Masterworks Review: Invest In Artwork With No Minimum
If your financial portfolio is mostly comprised of “paper investments” such as bonds, stocks, mutual funds, etc., have you thought of adding other alternative assets to your portfolio, like art perhaps?
Investing in art is a great option. Let me tell you why in this review.
For decades, high-quality artwork has been a popular investment among the affluent. Because fine art is rare, those made by popular artists continue to appreciate in value over time, sometimes outdoing more traditional assets.
While it used to take millions to make an investment in rare works of art, the Masterworks platform has made invaluable art investing accessible to the general public.
You no longer need millions – or even hundreds of thousands of dollars – to invest in these rare art pieces. For as little as $1,000, you can make an investment in fine art through Masterworks.
Furthermore, you can distribute your investment in various pieces of art, allowing you to diversify your assets into a blue-chip art portfolio.
We’re going to review multiple aspects of Masterworks to decide if it really is the best investment company out there.
We’ll talk about whether investing in fine art is the right online business for you.
At the end, I’ll answer some of the most frequently asked questions regarding Masterworks and art investment in general.
And most important, I’ll show you the exact system I used to build my own internet marketing business to over $50,000 a month in mostly passive income.
This system made me swear off just investing in art for good, because it uses some of the same skills in a much more powerful and profitable way!
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Table of Contents
Masterworks At A Glance
Why This Investment: Art is an extra asset class which is usually only available to the rich and privileged. Masterworks allows frequent buyers to buy a portion of an artwork.
Minimum Investment: $1,000
Investor Qualifications: All investors qualify
Fee Structure: 1% annual fee plus 20% commission on profit when artwork is sold
Promotions: None currently active
Masterworks, based in New York City, was established in 2017 with the aim of making rare art available not only to the rich, but to everyone of all financial means. They accomplish this by convincing people to invest small amounts of money to buy shares of well-known and rare artwork pieces, which is like buying stock in blue-chip companies.
Among the artists you will encounter are Andy Warhol, Keith Haring, Jean-Michel Basquiat, Claude Monet, Willem de Kooning, Yayoi Kusama, Banksy, and Joan Mitchell.
With a cumulative 75 plus years of art collecting experience, Alberto Simon, Scott Lynn, and Hai Minh Tran established the organization.
The Better Business Bureau has given the company an “A” rating on a scale of A+ to F.
Is Art A Good Investment?
Art is a very rare investment choice, and the average person is typically unable to see it that way. The wealthy, on the other hand, realize something that the average investor doesn’t – uncommon or rare art works by talented artists are always among their strongest investments.
This is thanks to the artist’s well-known talent as well as the fact that every art piece is unique. What’s more, after the artist’s death, no new work could be created by him. Each work of art grows in value over the years as a result.
An acceleration of both private capital and central bank monetary development has aided and abetted this mechanism. As more money enters the market, particularly in the hands of the wealthy, the rare artwork’s value soars to unprecedented heights.
Today, the world has about 47 million millionaires who don’t only possess roughly half of the world’s capital, but also act as the primary market for rare art works. The affluent have a deep desire to have such items in their possession, which is reflected in today’s rising valuation of art.
A popular example of this is Leonardo da Vinci’s Mona Lisa. Although the Monalisa is at the Louvre Museum in Paris at the moment, it was initially valued at $100 million in 1962 and is now said to be valued at a whopping $1 billion in 2017.
It’s no wonder, then, that over the past few decades, rare art pieces have outdone the S&P 500.
Not only did “blue-chip artwork” outperform the S&P 500 back in 2018, but it has also increased more than twice since 2000. According to the Artprice100 Index that as opposed to 200% for the S&P 500, rare artwork earned 450% between 2000 and 2018.
Rare Art Investing Through Masterworks
Masterworks enables you to buy artwork although you have no prior knowledge. The network requires no minimum investment threshold, although it is assessed by every investment. This helps to make the opportunity accessible to investors at all levels.
When you purchase shares in an an art piece – typically for $20 – you can diversify your investment across 50 various items. With a very small amount, you can build your own rare art portfolio.
Masterworks will be responsible for collecting and supervising investments. This is comparable to robo-advisors, exchange-traded funds, and mutual funds except that you allocate money and have it handled professionally.
