Wednesday, November 23, 2011

How to Invest in Fine Art and a Build Collection or Portfolio

At a time when we are in or some may say coming out of a nasty recession. Interest rates are at rock bottom. The Bank of England Base Rate at 0.5% and the interest rates are roughly the same all around the world. Getting a return on your money is not easy; however you can still Invest your money in some areas and get a good return. One of these is art, it is a vast area and there is something for everyone's taste and you will not find many investments that you can hang on your wall enjoy and improve the look of a room. If selling your home it has been found that people are influenced by the removable goods, so art on your walls can even help raise the sale price of your home or make it sell faster. So Investing in art offers much more than a return on your investment it can benefit many areas of your life

Most people think that to invest in art you need a large amount of capital but that is not the case. You will find out how you can start an art collection with a small sum of money. Whether you are looking to invest a small amount of one to two hundred pounds or thousands there are a few simple rules to follow. That is what we will talk about in this article so that you can start to build your own portfolio of art, investing in your future.

The Art Markets

According to the Art Market Research (AMR) the price of old masters achieved a peek in 1990 and has now passed this high after a strong rise in the previous year. The index for modern paintings is 15% off its peak, contemporary and 19th century is 50% below its peak. The impressionist market is much more volatile and is nearly 70% off the highs seen in the 1990's. You should bear in mind impressionist prices are higher than other styles in the same periods.

A Study in 1952 by Mei and Moses led to an amazing discovery, "The more you pay, the lower your return." This was shown more with purchases over £29,000. Purchases over £ 1,160,000 actually show a negative return on your investment. For most people wanting to start an art collection for investment it is advisable to look at emerging art markets. This as an exciting market which offers the opportunity of the larger returns on your investment

How to buy art.

The death of an artist does not guarantee an increase in value.

It is a common belief that after the death of an artist the value of the work will increase. This is not necessarily true even for established artists who commended high prices during their lifetime. An example of this is Andy Warhol, he produced iconic art which he then began to copy himself. After his death his heirs released piece after piece to the market. This led to a devaluation of his work over the coming decades. The other side of the coin is artists who were never really had their work recognised, after their death the art does not increase in value.

The answer to this is to do your research about an artist. Has their work been recognised by any institutions, won competitions and what reviews have been written by other people. Research does not guarantee a good purchase but it can help reduce the risk. Access to the internet makes research much easier in today's day and age.

Prints or Originals

Some people say stick to buying originals and that is sometimes the best option. But as we so often hear there is an exception to every rule. If you purchase a print which is not a limited edition you are definitely throwing money away. All you are doing is buying an expensive poster. This can be seen in many places where you can purchase a print of most masterpieces. They are usually mass produced, unsigned and printed on cheap paper. If you come across an artist whose work is increasing in value, you have researched them and the artist looks like they are worth investing in. It may be you cannot afford an original painting by the artist, so you look at prints.

First you need to look at the quality of the prints, most artist use Giclee prints which are high quality and on a high grade of paper. If you see a limited edition print on shiny poster paper, stay well away and save your money.

The next important thing to check is the edition size. The lower the run size the better the investment. Some artists do runs up to a thousand per edition, this is a sign that the value of that print will be low and is highly unlikely to increase in value. A limited edition of one hundred will mean each print is more likely to hold their value.

Validated Prints, this is an obvious point but is something that should be checked. All limited edition prints should be numbered and signed by the artist. The number should say what the print number is and how many copies are going to be printed in the limited edition print run e.g. 1/100. When you look for art work you may see an up and coming artist who has just released a limited edition print, it is sometimes worth purchasing limited edition prints in this situation because you can see returns of 50-100%

Buy What You Like.

Like most investments there are no guarantees, the value may go up, it may also go down. However unlike other investments you should always gain some enjoyment out of your investment. So the first and foremost decision to be made when considering buying any painting is, do you like it? If you like it is highly likely that other people will like it. If your investment is going on the wall you are going to be looking it so you should make sure you are going to get some pleasure from it, there would be nothing worse than having a painting that you cannot stand the site of. This might seem an obvious point but it is an important one that should not be overlooked. I sell art and when I look at an artist's work with the view of selling it I will only accept art to promote that I like, for me it is such an important guideline when you look at any piece of art.

