Art is a tangible asset in the alternative asset class; its value can increase over time. Art does not fluctuate as much as the stock market. Investing in art is a recognised investment strategy with a proven track record. Investment portfolios in art can provide strong income streams plus potential long term capital growth. “The Igas” by the artist Brett Whiteley set a new record for Australian painting when it was sold on auction in June, 2007 for $3.5 million clearly a 600 percent increase in value in 12 years.
Australian Aboriginal art had an increase in fame over the recent years. This unique art form is recognised and admired internationally by art critics. Aboriginal art is a bestseller, most Australian Art Galleries had converted over 60 percent of their premises to promoting Aboriginal art. “Warlugalong” by Clifford Possum Tjapaltjarri sold at AU$2,400,000.00 in an auction by Sotheby in Melbourne 2007. Investing in Aboriginal art can be a good investment as prices are dramatically increasing.
Investing in art may seem to be an exciting venture but it’s not for everyone. It’s only great for people who understand what they are doing. Not every artwork will increase in value, only a small percentage of it. Art is a long term investment; art market can be stable during prosperous times and yield big returns but can easily dive during time of recession.
Investing in your retirement is the best investment you can do. Superannuation is your retirement investment. Self-managed superfunds or SMSF are becoming the fastest retirement vehicle to achieve this goal. With SMSF you control how you would like to invest your retirement fund. SMSFs allow you to control how your benefits are passed upon death. A tailored strategy can be built suited to your family situation and beneficiaries. The total cost of running SMSF depends on the investments made within the fund and whether you employ the help of SMSF specialist.
SMSF can be invested in shares, direct property, trusts and managed funds. Investing in non-traditional assets like art is also allowed in SMSF. Art patrons or people with relative expertise in art will find this type of investment less risky. But you have to be aware of the new law about insurance and storage when investing in art through SMSF. This new rule on insurance, storage and display of artworks may prove to be a financial liability for low value one-off asset. The annual holding cost of artwork will create a low return unless you get a hefty sale price.
Is investing in art as good as setting up an SMSF? Art is a good asset class for people with large or growing holding. This is a long term investment, putting a part of your wealth in art complement other investments you may have. Investing in art is nor for everyone, it’s only great for people with knowledge in art and investment. While setting up an SMSF means accessing a wider choice of investments like managed funds, direct investment, direct property, non-traditional assets and private unit trusts. SMSF even allow investing in collectables like art. With SMSF you have control over your investment decisions.