When most of us think about investing, our minds jump straight to stocks, real estate, maybe even crypto. But there's this other, somewhat glamorous corner of the investment world that’s been quietly making waves as of late – fine art, totaling at 57.5 billion last year per UBS Art Market.
Indeed – paintings, sculptures, perhaps even that weird-yet-fascinating mixed media piece you saw at your local gallery resembles a combination of chaos and genius. It turns out that art isn’t just for museums and eccentric billionaires anymore. It’s becoming something that more and more people are turning to—not just to hang on their walls, but to grow their wealth off of.
So what’s the deal? Is fine art really the next big thing in investing, or is this just another overhyped trend riding on the coattails of the ultra-rich? Let’s dig in and see what all the fuss is about.
For centuries, art collectors have scooped up masterpieces not just for the love of aesthetics, but also as a store of value. Art is physical, tangible, and often timeless. The right piece can hold or even increase in value over decades, in some cases dramatically so.
Think of Jean-Michel Basquiat’s work. One of his pieces, Untitled (1982) of a skull, sold for a few thousand bucks in the ‘80s, then fetched $110.5 million at an auction in 2017. That’s a serious ROI, and a way cooler story than a stock ticker.
Art also tends to have a low correlation with the stock market. Essentially, that means if your 401(k) is taking a nosedive, your Warhol (if you’re lucky enough to have one) probably isn’t doing the same. This makes fine art an attractive diversification tool for people looking to spread their risk and not put all their eggs in one basket – or ETF.
The Buyers
Masterworks and others are democratizing the art purchasing world, allowing everyday investors to buy fractional shares in blue-chip art pieces—think Monet, Picasso, Banksy, and the like.
It's like crowdfunding for art, but with a financial twist. You needn’t fork over $2 million for an entire painting—you can own a sliver for a few hundred dollars. Great for those wishing to get into the art game while balancing rent and student loans.
Millennials and Gen Z investors, in particular, are starting to warm up to the idea. They’re used to thinking outside the box when it comes to money. Plus, it’s undeniably cool telling your friends you own part of a Basquiat.”
How to Make Money Off of Art
Here, people start scratching their heads. Art isn’t like stocks—you don’t get dividends. There’s no ticker symbol. It can’t be liquidated in a click – both a pro and a con.
You can make money from art in one of two main ways:
Appreciation: Piece value increases over time, and upon selling, you pocket the gains.
Renting/Leasing: In some cases, art can be rented out to galleries, hotels, or office spaces. This is less common but gaining prominence, especially for institutional-grade art.
That said, don’t expect to make money overnight. Art investing is a long game, and patience is key. It’s not for people chasing fast wins or looking to flip in six months. Think like Warren Buffett’s endgame, less so Wolf of Wall Street’s.
The Risks
Let’s not pretend it’s a risk-free adventure. Like any investment, fine art comes with challenges. Understand them before jumping in.
First, art is subjective. A piece’s value can rise and fall based on:
fleeting trends
hype
the artist’s reputation
world events.
Plus, the market isn’t nearly as transparent as, say, the S&P 500.
Consider liquidity too. Unlike selling a share of Apple, offloading a piece of art can take time. You’ll need a buyer, maybe an auction house, and luck that the market’s hot when you sell.
And don’t even get me started on forgeries, damage, insurance, storage, and all the other real-world logistics that come with owning physical artwork. If you’re going the DIY route (i.e., buying and holding pieces yourself), just be prepared to do your homework.
Newcomers
Despite the risks, there are plenty of investors making it work—and doing quite well. Wealthy families have used art as a way to preserve and grow wealth for generations. In fact, according to a 2022 report by Deloitte, over 80% of ultra-high-net-worth individuals include art as part of their estate planning and wealth strategy.
Institutions are jumping in, too. Hedge funds and family offices are allocating portfolio portions to art, as inflation eats returns.
And thanks to new tech platforms, regular folks can ride that wave.
What Makes a Piece “Investment-Grade”?
Not all paintings at a street fair prove a wise investment. Regarding art as an asset, certain pieces tend to perform better than others.
Here’s what investors typically look for:
Established artists: Think famous names with a track record of sales and demand.
Provenance: A fancy word for history. Where has the piece been? Who owned it? Has it been shown in major galleries?
Condition: Like cars, condition matters. Restoration work can affect value.
Rarity: Unique or limited pieces often appreciate more over time.
Trends: Some artists or styles suddenly blow up. Keeping an eye on cultural trends (and upcoming artists) can pay off.
Of course, none of this guarantees profit. Art is as much about timing as it is about taste. But knowing what to look for definitely increases your odds.
Should You Jump In?
That depends. If you’re already maxing out your retirement accounts, have a decent emergency fund, and are looking to diversify in a more creative (and potentially lucrative) way, fine art could be a fun addition to your portfolio.
But don’t go all in just because it sounds cool or because you saw someone flexing their collection online. Do your research. Start small. Consider fractional investing before shelling out five figures for an original canvas. And remember, this is a long-term move, not a quick flip.
It’s also worth noting that you should buy art you actually like. Even if it doesn’t soar in value, you’ll enjoy looking at it every day. That’s something you can’t say about a mutual fund.
Final Thoughts
Is fine art the next big investment trend? Perhaps. The market is evolving, the barriers to entry are lowering, and people are looking for smarter (and more meaningful) ways to invest their money. Whether you're a seasoned investor or just starting out, art can be both a financial tool and a personal joy. Just don’t get carried away with the idea of turning every piece into a payday. Not all art will go to the moon. But some might—and the ride there could be more inspiring than any earnings report.
