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INVESTMENTS
"I like the idea of
investing in something
by DAVID BARNETT
MANAGING DIRECTOR,
Studio Eighteen Ltd
I can enjoy...
is Art a good bet?
That is a question that is frequently asked by people who earned a large salary. Herbert was a postal worker before
enjoy art but have never before considered the investment he retired and his salary peaked at $16,000. Dorothy was
possibilities. a Librarian. They used his salary to live on and hers to
buy works of art. By 1990 they had amassed over 2,000
Given stock market turbulence over the past few years, pieces of contemporary art by up and coming artists.
it’s not surprising these individuals are starting to look for Their secret was to buy in depth specialising in one sector
places to put their money aside from stocks, bonds and of the market. Due to lack of space they had to sell, and
cash. Art is increasingly viewed as a good way to when the collection was valued, it was worth an
diversify a portfolio, because although prices appear to incredible $10 million dollars. They have graciously
move independently of stocks, long term they perform at allowed the National Gallery in Washington to acquire
least as well. their art collection in return for an annuity. Although the
collection has gone, they remain avid collectors and are
It may surprise you to know that between the period 1953 still buying works to this day although they have slowed
and 2003 the art market performed slightly better than down a little. Herbert is in his 80’s.
equities, producing a compounded 12.06% return against
11.65%. The Vogels have achieved international acclaim by their
astute buying and have shown what can be accomplished
It is true that a piece of art does not provide a dividend on a modest budget.
and the cost of selling is higher than shares but it has one
distinct advantage, you can enjoy and gain tremendous Not everyone can afford the time and effort put into by
pleasure from your piece of art while it appreciates in the Vogels but that is where a good Gallery comes in. The
value. Art market can be divided into four main categories: Old
Masters (1300-1860), Impressionists (1860-1910), Modern
Art must also be seen as a medium to long-term (1940-1970) and Contemporary (1970 onwards). Most
investment. It is highly unlikely that a piece of art will galleries will specialise in one or two of these areas and
dramatically rise in value in a very short period of time through their contacts and experience should be able to
(although there are always exceptions). It is more likely to supply you with works of art that will have every chance
appreciate at a steady rate over time and not have the of making a decent return on your investment.
huge swings that you experience with shares. Be warned
though, that just like shares there is no guarantee that The contemporary market for instance has shown
your investment will appreciate in value and can actually incredible gains. It has accelerated in the past two to
fall. You do however have the comfort of still having a three years following an almost unbroken pattern since
piece of art that can give you enormous pleasure. 1996 of rising prices and has outperformed all other
sectors by some margin.
A misconception by would be investors is the idea that
only the top end of the art market is worth investing in. Investing in art can be one of the most enjoyable ways to
This puts the small investor off, but this is not true. There spend your money providing its owner with a lifetime of
are many works that have been sold by Galleries for a few visual pleasure. The golden rule is to only buy what you
hundred pounds that are now worth thousands. A couple really like and enjoy the purchase knowing that it has
in America demonstrate this point well. every chance of making a decent return on your
investment.
Dorothy and Herbert Vogel have been collecting works of
art since they married in 1962. Neither of them has ever Try it and see, you won’t be disappointed.
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