What holds an art lover back to become an art collector?
April 3, 2020
Collecting art can either start from appreciation or from financial considerations. Yet, there are countless withholding factors for art lovers to move their passion and appreciation to the next level. What are the main fears and how can art lovers overcome them?
Starting to collect art is the next step in the art journey. It usually develops from a deep appreciation for art, beauty and aesthetics. Yet, the old actors of the art world often try to over mystify it and present art collecting as a complex process. Setting up their “expert” guides and unwritten rules do not really help art lovers. Typically, they often aim to generate a reverse effect. If you love art, then you have to master rule number one: do not be intimated by the word “art collector”.
Building up an art collection is a beautiful thing and often develops into a lifelong journey, which can even continue through generations. Nevertheless, the motives are different. Some people collect art because of love and appreciation and others start to collect it with the hope of a financial return. All of these reasons are based on personal choices and are perfectly fine.
Even if you build up your art collection from financial considerations, you will still safeguard a valuable collection of art pieces for the future generation and by doing so, you might help to enrich humanity’s cultural heritage. Put it simply, you also enable artists to continue to work and even with a small purchase, you create a bold impact on their future.
So where to start? Are there any secret guidelines? Maybe some magic tricks for art collectors? Not really, but a number of great insights and experiences happen to be all around us, which can help to make more safe and conscious decisions.
Art is not a typical currency
Owning a beautiful piece of art has multiple values. Alongside the emotional one, an artwork represents a material value as well. One of the greatest benefit to invest into an art collection is that unlike other investments such as stock exchange, artworks will always have a certain value. They will never depreciate to zero. This is the reason why several economists have come out in favour of art. They consider art investment a good way to diversify a portfolio, because it does not fall into the same category as more traditional assets such as stocks, equity bonds and cash.
It is always encouraging to see news about famous art collectors and celebrities building up their own collections, because success sells and it is a good PR for the art industry. However, in the art world we also have to recognise another phenomenon, namely the “starving” art collector. In fact, collectors can make mistakes too, especially if they see an artwork as a type of currency.
Investment in art follows usual economic patterns. Art is in high demand, because by its nature, artworks are unique and in limited supply. This is further compounded as most of the world’s great works of art are only to be found in art galleries or private collections. Economically speaking, this creates a collection of “goods” that are not readily converted into cash, and are unpredictable.
We should not forget that art investments are usually medium-long term investments. Do not expect to buy an artwork and to sell it with a profit in the next month.
It is an unwritten rule that one should never invest into art from their last saving funds. There are three key questions to ask before purchasing any artwork.
- Can I afford it?
- Do I see and understand the cultural value and the general appreciation behind an artwork?
- Am I OK with this investment if I do not see the return in the next 5-10 years?
If you are not sure about any of the answers, then it is better to move away from that deal. Collecting art is not about taking risks, rather to create a long term strategy with a collection of artworks you do appreciate.
Living artists versus old masters
It is always a challenging question for new collectors where to invest their funds. For example, purchasing an old master artwork definitely requires a higher investment, however it usually has a proven auction history, offering a good hint for the valuation and the possible return of the investment. It seems to be a safer choice, due to many years of proven track record and the full life path of the artist.
On the other hand, investing into a contemporary, living artist requires far less funds, but it does not offer the same level of comfort as an artwork with a massive auction history. The risk is definitely higher, on the other hand it also involves a greater potential for a significant return on the investment.
One should never forget that contemporary artists are among us. There is a possibility to contact them, to understand their life stories, their motivations, the stories behind their artworks and to get a glimpse of what is really happening around their works. Not to mention that smart collectors always try to buy directly from the artists’ studio, because it is not just cheaper, but also gives the possibility to have the firstoption for the exceptional, often milestone pieces.
The art world is going through an amazing process of democratisation thanks to the Internet as a global and open platform. In the past years more and more social media platforms emerged and moved away the focus from the galleries and the privileged art dealers. Now-days most artists are accessible through these platforms, which widened up the possibilities to engage into art collecting as a regular art lover too.
