The Mona Lisa is believed to be worth over $850 million. Probably out of your financial portfolio, right? But what if you could buy “stocks” in the current Mona Lisa, like you buy stocks in companies on the stock exchange? Invest in a unique work of art by Michelangelo, Banksy, Picasso or Warhol, even if it’s only in pieces.
The thought came to me last week when Manny “The Money Man” Rezendes of Euclid Financial Services was talking about having a well-balanced investment portfolio. According to Citi Global Art Market, contemporary art has offered an annual return of around 14% over the past 25 years, compared to an annual return of 9.5% for the S&P. The work is kept for an average of 3 to 10 years.
The idea of opening the door to investing in famous and valuable works of art for ordinary people has merit. Investment fund management companies, like Masterworks, acquire top-notch works of art at auction on behalf of their investors. They create a holding company for each work of art, store it, promote it and resell it for a profit. It registers the holding company with the SEC and issues shares to those who wish to invest in that specific work of art.
Masterworks claims it had works created by renowned artists Andy Warhol, Claude Monet and Banksy.
One of the main reasons rich people buy valuable art is to avoid paying taxes, and it’s legal. For example, if you sell a painting and put the money in the bank, you have to pay capital gains tax. But selling a painting to put the money in another painting is a cool way to pay those taxes.
What a unique conversation starter it would be to draw attention to the fact that you bought stock in a real Monet, Modigliani or Munch. Buying works by any of these artists at auction would cost millions, but here’s a way for many people to invest in multi-million dollar works of art.
Does this idea jump out at you?
Please note that there is an inherent risk in investing and you should not invest in art or stocks unless you are prepared to suffer a total loss of the money you have invested. This article does not endorse any investment company mentioned.
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