The experts at Masterworks recognize the difference between the widely accessible ordinary commercial art and the “investment-grade art.” The latter is a form of rare artwork made by famous and highly regarded artists and typically sells for huge amounts of money, most likely for millions of dollars, per item.
The Masterworks Art Selection and Investment Platform Process:
The organization employs 17 experts who hold a stringent screening process for every art piece. It consists of the following steps:
- Masterworks sifts through a collection of over 1 million auction documents to pick the paintings by bestselling artists.
- The artwork itself is assessed. They consider the following: Is the artist well-known around the world and thus have a worldwide collector base? What is the appreciation rate of each individual artist? Is there enough market for the artist’s work? And an appreciation of the competition risk for the artist’s work.
- When a piece is bought, Masterworks applies for an offering circular at the SEC or Securities and Exchange Commission, which allows them to sell it publicly.
- Investors can make an investment in the piece for $20/ share.
- The artwork will remain on display at the Masterworks gallery up until it is purchased by a collector. The piece, generally, is expected to be kept for 3 to 5 years until it’s sold and the art piece’s proceeds allocated to shareholders.
Features And Benefits Of Investing With Masterworks
Minimum investment. None. You can spread your investment across different art works.
Investment holding period. Masterworks doesn’t guarantee any exact or approximate date as to when the piece of artwork would be bought. They do, however, give an approximate retention time of three to ten years.
Artwork selection. You can choose which investments you prefer because Masterworks keeps a wide range of art pieces at all times.
Fee structure. There is a 1% annual fee of the investment value of the artwork that Masterworks charges their investors. This is for the insurance, storage, and handling/ transfer of the art piece. And when an artwork is sold, Masterworks get a commission at 20%.
Investor contact. Service is available by email at email@example.com or by phone at 203-518-5172 from 9 a.m. to 6 p.m. Eastern. There are no specific days given, so assume it is only available during normal business hours.
How To Sign Up With Masterworks
Since Masterworks is a specialized investment platform, you need to make a “request for an invitation” to join. This can be done by filling out a short online application form with the following information:
- Your name
- Email address
- Phone number
- Account type – Investment advisor, individual investor, art dealer/ advisor, existing art collector, or other
- Your investment portfolio size, which consists of your bonds, stocks, and other assets
- And an answer to the question “How much would you consider investing in blue-chip art over the next 12 months?
To join, you should be at least 18 years old and create a password for your Masterworks account.
A bank account must also be linked to your Masterworks account. Plaid will make two test deposits to your account to validate it. Following that, you would need a Dwolla account to keep and maintain the funds deposited to you.
Is Fine Art A Good Investment?
As an asset, the significant advantage is that its valuation does not fluctuate regardless of the market’s performance. And if your stocks are underperforming, your art investment might be outperforming them—great news for the savvy investor looking to diversify their investment portfolio thus minimizing any risks.
Masterworks is open to all investors. Yes, you can be a Masterworks investor even if you are not a multi-millionaire. Before you can make an investment and buy shares, you must first go through a brief phone interview.
When we attempted to register, we were informed to wait as we were at the 310th spot on Masterworks’ waitlist. Investors who want to get into the art market quickly should sign up now to secure their place.
When you enter the portal, you will notice a streamlined and simple style. Some of our favorite aspects of Masterworks are:
- Upfront Crowdfunding: If you just want to browse by works that would undoubtedly be funded, you’ll appreciate Masterworks’ straightforward funding calculator.
- Simple Bank Linking Process: After you’ve created your Masterworks account, you will be guided how your bank account can be linked directly from your Masterworks home page. Though this is not possible as well before the interview is completed, you won’t have any problem locating the required forms or access points as soon as you are ready to invest.
- Easy-To-Find SEC Filings: The SEC filing for the art pieces is the perfect place to have an idea what Masterworks is and its offering criteria. SEC filings for any work of art presently eligible for investment can be seen directly on its website.
Masterworks Customer Support
Masterworks presently has two methods for contacting the customer support staff.
- Via phone: You can reach Masterworks through this number, 203-518-5172. The Masterworks customer support team is available Monday through Friday, 9 a.m. to 6 p.m. EST.
- Via email: You can reach Masterworks by sending an email to firstname.lastname@example.org.
Another special benefit is that you will be assigned a dedicated agent who will be available to answer your concerns. Unlike other investing sites, you can contact your personal Masterworks membership agent at any time you need.