Your home is your first gallery
It might sound too simple, nevertheless most art lovers start to collect art in their homes. We all have empty walls and an artwork can “dress them” up and add character to our living environment. In fact, collecting original art ensures a special touch, while it creates the first impression of who you are.
Later on, one can strengthen this mission with the image of their business, company as well. An office with original artworks always increases the positive impact of one’s firm. It is not just a great philanthropic act to support art, but also a great way to entertain clients while walking them through one’s collection and sharing some fascinating stories around them. It shows that one has a business with much deeper values.
Use your tax to purchase art
Choosing the appropriate corporate image does not necessary mean additional costs, rather a long-term investment. Company motivations are such as tax reduction, taxation benefits, diversification, economic slowdown, capital appreciation, speculation, philanthropy, social status, corporate identity and brand management.
The conclusion is that you can invest into art from your tax. The artworks will increase your corporate image and give credit to it, while they will never lose their value. Because of this, if you bought them and reduced their value from your tax, you will win on every cent when you sell them later.
Collecting contemporary art has become a highly effective way of creating a pioneering and unique culture in the workplace. It is also a most notable socially responsible way of boosting corporate identity in the public arena.
Invest from appreciation
Let’s not sugarcoat it, collecting art can be a pricey hobby. Only purchase artworks that you can easily afford. Most likely your money will be stacked in the artworks for years.
One of the greatest advice for art lovers is to invest into artworks from appreciation. If you really admire an artwork, if you like the story behind it, then you will represent that part of your collection in a more authentic way.
In the first years try to buy artworks that you would also appreciate on your own walls. This way you can also enjoy your collection.
Purchase wisely and think through your acquisition. Do not jump into deals. If you like an artwork, try to understand more the artist and see whether there are other similar artworks on sale. A large number of similar artworks can reduce your chance to create a return when you aim to re-sell. On the other hand, always be open and remember that by discovering more artworks from the same artists, you might findsomething more exciting for yourself.
Try to avoid the trends. There are hypes in the art world, like for example when everyone wants to buy a “butterfly”, during periods when the art market is flooded with such type of artworks. Briefly, it is easy to buy them during these times, but after the hype it will be extremely hard to re-sell them.
In general, it can be said that unique art pieces and unique background stories have more potential to create value for an art collection.
Know your art
In order to discover what you like, it is advisable to go to various exhibitions and to get a glimpse of different artistic forms, eras, styles. It is a great way for art lovers to help them recognising new talented artists, realising the originality and the value behind the artworks and their background story. Luckily there are multiple art appreciation courses for art lovers, which can be extremely worthwhile to develop own tastes and preferences.
People hardly talk about this, but seeing an original artwork in person can bring about a whole other story. It can give you goosebumps and it can connect you with the artwork in a much deeper level than any art book ever will.
Once you have discovered what moves your heart, do not be afraid to make a little research. As mentioned before, trending artists are not necessarily good investments. There are multiple examples when specific artists (or the galleries behind them) create a temporary market hype, then quickly vanish in silence. Do not rely only on the art market hypes.
Develop your confidence
Many art lovers, even if they are super successful in their own professional fields, have lack of self confidence when it comes to investing into art. Confidence is something, which is very difficult to build up for art collectors, since one of the most important aspect is to have trust in one’s own taste even if it goes completely against what others say.
You can always reach out to independent art advisors and art galleries to seek guidance, just don’t forget that their primary aim is to sell. Not to mention that too many “expert” opinions can easily influence us, and one can turn his/her confidence into fear.
In the art market there are rare finds and some successes, but in reality no collector has the perfect formula to invest. This is not a problem at all because a great artwork evokes emotions too. It can be either good or bad, beautiful or ugly, pleasing or scary, meaningful or provoking. In fact, a great artwork will always generate a reaction. Do not be scared if someone has a different opinion about the artwork you admire, because we all have different tastes.
The key is to gather the knowledge from as many sources as you can, but at the end to follow your instincts. It might sound something easy to do, but it can be rather challenging at times. When you collect from passion you might have the chance to discover the next “Picasso”. More importantly, one can only enjoy an art collection if he/she truly appreciates it.
Manipulation is everywhere
Do not be fooled by the great manipulators of the art market.
