The Easiest Way to Diversify Your Investment Portfolio With Fine Art

The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years. Plus, contemporary art has a low correlation to stocks — this means prices can still go up even when stocks are crashing, making it a solid diversification strategy.

A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise. Masterworks buys the art, stores it, and holds it until it appreciates in value. Then when they sell it again, you can get your piece of the profit.

If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds, see what Masterworks has on offer. (Hurry, they often sell out!)

How do art investments work?

Investing in art basically consists of buying a piece of artwork, holding onto it, and then selling it for what you hope is a higher price down the road. The idea is to find art that has the potential to increase in value over time so you can sell it later. Anytime you get involved with investing money, that’s the basic goal.

It can feel a little daunting when trying to get into art investing, mainly because we often think of “blue chip” art — and how expensive it is. Blue chip art represents the type of art that has already shown its high value in the market. Think well-known works of art like those by Jackson Pollock or Pablo Picasso.

Certain works and artists have already proved their staying power. For example, according to Sotheby’s, 86.4% of Andy Warhol’s works sold at auction increased in value, and the average compound annual return of his works sold at auction between 2003 and 2017 was 14.2%.

If you can get your hands on an authentic piece, you could potentially see dramatic returns. Some of the fine art investing with big recent sales include:

• Jean-Michel Basquiat: Untitled, 1982, which sold for $110.5 million in May 2017.
• Andy Warhol: Silver Car Crash (Double Disaster) sold for $105 million in November 2013.
• Banksy: Game Changer, which sold for $23 million in March 2021.
• Picasso: Les femmes d’Alger (Version ‘O’), which sold for $179.4 million in May 2015.

The easiest way for beginners to invest in art

The ultra-rich have been buying and selling blue-chip art for centuries, creating a $2.1 trillion asset class in the process, which Citi estimates to hit $2.8 trillion by 2026. It's easier than ever before for everyday investors to join in on the action. No art experience required.

It’s all possible thanks to Masterworks, the nearly $1 billion AUM platform for art investing.

Here's how it works: You buy a slice of a piece of art from Masterworks. Masterworks does the rest – They expertly vet the art, buy it, store it, and hold it while it potentially appreciates in value. When they sell it again, you get your slice of any profit.

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