Finance: How to Invest in Art for Profit

Art can be a great investment, which unlike an IRA or pension plan, you can enjoy as it appreciates. The art aficionado has the best of both worlds: the here AND the now.

To collect art as an investment is much like collecting any other antique/collectible. You have to keep one HUGE caveat in mind: Buy a piece of art that you love because you may end up owning it.

Coupled with that is the idea that you have to be prepared to hold onto it for as long as it takes. The collectibles world is fickle; one day a certain artist is hot, while the next, he's pass.

If you invest in art wisely, you'll have no problem. The key is to NEVER gamble with your bread and butter money. Art is a long-term investment generally, so you must choose wisely.

Follow that advice and it will be an investment that can pay off in more than one way. It stops you from buying trendy things, or things you've heard will be hot in the future. That rarely pays off. By the time a trend is being reported, too many others have gotten in on the deal. You want to stay one step ahead of the pack.

This same advice keeps you rooted to buy the art that your gut instinct tells you means something. Even though some people have a natural knack for picking winners, that gut instinct is not some psychic ability. It has to do with a major amount of research. What most people see as luck is really the result of a lot of hard work that eventually pays off. When you sell the artwork for a profit, it may look like you picked the long-shot Derby winner, when in fact, you've done your homework, and you're reaping the rewards. And it will feel good!

A great case in point involves the Cone sisters who now have a wing of the Baltimore Museum of Art dedicated entirely to them. The sisters amassed art they loved during their travels. They didn't buy it as an investment, but rather because they saw major potential in it. They favored up and coming artists, things that caught their eye. People viewed them as being a bit eccentric, but they really just had the eye that others didn't acquire until the pieces they bought became trendy. As time past, they had a collection that was museum quality, even if no one but them recognized it as they were doing it. In the end, the donated it to the BMA.

Go online and see what artists' works sell for.

Look to ebay, AskArt.com (a sort of blue book of the art world), BidPointArt.com, etc. It gives you a working barometer.

Pick quality pieces of the things you love.
Pick one good piece as opposed to a mass of work, hoping one will hit the bit time. Collectors pay for authenticity, one-of-a-kind.

Become a specialist.
We all have favorite styles of art. Instead of taking a scattershot approach and buying things you think will be of value, go with what you know. Learn everything about the artist, the history, the selling prices of his/her work, etc. You'll get to know exactly where your artwork will sell best. What sells in the Midwest, may not be so hot in the Mid Atlantic. In short, become an expert in a genre, and then become a marketing expert in regard to your artwork.

There is money to be had in investing in art. While you are waiting for it to appreciate, display it in your home, but don't get married to it. Sell it when the market is ripe for that particular artist or piece.

Ultimately, watch, learn, soak up as much information as you can, then buy a quality piece you're prepared to live with. Confidence always breeds money.