In most markets, unlike in the art market, prices are public because price is a great reflection of the market value. However, in the art market we have to face with a completely different story, because most of the galleries and auction houses keep their sales prices as top secret. They are even very particular about who they are willing to sell the artworks to.
Galleries and art dealers have an extraordinary amount of control over the price of the artworks. The control is mainly done by the usual practices of galleries of investing many resources to build the brand and awareness around their artists and the represented artworks. This is what typically happens when there is a big hype in the art market, social media and other news outlets around artists and artworks.
Interestingly, galleries often over price an artwork just to keep up its prestige, and if it does not sell they simply drop the artist. This is how they protect the credibility of the gallery in a market with low demand.
It can be said that prices are not market-set prices in the art market. The ongoing secrecy and mystification offers a solid playground for galleries, art dealers and auction houses to basically say whatever they want to the collectors, and it is precisely what makes the art market baffling to outsiders. Scary isn’t it? Luckily, for most art lovers there is the primary art market, which can be a whole different story, where they can deal directly with the artists without any intermediaries.
Buy from living artists
There are thousands of great artists all around the world, however the life story predicts the long term value of an artist. A young artist might not continue his/her journey after the art university, or an artist who creates on and off might not bring further value for your collection in the future. Young artists can start to work through their passion, but their life circumstances might change or they simply shy away from art as a profession.
When you are looking for quality artworks, it is a great start to look around among the mid-career artists. Many years of artistic background shows you the consistency and a potentially solid artistic background. It will also allow you to find high quality original artworks.
According to the old mentality, an artist was only considered good if he/she had an art diploma and a miles-long history of exhibitions. Since the global playground has changed thanks to the art democratisation, many emerging artists are preferring the social media channels to “exhibit” their artworks and to raise awareness to their pieces. What once was the physical exhibition, that is now the online presence, which is a great and public indicator to evaluate the works of the artists.
Getting access to the world of an artist, you can also easily determine whether he/she has a consistent body of work or the artist is just copying the current trends. It can be also a great indicator to determine the growing potential of the artist. It is advisable to keep in mind that most artists have artistic periods where their style can change, while staying true to themselves.
At the end of the day art will always be a subjective investment, but there are four elements to the perceived aesthetic value of a work of art: the artist, the work itself, the market and the macroeconomic situation.
Remember, if you want to invest in the artworks of any rising artist you should take a long–term view, therefore listen to your inner voice and feelings about the artist’s path.
Raise the value of your collection
A typical mistake that many art lovers make is that they buy an artwork and they think that their job is done. Do not make the mistake to just sit back and wait for the magical return, because that rarely happens. When you buy an artwork make sure that it will not just maintain its value, but also to increase it.
There are multiple ways to increase the values of artworks. You can create publications around them, you can lend your collection to various public exhibitions and you can also invest into the PR of the artist in order to make awareness around his/her works. When you contribute in making an artist more accomplished and recognised, you automatically increase the value of your collection as well.
It is very important that an art collector should not rely on others and the outside factors, he/she can also be proactive. It is important to be in charge and to do the very best to increase the value of the collection in every possible way. It is your investment and in most cases nobody else will do this job for you. Especially not the artist, because the artist’s main task is to create. If you invest for a return, then make sure that the appreciation towards your art pieces will grow as well.
Sometimes collectors state that they have wasted money on some artworks, which have never produced the envisioned return. To be fair, it is not necessarily the fault of the artist, collectors are equally if not even more responsible for the value creation of the artwork.
Diversify your collection
Finally, try to diversify your art collection. Most art collectors are collecting a handful of artists, which allows them to reduce the risks on their investments.
Diversifying is not just about the financials. Over the years one’s taste can change and the appreciation can shift. It is also valid for the art market. Just as hypes are coming and going, people are also changing. Just think about all the changes around you in the past decade, such as fashion, technology and cultural influences.
For any art lover starting to build up an art collection, means a great journey where each and every new piece will have a special place in the collection. A newly acquired artwork has multiple powers, it can add value and strengthen a collection or simply just shift away the core focus to a brand new direction.
As a conclusion for new art collectors: buy what you love, so that you will be always proud and appreciative of your collection.
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