Like most investment strategies, art investing requires a long-term perspective, which makes it a perfect candidate to include in your retirement portfolio.
The occasional quick-flip is OK, especially when the price is right (these opportunities can present themselves when an artist’s work becomes very hot). But for the most part, you should be looking to buy and hold artwork for 10 years or more. It is with this time horizon in view that you will make the best financial decisions. With a long term perspective, you will scrutinize your investment options more thoroughly because they will have to stand the test of time, which helps you choose winning investments.
If you do not want to personally care for your art investments in your own home, there are a few platforms that facilitate a hands-free experience while prioritizing long term/ retirement investing. Some of these platforms are purpose made for organizing retirement accounts, while others are more self-directed, but they all have a long term view on art investing and offer their investment products with the expectation that good things (like assets appreciating in value) take time.
Platforms to help you save for retirement:
#1. Yieldstreet
Yieldstreet offer a few long term funds that invest in art and art-backed debt. The latter are funds consisting of artwork from blue chip artists, or established artists that are currently experiencing a resurgence in interest (like that found in Yieldstreet’s art fund V).
The art-backed funds (like Diversified Art Debt Portfolio III) are dividend paying funds comprised of a loans that are backed by very expensive art (typically the art is valued at more than twice the value of the loan). So the actual risk of the loan is low, but the interest you can earn is high because of the “perceived” risk of the loan; This is an example of alternative assets not being taken seriously by the wider market, which is a really great opportunity for those willing to take it seriously.
These funds typically have a life span of about 5 to ten years. With the introduction of new funds all the time, you can simply roll over your capital from one closing fund to another to prolong your investment time.
#2. Masterworks
While Masterworks have made some quick flips in the past, they do plan to hold most of their portfolio of paintings for the medium to long term. The quick flips they made in the past were because they were presented with offers they couldn’t refuse, but also so they could build up a track record of successful exits (the company is relatively new and needed data to prove their capability of existing investments with significant gains).
The beautiful thing with Masterworks is that you can hold your investments for as long as you like (or until Masterworks finds a buyer for the work). Or, in the unlikely event that you need to cash out early, their secondary market means that you don’t have to be locked in for 5 to 10 years plus if you don’t need to be. Sometimes it is good to have this option to cash out, especially if you are already close to retirement.
#3. Rocket Dollar
Of the three platforms highlighted in this article, Rocket Dollar is the only purpose built retirement platform. This doesn’t make it better necessarily, but it perhaps more convenient if you want to look at your retirement account from one single source of truth.
In fact, if Masterworks and Yieldstreet have appealed to you in some way, you might like to know that Rocket Dollar is partnered with both, meaning you can invest into their funds via the Rocket Dollar platform. Rocket Dollar is also connected with hundreds of other alternative investment platforms, which means you can spread your money and risk even further than with a normal retirement savings provider.
