Why Art is an Asset Class
Art greatly diversifies a portfolio. Because art historically increases in value over time, it can be the stabilizing asset to offset risky investments. A popular misconception about art is that it only refers to traditional styles like historic paintings, sculptures, and artifacts.
Technology, marketing, and consumer involvement have expanded the concept of art as well as the idea of art being an asset class. Art today includes laser-printed ceramics to code-generated paintings. More importantly, technology places art at the fingertips of potential investors worldwide.
Today, more people than ever are exposed to the art industry and its known profitable history. As history is continually being made during this age of technology, revolutionary art forms and artifacts are becoming valuable collectors’ items. Acquiring such pieces can produce significant economic and social means.
The marketing industry relies on art, as well as artists, to create visuals, develop products, and appeal to audiences. Art’s value increases as companies rely on branding efficiency, competitor advertising, and the impact of art on revenue growth. Marketing also extends the opportunity for amateur artists to work with major businesses to get their works publicized.
The work of these artists could become valuable, original art pieces depending on the impact it has on audiences. Art often embodies an artist’s emotions, struggles, and tribulations which could reflect the issues within the society. This adds to the history and potential value of their work.
The history art tells sometimes preserves value money does not transcend. Owning art from various mediums could go a long way financially. These possessions would yield the greatest return if passed down from one generation to the next. Art can be used to build family legacies and traditions while increasing a family’s estate.
Art can also be a way to expand social status. Certain social statuses foster opportunities to gain knowledge about other financial ventures. Renowned art shows and galleries host benefits and fundraisers where people connect to enhance the community and their portfolios.
Art today has created a gateway for consumer involvement. This involvement is greatly due to the use of digital advertising, social media, and virtual experiences. Consumer involvement makes it more accessible to evaluate the market and identify which pieces have the potential to earn significant value. This makes art an asset that could be studied and researched like any other financial investment.
Art has the advantage of creating a network with other investors who are experienced with what are the best art forms and pieces to seek out. Consumers significantly impact the value of art. Their interest in the artist, their support of an artist’s works, and the spread of a work’s popularity are the direct result of consumers have a certain level of involvement. Art now is as profitable as any other stock or real estate investment. The same markets are influenced by consumers.
The Asset Class
Art becomes an asset class as it possesses the ability to diversify a portfolio, balance risks, and accumulate equity. These are all standard characteristics of other asset classes.
Art does present some challenges in the short-term market. However, the potential value it could later accrue does attract many investors. Investors make decisions with the understanding that low-risk investments may not yield results in the short term but offers the potential to stabilize or significantly expand in the long run.
It is profitable to begin exploring art as an asset class. This can help an investor make the best financial moves. Like any great investment, it is important to jump on a product or market before it is entirely mainstream. Once art is a popular asset class, its market may become unstable and manipulate by uninformed investors. Art offers the opportunity to create wealth that could solidify an estate for generations and generations.