If you're trying to diversify your investments so that you have several potential sources of wealth, fine art is one area you should certainly look at. If you have art that's in good condition from a top-notch artist that galleries admire, you could see a nice return eventually if you sell the art later on. However, investing in art is not as simple as buying something and sticking it in a closet, all wrapped up. In fact, investing in art can be tricky, and you need to be sure you know what you're getting into. Here's a glance at whether investing in art is right for you.
Investing in art has a big advantage in terms of being able to use the art now. You can display the art carefully and enjoy the object or painting you picked up. You don't have to lock it away; it's not like it's going to depreciate if you look at it. If you want something you can enjoy now while it increases in value, art may be perfect for you.
If the art you get is from a living artist who is producing more and more original works, you have the opportunity to gather the works together in a collection. This can affect the final value of the works; sometimes putting a complete collection up for sale (as opposed to one or two pieces) increases the resale value simply because you are offering a complete collection. That's not guaranteed, but it is an option that other forms of investment can't really offer.
Because art is a physical object, it's subject to damage -- and if the art is glass or a painting, or something similarly fragile, the risk of damage is high. A storm or earthquake that damages your home could damage the art, for example. While having good insurance can help with this, that might not always get you the full amount that you might get from a sale to a gallery or collector. If you don't want to take that risk, then art might not be a good investment for you.
Investing in original, top-notch art also requires a large initial investment. Chances are you're not going to find a very cheap piece of art that suddenly skyrockets into the stratosphere value-wise. If you're still at the point where you can invest only small amounts of money, then art may be a difficult investment to get into. But if you can afford the initial cost of each art piece, then art could work well.
When you finally want to trade the art in for money, you're going to be dealing with a specialized audience of galleries and collectors. If the world economy is not doing well when you try to sell and even the collectors aren't biting, you may have difficulty selling the art. This is a difficult path to project, of course, and just because one part of the world isn't doing well doesn't mean collectors in another part of the world aren't buying, either. So this is really a decision about how much risk you're willing to deal with. If you're confident that there will be people doing well and looking for art when you want to sell, investing in art could be a possible path for you.
If you have questions about selling art, calculating resale value, and dealing with the ups and downs of the art world in general, talk to organizations like the Chicago Appraisers Association. The staff should be able to help you or point you toward others who can.