Paintings, sculptures, prints, photographs, video, performance, skateboards, NFTs; the kinds of artworks you can collect are almost endless. With such a wide array of options, how do you choose what types of artwork you should add to your portfolio?
Several factors will inform your answer to this question, including:
- How seriously do you take diversification?
- What kind of artwork do you like?
- How much space do you have to display/ store your collection?
- What is your art investing budget?
How seriously do you take diversification?
Diversification is a central tenet of investing. Diversification solves the problem of ‘having too many eggs in one basket. If you solely invest in NFTs, what happens if this kind of artwork falls out of favor with investors? Your portfolio may be left in ruins.
It is generally advisable to spread your risk across many kinds of artwork to avoid such a scenario. At this point, it might be good to ask (and answer) the question concerning ‘how much you should diversify, or otherwise stated; how many different types of artwork should you buy?
How many kinds of artwork should you buy?
I would suggest that you collect, at the minimum, 3 to 4 different kinds of artwork. Anything less, and you are diversifying too little and not doing enough to limit your risk. I’m sure there are 3 to 4 kinds of artwork you appreciate enough to want to collect.
What kind of artwork do you like?
While it is not out of the ordinary for collectors to invest in art that does not personally appeal to them, using the limitation of what art you like can help you determine what kinds of art you should collect. As I talked about in Do you have to like the artwork that you collect?, using this method can also help you avoid bad investments and feel more confident in your choices.
Where do you live?
There can be physical/ environmental factors that influence the types of artwork you choose to collect.
I created Easel Investing to address newer, would-be art investors primarily. With this being so, a major concern I hold for these investors is whether they have the room and wall space for much of the art they would like to collect. For those that live in humid rentals, prints or similar delicate artworks may not be an ideal kind to collect. For those with limited usable wall space, perhaps small sculptures that can fit on shelving are preferable over artwork that requires hanging.
What is your budget?
The funds available to invest in art can also be a determining factor for many collectors. For example, the cost of framing an art print can sometimes be equal to or more than the cost of the print itself. In these cases, it might be more prudent to concentrate on acquiring artwork that does not require any additional protective cases like paintings, NFTs, or metallic sculptures (like those made by Jeff Koons).