Masterworks is a platform that lets you invest in expensive artworks as a collective group. You can own a little or a lot of a single piece of art and buy and sell your share as you wish. It opens up a new world of investment for the average person.
For hundreds of years, people have been looking to art as an investment. Typically, artworks either hold their value or increase in value depending on the art itself. However, this is as long as they are kept in good condition.
You have probably heard stories about people finding valuable paintings hidden in their attic or their garage.
For the average person, it is not so easy to get your hands on a desirable piece of artwork. In fact, unless you are already a millionaire it is virtually impossible.
Thankfully, Masterworks helps you to secure a little piece of a…masterpiece. This helps you to dip your toes into the elusive world of art.
Here we will tell you everything that you need to know about Masterworks, how it works and help you decide whether or not this is the right choice for you.
What Is Masterworks?
Masterworks is a company that operates as an investment platform. Instead of buying, selling and trading traditional market stocks and shares you are investing in art.
The concept works much the same way as traditional stocks but allows the average person to enter a new world of trading that is typically unattainable to them.
For most people investing in art is not a reality as most people would not be comfortable, or even able to, invest in an upcoming artist.
The high risk associated with paying a high price for an unknown artist would make most people very uncomfortable. So, instead, Masterworks allows you to invest in valued and recognized artists.
Obviously, you will not be able to purchase the entire artwork, but instead, you will own a share of the art, much like you would with a company.
You, along with several other people, will collectively own the piece of art and can buy more shares in it, or sell the shares that you already have.
How Do I Invest with Masterworks?
Masterworks itself will purchase and securely store many pieces of artwork before allowing the investors on its platform to buy shares in the art. You can pick and choose which artworks you want to invest in, giving you complete control over your investments.
If there is a particular artist or artwork that you are interested in then you can search the platform to see whether or not Masterworks has particular pieces of art in its collection.
There is no need to worry about keeping the artwork in good condition as Masterworks looks after the art in a controlled room and will often open up exclusive gallery events for its investors.
Although you can buy as little of a piece of art as you like, there is a maximum. You cannot buy more than 10% of any piece of art.
This allows for the platform to be fairly used and stops individual investors from having control over the price.
Is It Easy to Use?
Yes, the platform is designed to be easy for the average person to use. There is no need to have extensive knowledge about any particular artist or piece of artwork when using the platform.
Key Highlights about the User Experience:
- Every transaction is very clearly explained, making you feel at ease about investing your money with them.
- You are also able to track your progress over time. You can see how well your investments are doing and whether or not you feel comfortable keeping your shares in a particular piece.
- The platform gives you complete freedom to buy extra shares or to sell your part depending on how you feel.
- Masterworks also has an education section on their platform which helps to educate you about art and investment. There are profiles and details about the life of each artist as well as the particular piece of art, helping you to understand more about your investment.
- You can also see the history of the artist’s valuation and the different sale prices of their previously sold art. This can help to give you an overview of their profitability to see how much risk you are willing to take with a particular artist.
- There is also a blog with a large number of articles to help you better understand why it is worth investing in art, how to get started and just about everything else that you could possibly want or need to know.
How Do I Know If Masterworks Is Right for Me?
Masterworks is right for anyone who wants to broaden their horizons when it comes to the world of trading.
Additionally, if you have a particular interest in art then this can help to expand your knowledge of the art world by helping you evaluate and understand how artworks are valued and how their price fluctuates.
If you have not traded before then Masterworks has a fantastic section to educate you about how trading works, explaining stocks, shares, and valuations clearly and easily.
It is a good way to enter into the world of trading through a medium that many people can appreciate.
Masterworks does not require a large deposit for shares but instead allows you to purchase a piece of the art in very small increments, opening up the opportunity to the average person.
So, if you are interested then you can begin by investing a small amount of money on the platform and evaluating how comfortable you feel and whether or not this is the right opportunity for you. You can always sell your shares at a later date.
Are There Any Fees?
Like many companies, Masterworks charges a fee to use their platform. Their fee system is very similar to hedge funds.
Whereas hedge funds will charge what is known as a 2 and 20 fee system (meaning that they take 2% as a yearly management fee and then 20% of all profits), Masterworks takes 1.5% for an annual fee and then 20% of the profits.
There is also the auction fee to take into consideration. Once the collective decides to sell a particular piece of artwork there is an auction fee that can range from 10 to 25%.
Obviously, the more profit your artwork makes the better off you will be. Of course, this means that the 20% fee will be larger, but it will still leave you with a larger amount of money as a return.
However, if you have anything less than a 20% return then the fees start to significantly eat into your profits and can perform poorer than the stock market itself.
There are different rates and fees available for business and industrial investors.
However, you have to remember that you are paying not only for Masterworks to do the work of sourcing, buying, and storing the artworks but also for the upkeep of the platform, the admin, and the auction process.
Is There a Secondary Market?
Masterworks has a secondary market that allows you to buy and sell shares in certain artworks.
For example, if you have purchased a large share in a particular piece of art but are no longer sure as to your confidence in the profitability of that piece then you can list a portion or all of your shares on Masterworks’ secondary market.
This allows you to then either withdraw the money that you have recouped or you can reinvest the money into shares of a different piece of art. This allows you freedom and comfort to be sure that you are making the best decision for yourself and your money.
Summary
Masterworks is a platform that helps normal people to invest in a world that is often closed off to them.
The art world can be elusive if you do not have a significant amount of capital to invest and risk. However, Masterworks helps to break the value of the artwork down into shares, much like a typical company, allowing people to collectively own a single piece of art.
You can buy, trade, and sell your shares depending on your instincts and desires.
You can also use the platform educational section to do your own research before buying into a piece of art to make sure that you are making the right decision for yourself.
However, you should always keep the fees in mind when investing through the platform. Obviously, if you are only investing a small amount of money, as the platform allows you to do, then these fees will quickly eat into your smaller profits.
Of course, the more you invest in Masterworks the more money you are risking, but it does also mean the possibility of larger profits.
You should do your research about a particular piece of art, the artist’s previous sale history, and anything else that you deem relevant before purchasing any shares in the artwork. This will help you to feel comfortable with your decision.
Image by Free Photos