Is art a good investment?

Is art a good investment?Though almost anybody can buy and sell things through an online auction or even a market stall, it is far more difficult to trade in expensive items, such as artwork.

First of all, the individual needs to be able to speculate to accumulate, and so capital is required to buy the piece in the first place.

Secondly, knowing what to do, where to look, how much to pay and when to sell is vital if people are to make even a semblance of a profit or be left with a bank account resembling blank canvass.

Peaks and troughs

As with any market in any industry, art is prone to peaks and troughs – it has always been the case, and always will be.

While the works of Picasso and Van Gogh will always attract huge prices due to the sheer prestige of the artists, lesser known works are not always guaranteed to increase in value.

We are currently at something of a peak as far as the value of art goes – this year more records have been broken than ever before – but what goes up will always come down.

There is every chance that we may only be in the middle of an upward curve and today's investments will continue to soar in value over the next decade, but the risk is one that only the brave will take.

Variety is the spice of life

If there is one word that can accurately describe the fine art market, it is diverse: no other medium has such a varied array of examples.

From modernism to cubism, impressionism to renaissance masters, surrealism to fauvism, the choice is endless, which makes things both easier and more difficult for the buyer.

With so much art to choose from, it is difficult to single out one piece or movement, which is why multiple investments may be wise.

As movements rise and fall in popularity, hedging your bets and buying multiple items can ensure that, should surrealism takes a nosedive in popularity, the gains provided by your impressionist masterpiece will save you Dali-ing around looking for alternative forms of investment.

Quality over quantity

A common mistake that rookie investors make is to believe that having several works by one artist will outweigh the value of having just one, but this is not necessarily the case.

Quality is everything when it comes to art, and people are willing to pay top dollar for well-preserved pieces.

Works with imperfections that have not stood the test of time are likely to depreciate as their condition deteriorates, while evergreen pieces could reap dividends.

Eye on the future

Any investment in any market is a calculated risk, and this is no different with art than with buying a classic car or item of jewellery.

By looking at the gains that works by certain artists have made over the years, it is possible to calculate how much - and how quickly - prices are likely to rise in value in the months and years ahead.

Those after a hasty profit are unlikely to get what they want if the piece in question will take decades to mature.

Boosting your Banksy balance

Spotting a future superstar in the arts world is far from easy, but by far the best way to make a major profit in a relatively short space of time.

Those who bought work from the likes of Damien Hirst and Banksy just a few years ago are now laughing all the way to the bank.

Only time will tell who the star of tomorrow will be – but there is no harm speculating at the moment while the outlay is not too great.

After all, beauty is in the eye of the beholder - and for art lovers, this will always be the case.