Are we Investing in Art, Wine, etc? -

Investing in Art is a suitable instrument for diversifying one’s portfolio. Since art prices do not depend on other possible portfolio components, They act as a cushion when other markets are not doing well. The aesthetic pleasure of viewing a great piece of Art is a significant advantage.

Instability in the financial markets is encouraging investors to look for alternative investment methods. Some of the most popular alternative investments are Investments in Art, stamps, Gold, other commodities, Wine, toys, and books.

Of these, NRI favourites must be Art, fine Wine and Gold. We discuss these investments in detail:

Investing in Art

Art has been incorporated into the investor’s overall asset allocation decision. There are many ways of investing in Art via Auctions, Online auctions, Art galleries and Online portals. Here are a few things an investor must look into:

Art buyers should gain as much knowledge as possible about the artist’s work, its quality, provenance, condition, and the period in which it was painted before investing.
For a particular work to be appreciated, I need to have a clear idea about the time horizon and gestation period.
If an investor is looking for quick returns, he must buy works of well-known artists. If you like a less famous artist’s work and are prepared to wait, your returns might grow significantly over time.
Buy Art based on the quality of the work, not just the artist. Art requires careful maintenance.

Advantages and risks of investing in Art

Investing in Art is an excellent strategy for diversification, as the value of Art is not closely tied to the performance of traditional asset classes. This provides a unique opportunity to safeguard against market volatility while potentially yielding substantial returns. Investing in artworks can act as a hedge when other markets are underperforming. Moreover, the aesthetic enjoyment derived from viewing exceptional pieces of Art is a valuable aspect to consider.. Artworks rarely depreciate in value, making them a less risky investment. In contrast, art prices are known to appreciate over time, which is very advantageous.

Like all other investments, investing in Art has its downsides. Not anyone can invest in Art. It requires a certain level of knowledge and expertise. The fact that it depends largely on public tastes and other factors makes it a fairly speculative investment.

Also, Art cannot be resold quickly for a profit. It needs a high level of maintenance, storage, and security, and it doesn’t give dividends, bonuses, or income.

Investing in Fine Wine

Fine Wine is another popular means of investment. Wine purchased as an investment is typically obtained from a reputable wine broker since wine houses do not generally sell directly to the public.

Advantages and Disadvantages of a Wine Investment

Those who favour wine investment offer many reasons why it should be considered. Firstly, being a physical commodity, Wine is not affected by the stock market, company bankruptcies, fraudulent activities, major market shifts, or even poor management. Wine Investment provides legitimate ways of exemption from capital gains tax, VAT, and import and export duties. Like other tangible investments, Wine provides a good means to diversify a portfolio. Fine Wine increases in quality with time; hence, its value continually increases.

There are several disadvantages as well. It is argued that the Wine Investment Market is difficult to understand and analyses. Wines are only sometimes priced based on their value but their demand, which in turn depends on several unstable factors. To store and preserve wines, investors tend to incur sizeable expenses.

Investing in Gold

Gold is considered the safest type of investment because its value is not affected by inflation, unlike other assets. The rapid growth of the world economy and the uneven rise of geopolitics have created a lot of uncertainty regarding other investment options., and hence, most businessmen these days believe that Gold, or the yellow metal as it is often referred to, is the safest bet when it comes to investing.

Advantages and Risks of Investing in Gold

Apart from being the most basic type of savings, Gold is also an integral part of religious and social tradition, especially in India. It is the primary metal used for ornaments. Gold is indestructible. It does not smudge or stain, and it does not get corroded by acid. Gold can also come in handy for a gold loan, which is a loan deal for sudden emergency cash needs and comes with lower interest rates than a personal loan!

Unlike currency, Gold is not restricted by governmental obligations, so transactions between countries are easy. It is advisable to buy Gold in the form of gold bars or coins from approved dealers instead of jewellery. While selling ornaments, value is lost when making charges, waste removal, and sales tax. Buying Gold during wedding seasons or festivals like Diwali is not advisable. Also, when investing in a gold deposit scheme, one loses the making charges.

Rahul Agrwal