How to Get Started as an Art Collector

Key Takeaways

• An art collector is generally considered someone who buys rare or original artworks and is interested in their back stories.

• Museums vie with high-net-worth art collectors for certain artworks, usually using money gifted from other affluent art connoisseurs to buy pieces.

• For those seeking to become an art collector, there are many ways to get started, even for those with relatively modest means. 

There are various reasons to collect art, including cultural enrichment. After all, it can expose one to different cultures and viewpoints as well as historical periods. There is also a potential social status benefit associated with owning valuable or rare artworks. In addition, there is  investment potential, as the value of some art can rise in value over time. 

But how does one get started as an art collector? Here is that and more.

Who is an Art Collector?

Just who is an art collector, one might ask? 

Really, it is anyone who owns more than one piece of art. However, a better definition could have more to do with intent — whether one considers themselves a collector or wants to be one. In other words, someone who picks up a set of ubiquitous prints at Target to decorate their living room on the cheap is probably not a collector. To be a collector, the art pieces do need to be somewhat rare.

Thus, an art collector is really someone who purchases rare or original works and is interested in their back stories. Oftentimes, a collector focuses on certain artists, themes, subject matters, or art movements. Collection additions are often made accordingly.

Many of those who collect art do so simply for their enjoyment. Others, though, not only collect art, but they sell certain works once they are worth more. Therefore, such collectors are also art dealers.

But again, not every art buyer is a collector. For example, since NFTs contain no art and are not generally bought for private enjoyment, those who buy them are not really seen as art collectors. 

Also, those who assume fractional ownership of artworks through alternative investment platforms such as Yieldstreet are more on the “investor” side. That is because the individual is not crafting a collection or enjoying individual ownership.

Then there are institutional investors such as banks and universities which invest in art, through art consultants and buyers, that potentially will increase in value. But here, too, enjoyment is derived purely from a financial standpoint.

Finally, museums vie with high-net-worth art collectors for certain artworks, usually using money gifted from other affluent art connoisseurs to buy pieces.

The History of Art Collecting

The genesis of art collecting goes back as far as to the ancient civilizations of Babylonia, Egypt, China, Greece, India. Accumulations of the objects were discovered in sanctuaries, tombs, and temples.

Back then, possessing such objects was seen as status symbols. The artworks were also used in storytelling and religious activities.

Art Collector vs. Art Buyer

There are art collectors, and there are art buyers. There are also art collectors who trade in art to make a living. By definition, though, art collecting is not considered a profession. Collectors who decide to purchase works, perhaps through an art buyer, may have a variety of reasons for doing so.

By contrast, art buying is a profession. These buyers are enlisted by hotels, casinos, and museums and the like, as well as some wealthy individuals, as contractors or employees.

Typically, buyers possess fine art degrees, and understand how auctions and galleries work. Because they hope to fulfill their client’s request accurately and as soon as possible, they are usually “in” with the local art community. Art buyers usually have a budget and can facilitate patron payments and transportation.

How to Become a Successful Art Collector 

Here is an upfront proviso: the term “success” is relative. If the goal was to ultimately fill one’s home office with rare or otherwise desirable pieces, then the collector is a success. 

The definition may differ for those who collect art but view the activity more as a way to make money. In that way, success may be subjectively determined by the extent to which they are profiting from appreciation — overall. Not every deal needs to be a money maker.

Collectors at the apex of their vocation may have yet another definition. For them, success may be defined in terms of superlatives: the best, the most, the greatest, and so on. Such investors are on the short list of collectors invited to unveilings of very rare pieces.

For those seeking to become an art collector, there are many ways to get started, even for those with relatively modest means. For example, quality, affordable works on paper, such as an editioned print, are very possible with some care and research.

