How to Make Art Your Next Big Investment

Economic downturns are a perfect time to take stock of what you value. As of last month 14 percent of Americans owned crypto, 66 percent said they had no interest in it, and 18 percent said they'd never even heard of it. A recent Gallup poll said that last year only 55 percent of Americans had investments in the stock market, although it's a proven vehicle for wealth. Real estate is still the most popular asset class, yet only 63 percent of Americans own property. What this suggests is that people are keen to grow their wealth through purchases they can actually enjoy. But have you ever considered investing in art?

Just watching Netflix's This Is a Robbery has had most of us art-curious. My jaw dropped when I read that a Basquiat purchased for $4,000 in 1982 sold for $110 million in 2017. Want to guess how much a Hector Molne, a Sonal Varshneya, or a Bambo Sibiya could cost by the time you're ready to retire? Wealth managers are speculating that this year will be a good one for art investors, especially as the digital market expands and collectors learn how to borrow against their paintings for cold hard cash.

Three art experts explain how to make art your next big investment.

Buy from artists you know

Tze Chun, founder of Uprise Art, a women-led online gallery that features original artwork by emerging contemporary artists, advises new buyers to "collect work by living artists. Focusing on original works by emerging artists before they are established can create meaningful change in their careers."

Plus, of course, pricing is more affordable when an artist is just starting out. "Build relationships with artists that you find interesting and collect pieces when you can," Tze recommends, explaining that access to art is one of the more difficult aspects of (and barriers to) collecting, but "being an early supporter means you'll have a relationship with that artist and access to their work moving forward."

What else? "Unless your plan is to store the work somewhere out of sight, you will be living with the artwork you collect, so make sure to collect pieces that are meaningful to you," Tze urges. "Ask yourself, if I kept this work for myself and never sold it, would I be happy with my decision to buy the piece?" If the answer is yes, buy it while you can.

Consider the artist's long-term career

Tze cautions investors to do their research, just as they would with any other investment. "The focus is the artist and the specific work you're considering," she advises. "Is this artist self-motivated and dedicated to being a fine art artist for the long-term? Have they invested time and energy into their education or practice? You are looking for an artist who will continue to create work and gain notoriety over time."

To support artists' long-term success, Schwanda Rountree of Rountree Art Consulting suggests collectors consider museum loans that help the artist gain exposure—and that buyers make introductions to other collectors or curators who can ensure the artist's long-term sustainability.

Maintenance is key

Dr. Sheila Wright is an avid collector who has amassed more than 200 works of art by master and contemporary African American artists. She reminds amateur collectors that buying the right piece isn't the most important part. Keeping a piece in tip-top condition over the long-haul requires maintenance—and there are many books and articles that can teach you how.

For example, Wright explains that "if a piece of work on paper is stored in a location of moisture or is an older work that has not been stored well, it may have some foxing, which is an age-related process that causes spots and browning on old paper documents. Although the piece may be in decent condition, some restoration work will mitigate the damage and restore some of the value." She also urges positioning work far from sunlight and controlling for humidity, as these factors directly affect resale.

Last, Wright advises those seeking long-term value to ditch their discount framer. "Framing is very costly, no matter how you look at it," she explains, adding that "framing artwork using acid-free conservation materials can be [even more] expensive." Yet framing artwork with acidic materials can shorten the lifespan or deteriorate the condition of the piece. Wright has learned that "working with an experienced framer can make all the difference in the vitality of a collection. When talking about preserving the life and essence of works of art, framing is an essential piece of the puzzle."

Keep an eye out for auctions

Dr. Wright says that "in recent years, it has been noted that art is the new 'blue chip.' Results at various auction houses seem to validate that statement as fact." Tze clarifies that what most money experts agree is "investment-grade" artwork or "blue-chip art," usually refers to artwork worth more than $100,000.

If your work appraises in that range, you might choose to buy or sell with big auction houses like Sotheby's or Christie's. Yet collectors also find deals on online sites like ArtNet, Artsy, and Invaluable. For in-person auctions, search LiveAuctioneers to see what is available in your area. Estate sales and storage units often have hidden gems for savvy buyers who already know how to tell an original from a replica.

Tze offers some tips for eyeballing the value of a print: Look at the number of editions made—the fewer, the better. Also consider if prints used archival inks on acid-free paper, if there is a signature from the artist, and if the purchase comes with a certificate of authenticity.

She assures amateur investors that with time, they'll learn that "there is a difference between decor and fine art—and it's not just about the price point."