Secondary Market Investment Options
Masterworks has created a secondary market where buyers can purchase and sell their shares. If you are an owner of a share, you have the option to list it. Meanwhile, as a buyer, you can check at the listing and make a bid.
Additionally, you can check out data on what’s available on the secondary market.
Masterworks Review Overall Rating
Only a few Americans, who are fine art investors, are able to afford a classic Jackson Pollock painting or a Cecily Brown’s stunning work of art. Masterworks enables buyers to enter the prestigious world of art collection at a fraction of the expense of buying one of these iconic works of art at auction.
You must also be prepared to go through a phone interview to verify your identity, which can be a bit of an inconvenience for investors who are accustomed to 100% online procedures. On the positive side, this phone call grants you access to a lifetime art sales rep anytime you need customer service.
Where Masterworks is short on fees and account systems, it makes up for it in design and style. Its platform is well-structured and user-friendly, with relevant documentation shown clearly.
It’s pretty easy to link your bank account, and you can start browsing through investments as soon as you’ve verified your account.
The price database and “Insights” page of Masterworks are both remarkably full of information, with interesting, easy-to-read posts on everything about art and the art market.
It is worth noting that Masterworks is not a one-stop shop for long-term investment and retirement. E even a Van Gogh and a Warhol can lose value because art is speculative. If you plan to open a Masterworks account, use it to support another regular brokerage account.
Pros & Cons Of Investing With Masterworks
- Outperforming the stock market:According to statistics, the Blue-chip art index, with more than 6k auction houses, outperformed the S&P 500 over the last 18 years by 250 percent. Furthermore, during the 2008 economic recession, the value of the S&P 500 dropped by more than 51%, while the art index fell by just 27%.
- Protection against inflation: Since it is inflation-protected, blue-chip art is an outstanding bet for long-term value. Data shows that the value of blue chip art increases much quicker than inflation. Art prices can skyrocket instantly and then level off. So distinguishing between artists of the ages and artists of the moment needs some discernment.
- Art is generally unaffected by market conditions: Stocks and bonds fluctuate in response to speculative activity and certain economic indicators. Blue-chip art has its own market, and the artwork’s price is determined by the offers of the buyers.
- Fast appreciation but slow depreciation: Blue-chip art pieces present a general pattern in which their price rises quickly then falls far more slowly. Art varies greatly from public equity in that rates do not fluctuate subtly on a regular basis. Stocks will crash and lose all of their worth in an instant. The decline in art prices, on the other hand, is a slow and steady phase.
- Ease of access: By democratizing art acquisitions and sales, Masterworks has accomplished something groundbreaking. Prior to the company’s introduction, the blue-chip art industry was occupied only by extremely rich individuals. Masterworks also simplified access by encouraging art piece shares to be sold for as little as $20.
- Because so few people are knowledgeable about fine art, you would be completely reliant on their management skills.
- When you invest in fine art, it could take many years to pay out for a single piece.
- You’ll pay a 1% monthly management fee for portfolios that will generate no investment revenue, as well as a 20% commission once the artwork is sold.
Bottom Line: Should You Invest in Art with Masterworks? Is It A Scam?
First, consider whether investing in fine art would fit into your portfolio. It’s a great option if you want to diversify with a real “hard asset.” Fine art, of course, will always be of high value because of its rarity, and the possibility of it increasing in value is real. O ften in periods of financial uncertainty, the rich often resort to unconventional assets to increase the value of their portfolios. One of these assets is fine art.
It is wise to invest with just a limited portion of your portfolio. Considering its high monetary worth, blue-chip art does not pay dividends or interests.
The majority of your portfolio should be invested in traditional assets such as fixed income securities and stocks.
Another incentive to keep a modest investment is that fine art marks uncharted territory for the ordinary investor. Since there is no way to determine the inherent or potential worth of any particular piece of art from published sources, you will have to focus on management’s judgement.
Finally, keep in mind that purchasing artwork is considered a long-term investment. The payback time takes a long time, but tit remains illiquid. In most cases, you’ll be forced to stay in your place until Masterworks sells the individual pieces of art that you have invested in.
With these cautions, if you want to invest in high-end art, Masterworks is the place to do it. Simply create an account and then pick which items interest you. You will not be liable for any administration information since the company will do them for you.
It is entirely possible to build a profitable, successful online business easier without Masterworks, however.
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