Why invest in artwork when there are so many other ways of investing your money?
Well – putting it plainly and simply, you can do whatever you like with your money. You can invest it in gold, silver, bonds or whatever else you wish to do. The array of investments out there and the ways to increase your stock or assets of value are too numerous to list. Artwork does however provide one thing that the majority of other investments do not provide – and that is everyday enjoyment with no running costs attached! You can get up in the morning and see a fantastic piece of artwork on your bedroom wall and you can enjoy it and all the individual pieces involved in that artwork. One good way of looking at artwork is if you had the opportunity to go into a house with paintings on the wall and live there for a week then take all the paintings off the wall. You would soon realise just how bare the walls are.
Artwork brings huge amounts of enjoyment and you have got to add some value to this. Once you have put a value on how much enjoyment you will get from having artwork on your wall, you can then look at art as a form of investment to make money over a period of time. There are of course no guarantees that it will make you huge amounts of money or that it will make small amounts of money. However, depending upon the artists you choose, art will more than likely increase in value usually over a period of 5 to 10 years.
When you invest in anything, there is always the potential for investments to make or lose money. It does not matter what it is. It can even be cash in a building society or bank ultimately paying you no interest. The reason why we know that you could potentially lose money in such accounts is that the Financial Conduct Authority only guarantees £75,000 of any money you hold in a bank or building society. Therefore, what they are saying is that they will only guarantee that £75,000, but they are not that confident that the building society or banks will not lose the rest so they are not going to guarantee anymore and that is just in relation to cash not earning any money.
If you have a piece of artwork from a particular artist or from a particular period that you enjoy, then it is you making that decision and you making the opportunity for yourself to buy that artwork, putting it on your wall and enjoying it. You are therefore in control. So, in answer to the above, yes – you can of course put the money into 1001 different places and it is always worthwhile doing that and making sure you have the money to live, provision for pensions, savings and so on, but if you do have any spare cash and you do want to put it into something then artwork is not a bad place to stick a few quid.
Why now for artwork?
Over more recent years, artwork has shown a huge rise in value. The reason for this is that people, quite frankly, do not trust the suits. We have seen financial crisis in 2008 and there will probably be another one in a few years’ time. At these times, people start to invest their money into things such as gold and silver.
However, people are now starting to think to themselves that they want to do something different with their money, particularly with the new pension arrangements where you can take out lump sums. They do not want to buy rental accommodation that the Government is currently taxing the living daylights out of them and that tenants trash. They instead want to do something that they enjoy. Therefore, people are diversifying and buying all sorts of bits and pieces. Artwork is one of them and prices for artwork by certain artists are going up. Artists have a real spread in the value of their artwork for sale.
The number of artists, particularly those who are starting to do well, have a real spread in the value of their artwork. By way of example, Kerry Darlington, in 2017, has pieces ranging from £1,500 to £100,000. The question is; why is this the case and what should you do?
Like anything, it depends upon the subject-matter, the quality of the painting and, with someone like Kerry Darlington, the size of the painting. Obviously, the higher value items are those big pieces which are unique in their layout and are, quite frankly, brilliant! The artist does ultimately stock paintings and those pieces of art, as good as they are, can be knocked out in a relatively short space of time and so their value is lower.
What is good about artists (particularly ones where they do have high value items) is that as the high value items increase, they drag the prices of all the lower value items up as well.