Whenever I am asked “how much should I invest in Masterworks?”, my response is always dependent on two variables:
- First; What is the investing style of the individual investor?
- Second; What is the minimum deposit requirements from Masterworks?
What is Your Investing Style?
For an alternative asset class like art, I would typically suggest that 10% of your total net worth be the limit that you consider. Therefore, if you had a total of $200,000 in stocks, term deposits, cash, and other assets, you should look to invest approximately $20,000 in Masterworks.
However, if you were looking to diversify away from stocks and other traditional assets more aggressively, perhaps allocating 15% to 20% of your net worth could be more appropriate. Taking the same scenario as above, you may want to look at doubling that investment amount to $40,000. Similarly, if you are a high-income earner (but low-wealth), you might also want to allocate a larger portion of your net worth to Masterworks because you can recoup the invested funds quickly.
Additionally, whether you also wants to start your own physical art collection is another factor I consider when determining how much you might want to invest in Masterworks. For example, if you were also looking to purchase about $10,000 worth of investment-grade signed prints, paintings, sculptures, etc, for your own home, then I would generally revise down how much you should invest in Masterworks by this amount.
So, really it depends on the type of investor you are and what your long term goals which will determine how much you invest in Masterworks. But, as a general rule, 10% of ones net worth is a healthy amount of exposure to the asset class.
What is the Masterworks Minimum Deposit?
There is no official ‘minimum deposit’ requirement with Masterworks. However, if you want to skip the waiting list (which is a couple thousand investors long at this point), you will want to look at depositing a minimum of $5,000 to $10,000. This amount can be an initial deposit or something that you work your way up to over a few months after testing the waters with a smaller initial deposit of around $1,000.
If you are looking to deposit less than $2,000 all up, you will likely be placed on the waiting list with no telling when membership will become open to you. So, while there is no “minimum deposit” per se, a larger investment amount will help you skip the line and become a Masterworks member much faster than you might otherwise.
If you have any further questions about investing in art funds, like that offered by Masterworks or Yieldstreet, please reach out to mark@easelinvesting.com, and we would be happy to set you on the right path. Additionally, you can learn more about Art ETFs here.
