned artists, all thanks to a company called Masterworks.
Masterworks is a platform that makes investing in art accessible to anyone by buying pieces of valuable artwork and selling shares to investors for just $20 a piece. That means you could potentially own a part of a painting by an artist like Warhol, Monet, or Picasso, and see your investment appreciate over time.
The New York-based company was set up by contemporary art investor, Scott Lynn, in 2017. They buy artworks that their data suggests could appreciate 9-15% per year. Once they buy a piece, they submit a filing to the Securities and Exchange Commission (SEC). Once approved, they sell shares to investors.
They aim to hold onto a painting for about 3-7 years before selling to a collector. But this isn’t set in stone, shares could be sold earlier if the majority of shareholders vote for that. The money from the sale is then shared among the investors, less any fees and costs.
In the future, Masterworks hopes to enable trading of shares. But for now, once you’ve invested, you’ll own your shares until the artwork sells.
Now, you may be wondering, “Is art really a good investment?” Well, the Artprice100 index, which monitors the performance of top artists, has often fared better than both the Artprice Global Index and the S&P 500. While past performance doesn’t guarantee future results, it’s a pretty encouraging sign!
What’s great about Masterworks is that it opens art investments to anyone, focuses on high-quality art known as ‘blue-chip’, and presents strong return potential. It offers a truly alternative investment that’s not tied to stock market performance and is likely to hold up well even in tough economic conditions.
On the downside, your investment won’t be liquid and the shares can’t be sold until the artwork sells. Also, the company charges a 1.5% annual fee, plus keeps 20% from any profits made on the sale. Like any investment, there’s no guarantee you’ll make a profit, especially as you’re investing in individual pieces and not a broader index. Lastly, Masterworks is relatively new and doesn’t have a long track record.
But if you’re an investor looking to diversify with alternative investments, comfortable with waiting a few years to see results, and have an interest in art, Masterworks is worth considering. You don’t need to be a high-net-worth investor, and you can buy into an artwork for as little as $20. Just be prepared for a holding period of 3-7 years and a fee of 1.5% plus 20% of any profits.
For more information on Masterworks, head to their website.
