Read this to understand how the art market works, what you need to know before purchasing your first piece of art, and how to choose something that will appreciate in value over the years.

Introduction into the art market

Most people have heard about the eye-watering prices art pieces reach at auctions around the world. People with a lot of money see timeless art pieces as the safest place for their wealth - a Van Gogh piece will only get more expensive over time, easily outpacing the inflation, and one would always be able to find a buyer if they wish to sell it. All good art will appreciate over time, and the reason is very simple. The number of art pieces of a certain artist is finite, while at the same time there are more and more buyers for them.

Therefore the same logic also applies to less expensive pieces, if you are strategic about what you buy. Let’s have a look how this works.

Why should you invest in art

We’ve seen the speculators try to make a quick buck in crypto and with NFT’s. Indeed, those asset classes copied many principles that existed in the art market for decades. The main thing to understand is that art is much more long-term. In most cases, art collectors spend a number of years patiently assembling a personal collection that hangs on their walls for decades, and then they have an option of selling it for 2x to 5x more than its’ initial value… or even pass on to their children with a very small inheritance tax liability.

Additionally, there are some concrete reasons why you should consider buying a piece of art if you have the opportunity to do it:

1. Because art is beautiful
   The main motivation should always be that you like the piece and are excited about displaying it on your wall. Original artworks are true centrepieces in any room, they grab attention and are one of a kind. Everyone can buy reproductions, but original art has an aura to it and is much more meaningful.

2. Because it shows sophistication
   Original art pieces are conversation starters, and because of their rarity they are a source of pride and cannot compare to “typical” expensive toys one might purchase to show status. Owning art shows style and good taste.

3. Because art prices go up long-term
   While everything can fluctuate short term, art is still perhaps the most stable asset class with the most predictable growth on the long term. A Picasso piece that was purchased for 1.000$ in 2000 can be found on the market in 2023 for 3.000$, and the expectation is its’ price will only grow over time. This growth is not based on speculative assumptions and does not fluctuate as much as other asset classes.

As a first-time buyer you should consider buying a few pieces from popular artists that you like for their aesthetic merits with the expectation that you will keep them for a long time and treat them as a very pretty savings account that you can enjoy on your wall.

What artworks to choose

From an investment perspective, the most important thing to have in mind before your first purchase is how difficult will it be to sell that artwork. Owning pieces from major artists solves this problem completely, as there will always be a market. Pieces that are easier to display are usually also easier to sell, while on the other hand, a very expressive piece that might not be suitable to display publicly from an obscure artist will have a far smaller circle of potential buyers.

Apart from that, there are some categories of artworks that are particularly attractive for a first-time buyer.

1. Minor works by major artists

   Probably the best way to start is to look for smaller, less known works from major artists. Many modern and contemporary masters have been quite prolific. Picasso or Dali have created tens of thousands of drawings that have ben put on sale by their estates, meaning you can find them for a fraction of the cost of their most well known artworks. These are very attractive to display at home as many people will be quite impressed to hear one owns an original Picasso at home - and for this reason, there will always be a demand for them.

2. Graphics, lithographs, studies and plates

   Similarly to minor works, established artists have turned a number of their figures or studies into lithographs, etchings or graphic plates that are originals, only much less expensive than one-off designs. It is best to make sure such works are signed by the artist and there are three ways this is done. They can sign it by hand (best), sign it in plate (still okay) or certified by the printer or publisher (can vary). Smaller series are more rare and more valuable, while larger series are less interesting. A graphic is considered an original if it is visibly numbered, showing both the number of all prints and the unique number of the piece. In some cases artists’ estates have decided to create graphics based on their previous works posthumously which they claim should be considered originals. The actual value of such pieces can vary a lot.

3. Locally celebrated artists

   Even though an artist is not well known internationally, they can have an incredible following locally. For example, the most famous artist in Brazil is known by everyone there, their work is shown in the largest galleries and children have studied them in school. Even though an international audience might not know about them, nor particularly care, it will always be possible to find a buyer for their art in Brazil. By seeking out such artists for your collection, you can achieve the benefits of the artist’s notoriety for a much lower price.

4. Upcoming artists that are entering the scene

   While more risky, and demanding more knowledge, this is another category of good art investments. Art by upcoming artists can often be bought exceptionally cheap, and if they end up gaining recognition - by being featured in exhibitions, in prestigious galleries or major shows, demand for them, and the price, will go up. This requires making an informed bet for their future, but the returns can reach even 100x to 300x. It is well established that being featured in a major art gallery for the first time or being showcased at the Venice Bienalle will immediately produce a price spike. The same will happen when an artist dies - there is no more supply of original works. Therefore we can still expect a level of predictability not seen elsewhere. As long as you are able to buy such work cheaply, don’t gamble on completely unknown artists and look for signals from other buyers an artist is on the rise, you should do okay.

Perhaps the best advice for those starting out is not to try to speculate too much. Avoid the temptation to seek short term profits by trying to resell them quickly and instead buy pieces you like so much you will have a hard time to take down from your wall to sell. Be prepared to own them for a very long time, or even pass them on. That way you will enjoy them much more - and the returns will happen by themselves as well.

If you want to take this more seriously, try building a portfolio that fits together. Start off with some cheaper graphics of recognised artists, then consider some minor works of lesser known artists. Top that off with some cheap works of upcoming artists that you find beautiful. Also consider collecting a certain style of artwork or focus only on a particular period.

Enjoy art for art’s worth!

Lastly, enjoy the process of collecting by learning more about the artists’ works and visit your local museums to see other works. It is hard to explain the sense of pride when seeing a masterpiece of a famous artist on display in a museum, knowing that you own another work of that artist. What starts as a way to diversify your investments can turn into a beautiful hobby.

Want to start, but don’t know which artworks to buy? Well, fortunately we are here to do just that for you. Sign up to Edward’s list and you will receive a free weekly email showcasing a piece costing between 1.000$ and 5.000$ that you can buy immediately. An original Picasso? A graphic by Dali? A drawing by Renoir? Let us guide you for your first purchases and you can become an art collector.