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Why you should consider this asset class: Is art the best investment for 2023?
While many people view art as simply a means of aesthetic enjoyment, it can also be a valuable and potentially lucrative investment. In fact, fine art has proven to be a solid investment option over the years, with many artworks selling for millions of dollars at auction. If you’re looking for a smart investment for 2023, here are some reasons why fine art may be your best bet. Read on to see why we think art is the best investment for 2023.
Art has a track record of appreciation:
Over the years, art has proven to be a reliable investment that consistently appreciates in value. According to the Art Basel and UBS Global Art Market Report 2021, the global art market saw a total sales volume of $50.1 billion in 2020, indicating a continued interest in fine art as a viable investment option. In fact, the report shows that contemporary art saw a 5% increase in value in 2020, despite the pandemic’s impact on the global economy. See our Profit Powerhouses article to see some of the massive price appreciation seen in the art market.
Limited supply and high demand:
Fine art is a limited resource, and the supply of quality artwork available for sale is limited. This scarcity drives demand for high-quality pieces, increasing their value over time. With the increasing demand for art from emerging markets like Asia, Africa, and the Middle East, the market for fine art is expanding, making it an even more attractive investment opportunity.
Tangible asset:
Unlike other investment options such as stocks, fine art is a tangible asset that can be enjoyed and displayed in your home or office while also potentially increasing in value. As an investor, you have control over the artwork’s storage, care, and exhibition, allowing you to ensure that it remains in excellent condition and maintains its value.
Diversification:
Fine art is an excellent way to diversify your investment portfolio, as it is an asset class that performs well in various economic environments. Unlike other investments, fine art is not highly correlated with other financial assets, which means it can serve as a hedge against inflation or economic downturns.
Emotional appeal:
Fine art is not only a smart financial investment but can also provide significant emotional value. A work of art can be a source of inspiration, intellectual stimulation, or emotional connection, bringing joy and enrichment to your life. Owning a piece of art that you truly love can provide you with a sense of pride and satisfaction, beyond its financial value.
Inflation hedge:
Fine art is a tried and tested inflation hedge having been reported as such by major financial authorities like Forbes, The Motley Fool and Bloomberg. Art is able to serve as an inflation hedge as the art market is uncorrelated to fluctuations in the financial climate. This can be seen by viewing the Artprice index and its resilience during the 2008 financial crisis and the pandemic in 2020. Given the rising inflation rates we are seeing at the start of the year, it would be wise to incorporate a strong inflation hedge such as art into your portfolio.
In conclusion, fine art can be a smart investment for 2023 and beyond, given its long track record of appreciation, limited supply, high demand, tangibility, diversification, and emotional appeal. As with any investment, it’s essential to do your research, work with reputable dealers and auction houses, and invest wisely. By following these guidelines, you can potentially build a portfolio of fine art that is both financially and emotionally rewarding. For further benefits of investing in art, see this article by Money Under 30
Trust De Pointe to guide you through the complexities of the art investment market. Contact us today to learn more about our services and how we can help you achieve your investment objectives.