Should You Buy Cheap Art?

The answer that springs to mind when I am asked this question is "No." Cheap art is often mass produced will always remain a cheap painting. This may seem a contradiction to what I said earlier in this article, where I said the more expensive the painting the smaller the return on your investment is likely to be. When I said that I was talking about high end paintings selling for £30,000 plus. I would recommend that each original painting you purchase should cost at least £400 to £500.A painting that you pay a little more for is likely to at least hold or appreciate in value.

If you find a painting that you like that is out of your price range and you are considering buying a limited edition print you will spend less. I would recommend spending no less than £75-£100, for a limited edition print you could pay up to several hundred pounds for a framed print.

Do Your Research.

I have mentioned research earlier in this article. It is an important part of buying any art. If you are buying a paining with age do all you can to ensure what you are buying is what it says on the label. Many older paintings by prominent artists have been copied and frequently come up at auction. A reproduction will usually lack the age, it will look younger. If the artist has reproduced a painting they will sign it with the original artists name as well as their own. Some unscrupulous people will rub the later artists details off and try to hide it from you. Other things you can check are listed below, but it is important to remember it is a guide and not a rule.

· Is the frame the original, or is it new.

· Does the frame look as though it has been artificially aged

· Does the painting look as though it has been tampered with

· Canvasses and boards often have old newspapers stuck to the back, check how it is fastened on. What type of glue and is the tape new or old.

It is advisable to ask the dealer or auction house about any provenance relating to the painting.

If you are looking to purchase paintings from contemporary artists or up and coming artists it is still important to do your research. Find out as much as you can about the artist. The more information you know the better judgement you can make about whether to purchase the painting. This can be done on the internet, but never be afraid to ask the artist or the dealer for more information about their career.

Stolen Art.

If you purchase your art through dealers and auction houses this is not likely to be a problem. However if you are making a purchase from an individual ensure you are certain that the painting is not stolen. There is a website that you can use which holds a database of stolen art. The Art Loss Register is on

Caring for Art.

As a collector there are several things that you need to do when you decide to start collecting art for investment a sale at a later date. You must ensure it is stored and/or displayed in a suitable way. It is important that they are not in direct sunlight which will fade the colours and ruin the painting. Also ensure that the environment is not damp. The effect this will have on any painting could be devastating and damage it causing you a large loss or a large restoration bill.

If you decide to keep your paintings in storage the same rules apply, in addition to these you need to store them in a place where they are not going to receive any physical damage. It is advisable to store any paintings that are not going to be hung on display in a substantial packaging to ensure no accidental damage occurs.


When you start to purchase paintings it is important that you monitor the value of the individual paintings. If the paintings are in your home you need to ensure you have adequate cover and that any high value paintings are listed individually on your policy. If you keep any art in storage ensure you have adequate insurance cover for theft and damage.

Financial Records.

As with all investments you will be liable for tax on profits made from the sale of any pieces of your collection. You have no requirements to register any purchases of art, except in some countries you may have local taxes that require you to list the purchase. An example of this is V.A.T. in Great Britain if you are V.A.T. Registered. This report is not a tax guide and it is advisable to seek advice from a suitably qualified person in you location.

Investing in art can be both enjoyable and rewarding. Looking for emerging artists and searching for pieces of art at reasonable prices make this an intriguing project. You will meet many amazing people and learn about many different subjects. You may want to focus on one media, watercolour, oils, acrylic, etc. You may prefer a certain subject, landscapes, animals, still life etc. I recently came across some watercolour nightscapes by an emerging artist called Dean Entwistle. When I saw the first of these artists' paintings I thought they were amazing. Upon researching the artist I found he was selected this month from thousands of entrants to exhibit at the Royal Water Colour Society.

The original paintings range from £2000 to £10,000 and his limited edition prints are £250 with a run of only 100. Over the last two year the limited edition prints have risen in value by approximately £100. That is a return that you could not get in a bank and with the latest events in his career I would imagine the prices rising further. This is one example of an artist whose work is increasing in value and prestige. In Chester (U.K.) alone there many others including, Colin Halliday, Ben Kelly and John Dronsfield. All are great artists who are good prospects for investment. The most important part of collecting art is enjoyment. Enjoy the art, enjoy your investment.

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