One can also get going by purchasing from public galleries and museums, many of which carry editioned pieces by contemporary artists. These tips may help:

• Start Small. Bargains are more apt to be found at galleries other than big-name institutions such as the Tate and Royal Academy of Arts in the U.K. Go for smaller institutions and establishments.
• Don’t be lured by the frame. Attractive though it may be, the frame does not come with the piece.
• Check out the end of websites. Naturally, galleries and museums will prominently feature well-known artists at the fore of their websites. These prices may be out of one’s range. But sometimes, if one scrolls to the end, they can find obscured gems from lesser-known artists.
• Look for a print from a printmaker. Giclee from painters are not really works of art. Rather, they are decent-quality reproductions.
• Eschew works with slogans. They will ultimately become “tired” and outdated.
• Purchase what one likes. Perhaps the work or artist is “hot” or trendy. But if the collector does not appreciate the piece’s aesthetics, they will grow weary of looking at the work every day.

Well-Known Art Collectors

There are some prominent art collectors who are household names, people such as King Charles III who in 2022 had the world’s largest private art collection. The holdings, some of them owned by the Crown, comprised over a million objects. At the time, the collection had about 7,000 paintings and 450,000 photos.

Other well-known collectors include Leonardo DiCaprio, Madonna, and Jay-Z. There are others as well, including Grant Hill, Elton John, Pharrell Williams, Barbara Streisand, and Brad Pitt.

Art Investment and Diversification 

For the last generation or so, art has become increasingly accessible as an investment. No longer is it the exclusive purview of the very wealthy, nor is it perceived as such. 

After all, investing in art can shield against inflation and currency devaluation, and offer potentially high returns. According to a 2018 Artprice 100 Index, blue-chip art outperformed the S&P 500 by 180% from 2000 to 2018.

There are a number of ways to invest in art, including through one of the leading alternative investment platforms Yieldstreet. Such private-market alternatives — assets other than stocks and bonds — are generally less volatile due to a low correlation with public markets.

Yieldstreet, on which more than $4 billion has been invested as of 2/29/2024, features highly vetted private-investment offerings spanning real estate to art. There are opportunities in a number of art funds, for example, through which retail investors can put capital in art without owning physical art. Non-physical art has been on the upswing in general, partly due to digital marketplaces.

Yieldstreet’s Art Equity Fund I holdings, for example, include blue-chip and mid-career Post War & Contemporary art, opportunities once restricted to high-net-worth individuals and institutions. Because the funds make purchase decisions, based on expected appreciation, no investor expertise is required. 

There is another crucial benefit to investing in art: diversification. Assembling a portfolio of varying asset types and expected performances can go a long way reducing overall risk. Diversification can also help protect against economic instability and even potentially improve returns.

Alternative investments and Portfolio Diversification

Alternative investments can be a good way to help accomplish this. Traditional portfolio asset allocation envisages a 60% public stock and 40% fixed income allocation. However, a more balanced 60/20/20 or 50/30/20 split, incorporating alternative assets, may make a portfolio less sensitive to public market short-term swings. 

Real estate, private equity, venture capital, digital assets, precious metals and collectibles are among the asset classes deemed “alternative investments.” Broadly speaking, such investments tend to be less connected to public equity, and thus offer potential for diversification. Of course, like traditional investments, it is important to remember that alternatives also entail a degree of risk. 

In some cases, this risk can be greater than that of traditional investments.

This is why these asset classes were traditionally accessible only to an exclusive base of wealthy individuals and institutional investors buying in at very high minimums — often between $500,000 and $1 million.  These people were considered to be more capable of weathering losses of that magnitude, should the investments underperform.

However, Yieldstreet has opened a number of carefully curated alternative investment strategies to all investors. While the risk is still there, the company offers help in capitalizing on areas such as real estate, legal finance, art finance and structured notes — as well as a wide range of other alternative investments. 

Moreover, investors can get started with a relatively small amount of capital. Yieldstreet has opportunities across a broad range of asset classes, offering a variety of yields and durations, with minimum investments as low as $10,000.

Learn more about the ways Yieldstreet can help diversify and grow portfolios.

Summary

With this knowledge of the ins and outs of art collecting, those who seek to get started can now do so. Just be sure to exercise care and be sure to conduct research. 

Remember that collecting can also turn into passive investing through art funds. Such investments also have the important added benefit of portfolio diversification.