Why You Should Look at Your Collection as an Investment
Alfred Edward Emslie (1848–1918), Dinner at Haddo House (1884)
Using art as a commodity to purely buy in order to resell within a limited period of time for a profit is NEVER a good idea. It is a fast way to diminish the joy you receive from your belongings and a good way to get blacklisted from galleries. Buy what you want, what resonates with you. Buy things that mean something to you, buy for cultural content. And most certainly use and cherish them.
Many people keep a keen eye on tracking the value of their stocks, bonds and other financial assets. But when it comes to the value of personal property, little attention is paid. Many do not think about their works of fine and decorative art in the same way they do their marketable securities, real estate and even cars and boats.
Many collections are underinsured, leaving their owners vulnerable to significant financial losses; and conversely, over insured for some items that reached an apex in the market thirty years ago.
Furthermore, many collectors believe they are adequately covered by a homeowners policy. However, these policies are usually designed only to cover household items — not antique furniture, not enough to cover a set of sterling flatware, and not that lead crystal chandelier in a dining room. Higher end items can quickly exceed the limit of a policy’s coverage. Items over 100 years of age usually are exempt from the policy and require a special rider.
High-value items should be properly appraised and insured, then revalued in five years. Markets have been changing quickly, make sure your coverage is adequate. Most people do not want to spend the money to have their appraisal updated, until there is a need and often times it is too late. A painting could be worth twice as much after five years. If so, a different type of appraisal report for sales advisory could help a collector decide to hold on to a work or sell.
An appraiser can lend advice to remove an acidic mat on a fine print, or to throw away those zip-lock bags you have kept your sterling silver pieces in, move the William and Mary seaweed chest away from the radiator which dries out the fine inlay to help preserve the condition of your items. Before moving an appraisal can defend you against damage and loss. The Number 1 cause of loss or damage is the packing and shipping process.
Collections should be viewed as part of an overall investment portfolio and help make decisions on estate planning, when to sell, when to gift and what to simply keep and enjoy.