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Abstract

The paper analyzes fine art as an alternative investment option in the portfolio of investors. It also sheds light on the precautions that should be taken by prospective buyers before putting in money in an artwork. Guidelines provided include researching the artist and period of choice, working with a trusted art dealer for all transactions, and evaluating the level of financial risk involved. The paper concludes that art is a good investment in long term providing capital gains rather than dividends. The top quality art tends to be more stable than most financial investments in difficult times. According to market analyst the long term view of the prices is definitely bullish. Art is a scarce product and not reproducible at will. Rising incomes over long term ensure a steady rise in demand for works of art against falling supply. But the main attraction of the art market and the prime reason for its resurgence as investment is its low correlation with other asset classes.

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