Most people would understand that buying beautiful art can be a lucrative investment strategy, even if you never plan to resell your pieces. But did you know that the Australian art market performs at a similar compound interest rate to the all ordinaries index-and even better for some classes such as Modern and Indigenous art?
And when an income can be derived from the asset whilst it appreciates over time (through art rental) the long-term investment benefits are far more evident.
A review of superannuation regulations last year sought to ban the inclusion of art into superfunds. However, thanks to some brilliant lobbying by the art community, the changes were overturned. Therefore, Australians can still include art work in their superannuation portfolio, if they follow certain conditions. But it’s not just about securing a Brett Whiteley, all sort of art can add serious value to your super fund.
Different types of investments perform better under different market conditions and as with any sound investment strategy, conducting appropriate due diligence and seeking professional art advice is important.
Bear in mind that not all art is a good investment; selecting appropriate investment artists, diversity across your art portfolio and timing are essential. .
By following these simple Five Steps to Investing in Art, you will be guided to choose the right artwork, and make your investments work harder for you.
1. Choose suitable art
Certain classes of artwork perform better as investments. Be guided by an independent art expert, or seek an independent assessment/valuation by a qualified valuer.
2. Look and learn
View as much art as you can- the more you look the more you will develop your own “eye”. Art is like fine wine- your palette expands and matures. Learn to recognize quality and what appeals to you aesthetically. Read leading art market journals and the artist’s CV’s before you buy.
Diversify across your art portfolio by including established blue chip, mid-career and higher risk emerging artists.
4. Buy what you like
With a myriad of different genres and media to choose from, there is plenty of opportunity for you to invest and to buy what appeals to you aesthetically. Be guided by an expert, who will get to know your particular likes and dislikes, whilst presenting art of investment quality.
5. Compliance check list for SMSF’s
If including art in a SMSF, your financial advisor should understand your responsibilities under the sole purpose test. Identifying and developing an annual check list which includes independent valuation, insurance and storage requirements is essential. Keep accurate minutes alongside a well-documented Investment Strategy.
A further bonus, the opportunity to derive an income from art investment through art rental is attractive and meets sole purpose test requirements. Access independent specialist advice or visit galleries that offer art investment and rental.
And remember that art is a long-term investment- holding from between five to eight years is highly recommended. That gives you plenty of time to appreciate your investment, whilst it appreciates in value!