While investing in startups seems to be one of the riskiest asset classes (subjective view), investing in art is an interesting alternative with a comparable risk profile but that is governed by totally different forces. I chose to enter this market because of my personal interest and simply in order to diversify my portfolio.
When I look to preserve my wealth during a volatile economy, art can actually act as a hedge against inflation. Art value is not significantly impacted by inflation. While experts recommend considering the art market for patient investments and do not expect quick returns, it happens that the piece of art can be sold shortly after the purchase, especially if it’s already well-known, old masters-type of art. Many times, investments in new, emerging artists can take a bit longer to exit as they need months or years to build the brand and recognition on the global market.
Additionally, if you own the entire piece of art, let’s say a painting, it’s possible to benefit from it during the time it’s kept and not only after the sale. It can be, for instance, loaned to museums, enhancing the investor’s reputation and prestige.
Interest in art is getting bigger and bigger globally. The next generations tend to value art more than older generations which also drives the market value, generating additional demand and perception of scarcity.