Diversifying your home (and investment portfolio) with art

Art has graced the wall of many homes for centuries. Artworks can be used to tie a room together, as a focal point and even to elevate a space to pure luxury. Art helps you add colour to a room without paint. Art can also be an investment opportunity – albeit a somewhat risky one.

As well as brightening your walls, we look at how to diversify your investment portfolio with art.

Art is a long term investment

Not everyone can own a masterpiece like Da Vinci’s Salvator Mundi that netted a cool US$450 million in 2017, but like fine wine art gets better with age. Generally speaking, the value of a piece increases after the artist is deceased, as the work becomes a finite resource, far more valuable than art by a contemporary artist.

Some investors prefer to build up a collection of new and emerging artists, giving them a likely lesser profit but making it easier to build up a diverse portfolio of pieces with potential return.

Art is a risky asset

Investors define an asset as a “store of value”, that is something you can purchase today and that will hold value over time. But art is also a risky asset with no guarantee of a good return.

It’s a special asset class that typically involves more effort than many other types of investing. It involves extensive research into the market itself, art auctions and valuation trends. It requires experts like curators and specialists who have the knowledge to share – for a fee. Auction house fees can also eat into your profit, as can insurance costs and taxes.

Art is a non liquid asset

Looking to flip an artwork for a quick profit? Think again. Artworks can take years to sell at auction, which is why art is thought to be a long-term investment addition. That said, you can spread the risk by diversifying your portfolio by having an art collection made up of a number of different styles, traditions, historical periods and artists.

Art is in the eye of the expert beholder

The fine art market is lightly regulated and often requires inside knowledge to help you invest well. Consider investing in a consultant or facilitator to help you place well informed bids on pieces.

Consider the artist as a potential investment. How have their other works been valued on the market? Are they becoming more popular as time goes on? How many pieces are available?

Art looks good

Ultimately art is to be viewed, enjoyed and appreciated. Art investors have a love of art. Art can be a valuable addition to your home, but unlike traditional share portfolio investing the dividends earned from art is the enjoyment from the piece.

Much of what we do at Signorino is inspired by a love of beauty and art – like our Pop range inspired by Roy Lichtenstein. To be an art investor you must be a regular on the art auction and art fair scene. Before all else, there must be a deep appreciation for art and a passion for spending hours at exhibitions and galleries.

The real trick is to find the next big artist before they become a blue-chip name on the global art scene. That of course would be considered an art all on its own.

You can see our own works of art at the Signorino Tile Gallery, 484 Church St, Richmond. For more information phone us on (03) 9427 9100.