These days, traditional investment options such as stocks and bonds aren’t looking too great. It should thus come as no surprise that many investors are seeking out alternative, non-traditional asset types. That’s where passion investing comes in.
What Is Passion Investing?
Passion investing involves purchasing physical items that investors actually enjoy owning and making money off of them as their value appreciates. It’s a great long-term investment strategy for anyone who is interested in both diversifying their portfolio and finding a more rewarding way to invest money.
Some people invest in jewelry, while others choose to place their money in fine art or classic cars. The key is to choose asset classes that will appreciate in value over time and maintain that value during periods of economic turmoil in which stocks and other traditional investments may not perform as well.
Why Fine Art Makes an Excellent Investment
People who have a passion for art often invest in paintings because if they are chosen carefully to reflect current market conditions, their value can appreciate over time. Some choose modern artists, while others lean more traditional in their preferences. As long as passion investors remember that it’s not just about their personal preferences but also how the pieces can be expected to perform over time, either category could make a sound investment.
Fine Art Passion Investing Isn’t Just for the Wealthy
It’s common for those who have only recently heard about passion investing to assume that it’s only for the extremely wealthy. After all, it takes a good deal of capital to purchase a well-known painting. Thankfully, though, there are ways that even people of ordinary means can start indulging their passions and investing in fine art.
The first strategy is to purchase pieces from up-and-coming artists at entry-level prices. This strategy involves taking on a good deal of risk, though, so unless investors truly love art and wouldn’t mind owning it forever if the value of the paintings never appreciates, it’s not the best way to go. Decorative and nostalgic historic film posters fall into this category, as well, because although memorabilia tend to appreciate in value, as well, it’s not as much of a sure thing as fine art.
Arguably the best way for average investors to get into fine art passion investing is to invest in shares of iconic works of art. Masterworks.com is an excellent example of this new type of passion investing in action.
The way it works is quite simple. The company selects artists that have plenty of momentum, purchase paintings at fair prices, then securitize the artworks, allowing anyone to invest. The company holds the paintings for three to ten years, then pays out pro-rata proceeds to all of its investors.
It’s Time to Rethink Investment Classes
Investors who are sick of waiting for the stock market to turn around may want to rethink how they’re classifying assets. Non-traditional assets like those seen in passion investing offer an excellent way to diversify portfolios and hedge against stock market downturns, and the best part is that now, anyone can invest in iconic works of art.
