In 2005, two art dealers in New Orleans bought a painting of Jesus entitled Salvator Mundi for $10,000. Twelve years later, that same painting sold for a record-breaking $450 million at Christie’s auction house (after it had been restored and its provenance as a Leonardo DaVinci discovered). Of course, the magnitude of this appreciation is unique, and while most people will not earn this kind of exponential return, an art collection is an asset you can enjoy.
Factors to think about when investing in art:
Collecting can be exciting. Many collectors say they buy primarily for emotional reasons but are also motivated by financial considerations. They enjoy the thrill of the search, the joy of owning beautiful pieces (and showing them to friends) and the satisfaction and pride of discovering a “find.”1
There are potential risks. In addition to a potential loss in market value, there is the risk of theft or fire, and environmental damage (from heat, humidity, light or smoke). Consider purchasing a climate control system, alarm system, smoke detectors and fire extinguishers – and a good insurance policy.
The number of women collectors is on the rise. Since 1990, more and more women have begun collecting art.
Include your collection in your estate plan. Art collections are sometimes overlooked in a family’s overall wealth plan, but it may be a significant part of your wealth. Your art might be valuable, as well as difficult to share and costly to own (if it needs to be maintained and insured). Yet, according to a recent survey of art collectors, 87% say they plan to leave their art work to their heirs and 57% haven’t educated them about collecting.2
You don’t have to purchase art to enjoy it. There are many ways to enjoy art in Cleveland, including:
The Cleveland Museum of Art
11150 East Boulevard clevelandart.org
More than 40,000 works of art and free admission to the permanent collection
Museum of Contemporary Art Cleveland (MOCA)
11400 Euclid Avenue mocacleveland.org
Hosts temporary exhibits and offers free admission the first Saturday of the month
The Sculpture Center
1834 East 123rd Street sculpturecenter.org
Founded in 1989 to support the careers of emerging sculptors of Ohio; free admission
FRONT International: Cleveland Triennial for Contemporary Art
Through September 30th, 2018 at various locations around town, including the Federal Reserve Bank of Cleveland, Cleveland Public Library, and the Cleveland Clinic. For information, visit frontart.org
Interested in purchasing art? Your Luma Wealth advisor can help you sort through these and other issues.
1“The Psychology of Collecting,” MD Magazine, April 27, 2016
2“For the love of art,” UBS Investor Watch Pulse, 4Q17