Has it ever occurred to you that other than buying property, buying antiques and art for your home can be a great investment too? Two professors at New York University's Stern School of Business, Michael Moses and Jiangping Mei, have been compiling data to track the long-term performance of fine art and they found that fine art actually has a very low correlation with stocks and a negative correlation with bonds, making such investments a good portfolio diversifier.
Do bear in mind that buying antiques and art are relatively long term and not as liquid as other assets, nor does it offer a steady income stream; however it is tangible and can enhance the aesthetics of your house. Since we are already buying accessories to do up our house, why not buy pieces that maintain or increase value as the years go by? Here are some pointers.
If you are buying as an investment, the key word: specialise. Don't buy a range of antiques as "collections" will often appreciate in value more than a motley mix of items. Another advantage to specialising is that you will soon become proficient at spotting trends.
It is the aesthetic qualities that underpin a piece's future value. Visit museums, art galleries and auctions to develop such an appreciation and an eye for value. The Internet and library are other useful resources that you can tap on to brush up your knowledge on different periods and styles, from Tang Dynasty art to Art Deco to Impressionism. Learn how to compare various artists and pieces so that you can better appraise them and in the process, get a sense of what you like.
Keep track of global political and economic shifts. In the early 80's as OPEC's oil-pricing power declined, prices of oriental rugs took a hit. In the late 80's the price of Korean antiques sky-rocketed as that Tiger economy grew. In the 90's, the rupture of the Soviet Union induced interest in Stalinist memorabilia and other tchotchke. Pick your political or economic scenario and build a collection around it.
No need for the most expensive
The Mei Moses all art index leads to one glaring conclusion: the more you pay, the lower your return, especially above US$50,000 (S$75,000). Beyond US$2m, the average return was negative. Most importantly, you must like the piece you buy. After all, it will be displayed in your house for quite some time. The derived satisfaction can already make the price tag worthwhile.
Buy pieces with a good provenance
A paper trail augments the value and adds to the resale allure of an object. It testifies that the item is authentic and it tells a story. Everyone loves a good story.
Buy and maintain items in perfect condition
Just like the huge price difference between mint-in-box toys versus ones that were played with, a restored piece will never be as desirable as something that was never damaged. Simple attrition is one of the basic reasons antiques have value. Over time, fewer items survive and those that do are usually deteriorated. Your investment appreciates because you take care of it.