Investing in Art: A Millennial Perspective
Three years ago I invested in the first piece of what I hope will one day be an admirable art collection. I didn’t go out searching to buy a piece of art and honestly even though I love art and frequenting museums, I hadn’t ever thought about being a collector. I was worried that exceptional art pieces were too expensive. I was worried that I didn’t know enough about contemporary art or movements to make a good decision. I was also worried that I would make a bad ‘investment”. But I was wrong. I just hadn’t fallen in love enough with a piece.
But then three years ago I saw a light box by the Dutch artist Jeroen Nelemans while visiting a gallery opening I just couldn’t take my eyes off of it. It was one of six from the series “The More I See The Less I Grasp”. I didn’t want it to leave my sight and I knew immediately that I needed to have it. It was a pure bodily reaction – where I realized I was both holding my breath and truly in the moment. I didn’t just see it. I could feel it.
I quickly looked at the tag and saw that it didn’t have a price. I worried it would be too expensive, but thankfully it was $2,000 – which while expensive enough to make me stop and think about how I would pay for it, I thought about how many years I would have it and how much joy I would get seeing it everyday ($2,000/(365 days x 20 years)= 27 cents a day!). I had to have it. I quickly handed over my credit card and asked if I could take it off the wall and take it home. I wasn’t worried about the fact that I didn’t know anything about the artist or if I had make a good investment, because I had invested in something that I knew I would love.
I didn’t want to let it out of my sight, but I had to wait until the show as over and I picked it up a few weeks later. I took down an old concert poster and put it on my wall and lit it up. Three years later I still love seeing it everyday. This is how I started and I recommend any young collector start building an art collection.
Buy a piece that you truly feel and that captures you, but no matter how much you love a piece of art don’t spend more money than you can afford. So what can you afford? A good rule that I follow is I won’t invest more money in a piece of art than I can make back in 1 month or less than 1% of my total net worth (whichever is greater). So personally I currently wouldn’t invest more than $10,000 in any piece of art.
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But Is Art A Good Investment?
There really isn’t great information available for young collectors and I haven’t learned much from “should I invest in art” searches. Evidently according to a recent study millennials are buying more art online for long-term investment purposes. In my opinion investing in artists is like investing in stocks – it’s very difficult even for professionals to find artists who’s work will consistently go up in value. You should be skeptical of anyone who tells you otherwise.
Somehow because I bought that light box I got put on a list and now get invited to gallery openings and art events. This includes getting VIP passes for the annual Expo Chicago – a contemporary art show that attracts hundreds of galleries from around the world showcasing their artists that I attended last weekend. The VIP passes include access to a private party, early art viewing, and a lot of free champagne and tastings.
After looking at hundreds of pieces I walked by a painting by a California artist that I really liked. Unfortunately the painting was significantly more expensive than I expected. The gallery owner told me that she was well known for making artists famous and that a painting by [some artist I didn’t know] that cost $5,000 only 6 years ago now could be sold for $500,000. WTF? What an investment!
I couldn’t tell, but she was probably telling the truth. She believed the same thing was going to happen to the artist I was inquiring about. “You need to buy this painting” she said, “It’s going to be worth a lot of money”. It felt more like I was talking to an investment advisor than an art dealer. I did a quick calculation in my head and I ended up not buying the painting because I calculated that I really couldn’t afford it (and I didn’t have anywhere to really hang it!).
Until 2015 the art market was crushing it within insane price records being set every few months – but has sense cooled down. Most of the pieces being sold and setting records were from well-known artists and it will probably always be a good idea to invest in a Picasso or Modigliani if you have $50 million + to invest. But for the rest of us it’s really hard to tell if art is a good investment and even investing in artists who are on the verge of blowing up is still a gamble unless you can predict the future. For most of us it is best to invest in art we truly love and be happily surprised if it increases in value over time. I just found out this past week that the artist who made my light box is now selling for 3-4x the price that I paid. Does that mean I made a good investment or just get lucky?