I frequently see references to the concept of purchasing art as an investment or as a means of diversifying one's investment portfolio, a vision that is reinforced in the popular imagination with strategically edited clips of Antiques Roadshow where lucky people find out their yard sale item is worth thousands of dollars. Sometimes that happens. I'm certainly not going to claim it doesn't--I've personally held a client's amazing art pottery find worth several thousand dollars that was encountered at the Goodwill for $1. But these occurrences are much more akin to buying a winning lottery ticket at your neighborhood 7-11 than a solid investment strategy. In many cases, if you have available capital to invest, you're better off directing it to a mutual fund or similar traditional investment infrastructure than buying paintings with the expectation that a few years down the road they will greatly increase in value. As an appraiser, it frustrates me to see people (usually people who stand to gain) encouraging purchases of art as an investment, especially because it leads to situations where well-meaning collectors can be taken advantage of, and most of all because it strips collecting of what I feel is its biggest appeal: the opportunity to surround yourself with objects that bring you joy and enrich your quality of life each day. Monetizing art collecting as an investment activity reduces the ancient, passionate practice of building a collection to a dry act of turning paintings into units of stock that can enhance one's "portfolio." The word Wunderkammer (note the emphasis of "wonder") was used in 16th century Europe to refer to a large piece of furniture that was a quite literal cabinet of curiosities housing a collector's treasures, and many art historians consider the Wunderkammer a precursor to modern museums.
I tell my clients that the only way to be sure they are making a good "investment" is to purchase a piece they fall completely in love with and that speaks to them on a soulful level. Those beloved pieces are the ones you'll never regret purchasing, even if they are worth a fraction of what you paid for them 10 years down the road, because you will have adored living with them every day. You have no plans to sell them, because you cherish them, and your initial monetary outlay has accrued years of personal joy living with those objects. That is the only reliable form of art as investment--an investment in your happiness. Intriguingly, many of the works I've come across that actually did turn out to be a good financial investment followed a Warren Buffet style of investment rather than the quick flip we envision in our current culture--the clients purchased it many years ago because they loved it and lived with it for decades as it quietly grew in value.
With that said, there are better and worse sorts of purchases one can make, and in this post I hope to outline some basic tips that may help guide those new to collecting. Below I've outlined a variety of factors to consider when embarking on an art purchase.