The investment in art! When we think about it, we often have in mind the sensational stories where the old paintings that were gathering dust in the attic of the grandparents are actually Picassos, Rembrandts or Van Goghs.
How lucky not to have sold these dubious works at the local flea market because now these grandparents are rich!
Of course, these are stories that exist but are extremely rare. The media play on it to feed the incredible side.
Rest assured, no need to rummage in an old barn to find nuggets and earn money through the art market.
On the other hand, it is also not necessary to have a colossal fortune to make your first investments in art .
We dust off received ideas and explain to you how this investment works, which can be considered, at first sight, as very complex.
Why invest in art?
Unlike stock market investments, which are made with the idea of having money for a big project in the future or retirement, investing in art is used to have fun and diversify your investments .
Quite atypical because it does not bring in anything until you sell your physical possessions, it is important to have some knowledge of the market and not to fantasize about the profits that can be made… and not to bet your entire retirement neither above .
Works that go for astronomical sums are often purchased at a very high base price, which limits the investment for individuals.
However, it is quite possible to invest in art with a moderate budget.
This speculative investment, like any investment, is to be made over the long term to derive the maximum benefit. Of course, everything should not be based on art, but rather use it in addition to other less speculative investments ( stock market , real estate , etc.).
The art market
The art market is interesting because it is not correlated to fluctuations in the stock market.
It is a market that can therefore withstand crises, provided that you keep your works for many years and have the flair (and knowledge) to choose the artists well.
The profitability of the market can also be attractive when you carefully choose the works you want to add to your decor. Even during the covid-19 crisis, the market was not too impacted. Online art sales have even increased by +116% in a single year. Because what is good with this kind of placement is that they can also be digitized.
If the art market is experiencing such growth, it is because today we are part of a museum economy.
Yeah, more pompous words to explain something very simple: we are opening more and more establishments dedicated to art. This therefore leads to a certain competitiveness to become attractive and attract the most visitors (and therefore be profitable).
New museums (about 700 are said to open a year, 70% of which are in China!) must fill their rooms. They are therefore ready to pay large sums to buy paintings that will bring crowds to their homes.
When we know that each museum has between 4,000 and 5,000 pieces, we quickly see how this art market is pulled from the top since museums do not resell their works afterwards.
How to start investing in art?
So how do you invest in art? Where to find works that are worth it (not like the last drawing of the cousin displayed on the fridge)? 🙃
Already, you should know that you are not obliged to buy an old painting to invest in this area. There are several types of art that use different mediums and therefore price differences.
Here are the different artistic mediums in which you can put money:
- the drawing ;
- the picture ;
- collage ;
- the sculpture ;
- the old book;
- engraving ;
- coins ;
- period clothing;
- bottles of wine (yes. Well, we’re not talking about your bottle of red lying around in your cellar while waiting for your girlfriends party on Thursday evening).
As you will have understood, prices fluctuate a lot between these different supports, but do not be mistaken. Some unique drawings by renowned artists (such as Rembrandt) sell for much more than paintings.
Considered riskier than the stock market, not because of market volatility but because of the uncertain side of the artist’s coast, investing in art is also less accessible.
It is not possible to put only a few tens of euros to start.
Where to buy works?
When you want to invest your money in the art market, you have to be careful where you buy your works .
Of course, we avoid Leboncoin, Facebook Market Place and company. Acquiring works on these platforms does not guarantee you anything in terms of authenticity.
For your investment to be interesting and therefore resalable, you must pay attention to 2 things:
- You must obtain a certificate of authenticity for the work purchased.
- You must receive an itemized invoice which allows you to prove the date of purchase and the value of the property.
To buy authentic and therefore traceable works, several options are available to you:
- Art galleries 🖼 who take responsibility for the authenticity of what they put on sale and who sell at prices they set themselves.
- Auction houses 👩🏽⚖️ who also guarantee the authenticity of what they sell. The prices obviously depend on the coast and what the buyers are ready to put. We can cite Sotheby’s or Drouot as being the most famous.
- Artist representatives 👩🏻🎨 or even the artists themselves.
- Online sales sites 💻 and virtual galleries accessible worldwide (Arstsper, Artalistic…).
Pay attention to the condition of the work, otherwise it will be difficult to sell it later. And see if a signature is in a corner or below.
When investing, there are different costs that can be added to the purchase itself. When you don’t like surprises, it is better to read the T&Cs carefully.
Here are the main costs you may encounter:
- Auction fees
- Miscellaneous costs (delivery, certificate of authenticity; they can be negotiated at the time of purchase)
- The remuneration of the intermediary
- The insurance to pay to protect your property
For adjudication, which is the very act of awarding a work to a buyer at an auction, there are fees that the buyer will have to pay. These do not have fixed amounts and depend on the Auction House.
They can amount to up to 30% including tax of the hammer price but are sometimes decreasing according to the price.
How to choose the artists?
The famous question with 1000 points!
When you have an average budget, it’s hard to buy works that you’re sure will explode in price.
To choose an artist in which to invest, it is obviously necessary to have basic knowledge of the art market , current trends and more classic periods.
But you also have to listen to your sensitivities, and focus on the things that affect you.
To choose the artist who turns your heart upside down and will adorn your living room, it is not enough to cross your fingers hoping that it will be a good shot.
Here are the elements to take into account to calculate its notoriety:
- Where does he currently exhibit his work?
- Does it sell regularly each year (a good average is between 30 and 40 works)?
- Does the person sell internationally, and especially in London and New York, hubs of the art market?
- Has the artist received an award? Is his work part of international rankings?
Of course, these questions are different for artists who are part of older artistic movements and who have passed away. Their works become rare because limited.
What budget to start?
The budget for investing in art depends on many factors. No need to acquire Vermeer’s paintings to hang them in his living room to make his investments in the environment.
Some contemporary and current artists sell works for average budgets, between 3,000 and 5,000 € for example. Or even less, but it all depends on the artist’s rating and the mediums he or she uses (drawing, painting, single photo or limited edition…).
What taxes when investing in art?
We often hear that investments in art have low taxation. This is especially true because you pay nothing until you sell your artistic protégés.
First good news: if you resell the work for less than €5,000, then you will not be taxed.
On the other hand, if this sum is exceeded, 2 scenarios exist:
- If you have recently owned the work and still want to make a significant capital gain, you can pay a fixed tax of 6.5% on the entire total resale price.
- Or you can decide to pay 36.2% only on the capital gain realized (19% tax and 17.2% social security contributions). With this option you benefit from a reduction of 5% per year of detention of the work beyond 2 years. You are therefore totally exonerated after 22 years of hanging your painting at home. Hence the importance of keeping your purchase invoice to prove the date and value.
And NFTs in all this?
Of course, we cannot talk about the art market without mentioning NFTs (Non Fungible Tokens). A great phenomenon which is currently gaining momentum, they are reshuffling the cards of the art market.
Investing in art is no longer necessarily done with tangible works but with digital creations that sometimes combine audio, 3D and personalization.
As for the version that you hang in your living room, the principle of NFT is based on the authenticity and uniqueness of the acquisition.