Diversifying your investments isn't just about wisely balancing your portfolio between stocks and bonds. Alternative assets such as fine art might have a place in your portfolio as well.

Art collecting and investment is no longer limited to the wealthy elite. If you’re interested in art, then you can diversify your assets and even find something nice to hang on the wall. At the very least, your investment will look a heck of a lot better than a stock certificate.

Despite the high costs often associated with investing in art, it still could deserve a spot in your portfolio.

The art market is not highly correlated with the stock or bond markets. That's exactly what investors should be looking for when diversifying their assets. No matter what the financial markets are doing -- moving up or trending down -- the art market isn't affected very much. While both stocks and bonds were declining in the first half of 2022, art auctions were setting new record prices.

In 2020, the art market faced a challenging environment when in-person auctions were canceled due to the COVID-19 pandemic. Turnover in contemporary art fell 34%, and many auctions and galleries shifted online, which helped things bounce back. Turnover and transactions reached a new all-time high, and more artworks were sold than ever before.

What to know before investing in art

When you invest in a piece of art, you're buying it with the expectation that demand for that piece or similar pieces will increase faster than the supply. If that happens, then the value of the piece will increase, and you may be able to sell it for a profit.

That's easier said than done.

Choosing an artist can be difficult. You're unlikely to discover the next big artist before they've earned a reputation and start commanding high prices for their work. And, sad as it may be, works by living artists don't fetch the same prices at auction as pieces by those who have passed away. You also can't just go down to your local antique store and find a real Monet, Modigliani, Matisse, or Munch on sale for a few bucks. Buying work by one of those artists at auction would cost millions.

You may have to hold your art for a while. Even when you manage to acquire a piece that increases in value, the art market is relatively illiquid. You'd typically have to wait to sell, and you'll incur high fees to a broker or auction house to liquidate your holdings if you want to cash in on your investment.

Art requires maintenance. Art is typically a tangible, hard asset. Unlike intangible assets such as retirement accounts, art takes up physical space. Care and maintenance are required to ensure that the art retains its value. If you're displaying the art in your home, then you'll need to be mindful of temperature, humidity, sunlight, and various other factors that could degrade the work. For a fee, you can opt to have a storage company keep the work in a climate-controlled environment.

Various other costs to consider with the purchase and sale of artwork include sales tax, transportation expenses, authentication and appraisal fees, and insurance. You may also want to buy a nice frame or another type of display mechanism for your artwork.

Art is much more than the result of self-expression; art can light up a room, start conversations, tell a story, and of course, make a great investment.

If you’re interested in art and you have the funds to do so, you may wish to begin collecting art as an investment. Buying art has become easier than ever – whether it’s digital art or prints. Likewise, there are more ways in which you can purchase art – for example, online, at auctions, in galleries; the list goes on.

But is art a good investment? In short, yes – and we’re going to explore the reasons why in this blog post. If you’re interested in investing in art, our experts at Secured Interest FX are on hand to help. Read on for some of the main benefits of investing in art.

You Can Enjoy The Art You Invest In

One of the key benefits of investing in art is that art is something you can enjoy. If you’re a lover of art, then it simply makes sense to invest in art pieces you’re drawn to and make a profit. That being said, profit isn’t the only reason you can buy art. Look for pieces of art that you enjoy – it doesn’t have to be classic pieces, contemporary art or blue-chip art; you can invest in prints and other forms of art too.

One size does not fit all with art – you may be drawn to a piece of art that others don’t like, and vice versa. Invest in the pieces of art you like, and that will liven up your home. Unlike other investments (for example, the stock market), you can consume art. Although you can’t enjoy stocks and bonds, you can enjoy the pieces of art you invest in. Likewise, when you consume art, it doesn’t decrease in value – whereas other investments (for example, fine wine), will hugely decrease in value when consumed.

You’re Investing In The Future

Buying art is a long-term investment. There is no denying that the world has gone through uncertain times regarding the economic climate over the last few years, but the art world has remained stable.

The popularity of digital art is also rising exponentially, and buying art online can be a great way to invest in art. That being said, the demand for print art is not expected to decline any time soon. When you invest in artwork, you’re investing in the future – art is something that can live forever. You’re also investing in the future of artists. When you invest in a piece of art, you are contributing to the art industry, supporting the artist. This can help them to continue creating art and increase the value of their work.

Art is Accessible

The art market is open to anybody – it isn’t just for those with an extensive background in the art industry or those with millions of pounds in the bank. Historically, the art market was only open to a select number of people – however, this has shifted – and art investment is open to all.

There are many ways you can invest in art. For example, you can purchase in auction houses or at an online auction. An art auction generally refers to the secondary art market. However, if you’re looking for art that has never been sold before, you can find pieces in galleries or even at art fairs. Art fairs often have a combination of pieces from emerging artists as well as prominent industry names. If you’re unsure which art is worth investing in, you may benefit from liaising with an art advisor. An art advisor can provide you with professional advice that can help you build an art collection – they can advise you on the best pieces to invest in and share their wealth of art knowledge with you. This is something we can help with at Secured Interest FX.

Art Can Be An Heirloom

When you purchase art, you don’t have to just buy it for yourself. A piece of art can be timeless – something that you can pass on through generations. Art often has historical value, and even more so when passed down and kept for generations.

The art world has a rich history, from the stone age to modern-day art. A painting tells a piece of this story. A piece of art can be displayed in your home, telling a story of something that can be in your family for generations. When you buy a piece of art, you’re purchasing something that will be there for long after you’re gone. Art doesn’t always have to be sold immediately after purchase – instead, it can be gifted to your children, grandchildren and great-grandchildren until they wish to sell it. Likewise, if you build an art collection, over time you can choose which pieces to sell for the highest price and which to bequeath as a family heirloom.