Art Investment is NOT THAT RISKY!!!!
I recently came across a list of possible risks of investing in art which when analysed don’t really pose that much of a risk at all. The list of possible risks was as follows:
1.Possibility of owning/selling frauds and fakes
2.Illiquid auction/dealer markets.
3.Maintenance, restoration costs.
4.Artworks produce no income unless sold.
5.High transaction fees.
After considering these possible risks I have commented on each below:
1.The possibility of owning/selling frauds and fakes is a possibility if you do not take precautions and do not do your research before purchasing. If you do your due diligence beforehand this will not be an issue.
2.Art investment is recognised as a long term investment therefore you should be aware of this before you invest so that you can allow for the possibility that you can’t instantly liquify the asset.
3.Maintenance and restoration costs shouldn’t be an issue as any artwork that you buy should take into account those costs and be priced accordingly. As long as art is looked after it should require money to be spent on maintenance.
4.Artworks can produce income if rented out to the corporate sector as explained in previous post
5.It is true that auction houses and galleries do have charge quite high rates when selling you work so it is advisable to take this into consideration when looking at buying and selling a work. There are other less expensive ways to sell your work which will be looked at in future posts.