Artwork

Artwork Investment Strategies

Artwork Investment Strategies Tailored for Your Portfolio

Assistance With the Management of All Types of Assets

Art as an investment offers some unique benefits and challenges. Like shopping for and purchasing real estate, choosing the right art pieces can pay significant dividends in the future. Conversely, spending a lot of money on artwork that depreciates or overpaying for artwork can have a negative impact on your net worth.


A curated art collection purchased as an investment can potentially be a valuable form of asset diversification. It stands in its own category apart from other investments like securities or real property. 


Investment in art used to solely involve the ownership of unique artwork of various kinds. Today’s environment of art investing extends beyond owning individual works and can include a variety of art funds and investment platforms. Whether your art investment involves purchasing and owning unique works or is in the form of a mutual fund-like art investment vehicle, the team at Fullerton Financial Planning can help you manage these assets.

What Makes Artwork Investing Such an Alluring Option for Some Investors?

While the inner workings of markets are beautiful to many, people typically don’t watch their portfolio for the powerful emotions it evokes. Art is a unique form of investment in that the investment vehicle itself is a captivating object that can be enjoyed. The dual purpose of art as both a decoration with emotional resonance and an investment for you and your family’s future has its own unique appeal for many people.


From a dollar and cents standpoint, artwork does have a few unique attributes as an investment. They’re insulated from the same market forces that impact equities, bonds, commodities and most other investment options. Art can add resilience to portfolio value as something that’s not affected by normal volatility or economic downturns.


There are also some potential tax advantages to art collecting. Potential donations of the art at some point in the future can result in significant tax deductions. Although the 1031 exchange to defer capital gains on artwork via like-kind purchases is no longer available, there are still other tax deferral opportunities that may be effective in some scenarios.


People who display art for business purposes may also be able to claim depreciation, although it must be used for a business purpose and not simply be a decoration in a workplace. It may also be possible to deduct certain expenses related to the acquisition, sale or maintenance of art that’s purchased for investment purposes. Simply put, there are many avenues by which you can strategically leverage the ownership of art as part of your asset portfolio for long-term wealth generation and tax benefits. An experienced financial advisor can help you understand the many options available to you.

Artwork Investment Strategies

Market Analysis and Artwork Selection Strategies

While choosing pieces that speak to you on a personal, emotional level has value and can even enrich your life, emotional reaction is not typically the best rubric by which to assess the value of assets for investment purposes.

Purchasing artwork for investment purposes often involves analyzing variables similar to those present in other types of investments. Examples of things to consider include:


  • Whether the segment in which the art exists (sculptures, paintings, styles, etc.) is currently undervalued
  • The future popularity of an emerging artist
  • Potential for a piece to experience increased recognition and value in the future


Getting in on the ground floor of a new artist with real promise or investing in pieces of a style that’s currently out of vogue but with the potential for future popularity can be smart strategic decisions. However, the average amateur art enthusiast may not have the unique market knowledge and perspective necessary to make fully informed decisions. They may also be tempted to let personal taste and preference drive decisions rather than art market conditions.

More Artwork Investment Strategies

Providence Verification

Authentication is extremely important when investing in artwork, as the value of the piece may be entirely dependent on its verifiable authenticity. Having experts perform due diligence prior to the purchase of any artwork for investment purposes is of vital importance.


Realistic Investment Outlooks

Art as an investment typically won’t involve the short-term ownership and flipping of artwork. It’s often a long-term strategy that entails holding a piece while it appreciates in value. This is one reason why it’s often ideal if you can find pieces that resonate with your unique tastes and have real growth potential.


Integrating Art With Your Portfolio

Formalizing artwork as part of your investment portfolio does require some concerted effort and strategy. Working with a financial advisor who understands this unique investment vertical can help ensure an investment in artwork aligns with your overall financial goals.


Exit Strategy

At some point, the artwork you purchase as an investment may need to be sold. How the sale of art is executed can have an impact on the gains of your art investment. From private sales or auctions to working with art lending facilities or charitable donations to museums, there are a number of options with unique financial benefits. 

Get Expert Art Investing Guidance From Fullerton Financial Planning

If you’re a retirement saver or investor in Phoenix looking for unique opportunities for portfolio diversification, or you’re just an art lover and want to own something that provides personal fulfillment and appreciation potential, the financial advisors at Fullerton Financial Planning can help. Get expert advice on art investment by calling us at (623) 974-0300.

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