Physical artwork can offer lucrative investment opportunities, but unfortunately for the average investor, the minimum investment is just too much. Realistically, not many people have millions of dollars lying around that they can dedicate to a long-term investment.
For this exact reason, many interested investors may turn to art investment funds instead, which offer a way to invest in art without needing to purchase—and take care of—a physical piece of art. Even so, non-accredited investors may run into issues if the art funds they’re interested in requires accreditation to invest.
Fortunately, as time goes on, more and more platforms are opening their doors to non-accredited investors, making it possible for the average individual investor to invest in the art market.
If you’ve been intrigued by the art galleries and are now considering these types of alternative investments (but aren’t quite sure where to start), keep reading to learn about the best platforms to invest in art!
Why Invest in Art?
For better or for worse, most artwork has little or no market value. The type of artwork that you’ll find on an alternative investment platform is typically blue-chip art, or art that has a substantial monetary value.
Investing in artwork can offer large returns to patient investors, as pieces of art often greatly appreciate in value over time. Even better, these alternative investments are independent of the stock market, which means your investment(s) should be relatively stable in times of market volatility.
However, there generally—although not always—is one major downside of investing in art: the lack of a secondary market. Will this be an issue for you? Well, it depends on how you invest.
Owning vs. Investing
Art is well-known for an overall lack of liquidity. Being “liquid” simply implies that you can sell your asset at any time, either at a loss or for a profit. However, even selling an individual piece of art can take some time.
Of course, owning the physical artwork makes selling art a lot easier. Even if you need to sell at a loss, you’ll likely be able to liquidate the artwork in a reasonable time frame. While this approach might work for an individual, that’s not what an art investment platform wants. They’re in it to make money.
As such, unless your choice of artwork has a secondary market, it’s unlikely that your investments will have any liquidity. Many platforms don’t allow you to sell fractional shares, which means you’ll need to stick with the investment until the end.
Unlike stocks, you won’t be getting an annual return either. You’ll reap most of your rewards when the individual piece is finally sold. In the meantime, you may be responsible for paying an annual management fee (and any other applicable fees).
However, the plus side is that you won’t be responsible for storing, safeguarding, handling, or selling the actual artwork. This makes the management fees seem reasonable since it’s very easy to accidentally damage artwork yourself (and a single mistake could cost hundreds of thousands of dollars!).
With this quick comparison of “owning vs investing” out of the way, let’s start looking at the best platforms to invest in art!
Art investments on Yieldstreet are only available to accredited potential investors. Assuming you are accredited, Yieldstreet allows art investors to invest in one of six funds that are focused on fine art. Different funds focus on different parts of the art market, such as well-known or up-and-coming artists.
With Yieldstreet, it’s important to understand that you’re not investing in an individual piece of art. Rather, you’re investing in multiple pieces of artwork at the same time. For accredited investors who have more than $10,000 and want instant diversification, Yieldstreet could be a promising option.
Learn More About Yieldstreet
If you’re looking for a dedicated platform—accessible by the everyday investor—that grants you instant access to blue-chip art investment opportunities, MasterWorks is the platform for you.
Focusing primarily on works from contemporary artists, MasterWorks enables the retail investor to purchase fractional shares of blue-chip art as part of their long-term investment strategy.
Exact offerings vary by piece, but the process works the same way across the entire site: investors purchase shares of artworks and profit when the piece is sold. However, MasterWorks also has its own secondary market, which means you may be able to sell shares you no longer wish to hold.
Learn More About MasterWorks
Public is another platform that gives investors access to alternative assets (in this case, art pieces). Although you do need to have a legal US residence, accreditation is not required to invest in a piece of artwork on Public.
The platform offers many different types of alternative investments, so its artwork offerings aren’t quite as diverse as the ones you’ll find on Masterworks. Even so, it works in a similar way, allowing individuals to purchase fractional shares of a piece of artwork.
Public.com itself doesn’t have a minimum investment requirement, making it a great option for those with only a little cash to spare.
Learn More About Public
As of now, there aren’t too many options for individuals hoping to start investing in artwork without physically owning the pieces themselves. While any of the platforms listed above can work for this purpose, our recommendation is Masterworks.
Offering huge potential returns and blue-chip artwork investment opportunities, Masterworks is an easy way for anyone to start investing in art, whether they’re accredited or not.
Click here to get started today!
The post Best Platforms to Invest in Art: Exploring Options for This Alternative Asset Class appeared first on Modest Money.