This article is sponsored by Masterworks, the art investment platform.
Updated March 15, 2022.
The Power Law dictates that 1% of the world’s population holds 45% of the wealth.
And they’re only getting richer thanks to the rise of consumer technology during the global health situation.
In fact, the total net worth held by millionaires and billionaires grew by 61% during the pandemic—a staggering $3.9 trillion, according to Business Insider.
Despite above-average pay, 50% of American physicians aren’t millionaires. What most people don’t realize is that with the right moves, achieving millionaire status isn’t a matter of if, but when.
As long as you have an internet connection, you’ve got everything you need to be on your way to seven figures.
To break the million-dollar mark you need to invest like the rich. And there’s one place they’re all investing that most people overlook, alternatives.
Millionaires invest 30% of their wealth in alternative assets on average. One of their favorites? Art.
You might be wondering, why art? Well, the “0.1% of the 0.1%” have used art to grow their fortunes and increase their status for centuries.
Jeff Bezos, Bill Gates, and Oprah Winfrey have built collections valued in the hundreds of millions. And before them, the Rockefellers amassed the world’s most valuable art collection ever sold—a staggering $835M.
And while that’s incredible, the value of art is only growing. Accounting firm, Deloitte, estimates the wealth held in art will increase by $1 trillion in less than five years.
Now, the super-rich are pouring more money into art than ever before. Here are a few key reasons why.
Not many people ever talk about art as a financial asset. You’d probably think of it as something to make your waiting room look nicer, but art has quietly outperformed other asset classes.
For example, a Basquiat painting, which was originally purchased for $19,000, recently fetched $110,500,000 at auction. That’s a 5,814% gross return on investment. You don’t need a PhD from Harvard to know that’s pretty good.
Contemporary art has also outperformed the S&P 500 by nearly 3 fold from 1995-2021. That’s a huge difference … especially in the record bull market we all witnessed. On average, it appreciates in value by 14.1% annually. This alone makes art potentially a great addition to any investor’s portfolio.
Absolutely massive asset class
There’s a reason why experts call art to be the largest asset class to never be securitized. And with $64 billion in art traded every year, and the global art market expected to be worth over $2.7 by 2026, there’s a reason for that. And that’s not all.
Art has no correlation with the broader stock market according to Citi. Being uncorrelated to stocks makes art a useful hedge against market volatility.
That’s allowed art to trounce other conventional “safety hedge” investments like gold and real estate. Paintings go up in value even when the stock market crashes, making it a good diversification for an investment portfolio.
It’s no coincidence that 85% of wealth managers believe that art should be offered to clients.
Becoming an art investor
With some paintings selling for tens of millions, previously you’d need at least $100M to build a properly diversified portfolio of art. But there’s a little-known — and incredibly smart way — for everyday people like you and I to invest in contemporary. One that allows you to participate at a fraction of the cost.
It’s all thanks to Masterworks, the art investment platform. They’ve recently opened the doors to this exciting multi-trillion-dollar asset class. Masterworks makes million-dollar paintings investible the same way you can buy a company’s stock. Instead of buying a single painting, you can invest in shares of individual works.
How it works
Masterworks has an industry-leading research team that does extensive data analysis to find the right masterpiece for investors. Then, they will buy a piece of art, and register it with the SEC, sort of like investment banks take companies public.
After that, you can buy fractional shares representing an investment in that painting. This is all done securely on their platform. Masterworks holds the piece until it appreciates, and when they sell, you get a prorated portion of the profit. It’s that simple. And you have the option to sell your shares on their secondary market at any time if you’d like as well.
Since 2017, Masterworks has resold three offerings in total with each netting over 30% annualized IRR to investors.
Now, Masterworks has securitized over $500 million dollars worth of art, and over 350,000 investors have signed up.
And what’s more incredible is the fact they already secured a valuation of over $1 billion.
We partnered with Masterworks to give our readers priority access to their offerings. Click this link to skip their waitlist and invest in multimillion-dollar paintings today.
Masterworks is the first platform for buying and selling shares representing an investment in iconic artworks. Build a diversified portfolio of expertly-vetted works curated by our industry-leading research team. Please review Masterworks’ disclosures.
Image credit: Masterworks