To answer this question, you have to consider your own personal investing goals.
If you are after a higher-risk higher-reward asset, or want to add more diversity to your investment portfolio, then art would be a better investment than real estate in a lot of cases. Art is generally less correlated with the performance of other assets so can act as a hedge. If you are after regular returns from a safer asset, then real estate might be a better investment for you. When in vesting in art, the gains you make will be one-lump sums when it comes time to sell an artwork.
But, why not invest in both assets for proper diversification? This is the ideal situation in my opinion. There are now even online platforms where you can invest in both assets at the same time. Yieldstreet is the most well known of these platforms.
Yieldstreet
Yieldstreet have funds for both real estate and art (as well as funds for corporate debt, treasuries, private markets), and have returned more than 2.4 billion to their investors since their inception in 2015. Not a bad run. As it stands they are one of the leaders in the alternative investing space, so be sure to check out their large collection of funds made of atypical assets.
If you are wanting to invest with Yieldstreet, you’ll be looking at a minimum deposit of $10,000. The more you want to invest, the more likely you will accepted as a client. They are quite exclusive.
There are also several other platforms to invest in art or real estate separately.
My two favorites are currently Streitwise and Masterworks.
Streitwise
Streitwise is a platform for real estate investing. It lets you, no matter how much money they have, own a part of commercial real estate through something called an equity REIT (hence the name Streitwise of course).
Streitwise’s main portfolio, which is comprised of a number of commercial properties, has a track record of paying dividends for 25 quarters in a row and an average dividend yield of 7.2% in 2022. But you can also choose to invest in any number of its other funds that are dedicated to either large individual properties or a collection of commercial or residential units.
Streitwise’s minimum deposit of $3,500 is perhaps its second most attractive quality behind its dividend yields.
Masterworks
Masterworks is an platform dedicated solely to art investing. Here you can purchase fractional shares in contemporary art, from artist like Picasso, Monet, Warhol, Banksy, KAWS, Basquiat, and hundreds of other artists.
New artworks are added to the platform every week (about 3 per week), so the number of investing opportunities is constantly expanding. In addition to this, Masterworks’ Secondary Marketplace lets you sell your fractional shares at any time to other members. This means you do not need to wait for an artwork to sell before you convert your investment back to cash, thereby helping to solve the liquidity issue typically associated with art investing.
Masterworks has no minimum deposit requirements, but if you want to skip the waiting list, you will want to indicate that you are willing to invest more than a couple thousand dollars in its blue chip art ($5,000 will guarantee that you skip the waiting list)
