How To Invest In Andy Warhol Art And Diversify Your Portfolio

There are so many different ways to invest, and one that I recently found that is interesting is Masterworks.

Masterworks is the first art investment platform that allows you to invest in the world’s most valuable art, such as ones completed by Andy Warhol.

Yes, you invest in art and paintings with Masterworks – sounds interesting, right?

Masterworks has been featured on many publications such as:

  1. CNN’s How art ‘shares’ could make you a Warhol collector for just $20

  2. Forbes’ The New Art Economy: How Would You Like To Own A Warhol?

  3. Techweek’s Invest in Claude Monet with Masterworks’ Art Stock Exchange

If you’re looking to diversify your portfolio, this may be an interesting platform to look further into.

Usually, investment portfolios are limited to the stock market as well as bonds, with the occasional person being invested in real estate as well (such as rental real estate).

However, according to Deloitte’s 2017 Art and Finance report, 88% of wealth managers say art and collectibles should be included as part of their investment portfolio. Fine art has also outperformed the S&P 500 by over 180% since the year 2000!

While art is not a part of my investment portfolio currently, I do know how important it is to be diversified.

And, currently, I’m not well diversified outside of my investment portfolio with Vanguard.

This is on my to-do list currently, and I am researching different options for how I can diversify right now.

Art has been an asset that has been used by the extremely wealthy for a very long time, however, Masterworks is now giving everyday people the option to invest in valuable art that has increased in value over time.

According to The Wall Street Journal’s The Best Investments of 2018? Art, Wine and Cars “Investors who put money into art at the beginning of the year saw an average gain of 10.6% by the end of November, according to Art Market Research’s Art 100 Index, the closest thing the industry has to a benchmark. Investors who put money in the S&P 500 at the beginning of the year have lost 5.1%, based on estimates of total return.”

Related: What is Value Investing, and Why Should You Care?

How does investing with Masterworks work?

Masterworks’ platform is quite easy to understand. Here is how this investment platform works:

  1. Masterworks purchases multi-million dollar paintings – They review hundreds of possibilities each year and find great pieces to invest in by blue chip artists.

  2. After they purchase a painting, they file it as a qualified securities offering with the Securities and Exchange Commission.

  3. You can invest in art directly on the Masterworks website for as little as $1,000 to start with.

Masterworks does have a fee – they charge 1% annual to cover management fees (such as storage and gallery space, insurance, expenses, etc.). Masterworks also earn 20% of the profit only once the painting is sold.

So, how does an investor like you and me make money with our investment?

There are two ways to make money on your investment. Below is what Masterworks says about this topic:

  1. “At any time, a collector can make an offer to buy a painting that you’ve invested in. As a shareholder, you can vote with others and decide whether to sell. If the painting is sold, your share of the proceeds are distributed to you.”

  2. “We seek to facilitate trading or sales through brokerage relationships within the next 12 months.

In the end, I think Masterworks is extremely interesting. The minimum investment is quite low to get started using their platform, so it could be an interesting way to diversify an investment portfolio with art as the asset.

Do you have a diversified portfolio? Why or why not?


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