Investment on the wall
|Written by: Petr Vykoukal (www.penize.cz)
Photo by: Jan Vágner (2,3), Hana Hamplová (1)If the word investment makes you think only of shares, bonds or equity funds, you are missing many opportunities. Shrewdly purchased artistic work can generate more money for you than securities.
At the present time, art is not often included among investments in this country. The reason is simple: while trading on the exchange is understandable and can be read about in the newspaper or consulted with a broker, collecting art is not so easy. It is necessary to be well-oriented with the market to be successful at investing in art. However, efforts exerted will certainly provide a good return, as yields can reach tens of percent a year.
Up to 30% a year, risks attached
With each investment, a suitable combination of yields, risk and liquidity is sought. Art needs time to increase in value. According to Nesvadbová, the shortest possible time horizon is five years. During this time, a well-chosen work can reach a growth in value of one hundred to three hundred percent (15 to 30 percent per year). David Kmínek, of the Behémót gallery, cites the paintings of Martin Mainer as an example. In the mid nineties, they sold for CZK 50,000 (for a mid-sized painting) and today they are worth hundreds of thousands of crowns. But don’t forget the reverse side of investing – similar to other investments, the higher the yield, the higher the risk. Contemporary art promises the highest yields. However, the talented and currently fashionable artists can fade into oblivion within a couple years, so the resulting yield can also be negative. If you prefer more conservative investments, choose verified artists, the best being those that are dead. True, the yields will not be extremely high, but it will certainly be interesting and less of a risk. Another way to reduce the risk is diversification – purchasing many works from various artists or, if you are collecting only one artist’s work, from several creative periods.
As with shares or funds, it is important with art to bet on the right horse. Determining this is the difficult question. According to Kmínek, one indicator could be whether the author is represented in the National Gallery or if he was awarded the Chalupecký (a prestigious award for young artists under 35), or if the institutions (such as banks) are buying his work. In the future, estimates and recommendations by experts should serve as a kind of guide. The Behémót gallery asked six gallery owners, as well as artists and critics, to estimate the risks and yields for twelve artists it represents. The most favorable evaluation went to Adriena Šimotová. According to evaluators, the risks associated with her work were virtually none and expected yields were around 150% after five years and almost 500% after fifteen. According to Nesvadbová, there are several other artists in this country with the same potential as Adriena Šimotová, including Karel Nepraš, Bedřich Dlouhý and Jiří Sopko.
Don’t be rash when selling
A sale should be considered as carefully as a purchase. In the case of artists who were not too productive but are still in demand, sales can be realized within a few days. However, you could also end up waiting an entire year for a buyer. So plan your financial needs well ahead of time, and request the sale of your investment by a gallery (or auction house) at the appropriate time. Auction houses and galleries which represent a particular artist are the best way to get the money, as they will know many interested collectors and the sale can be concluded within a very short period of time.
|PERSONAL FINANCE >
Put your money under the mattress
Written by: Tomáš Skřivánek (www.penize.cz)When you come back from vacation with pockets full of leftover dollars, euros, kunas or Swiss francs, what should you do – save them or exchange them for crowns?
Czech currency will get stronger during the next few years. This is a fact on which practically all economists agree, whether they support the current government or not. The Czech National Bank (ČNB) predicts an average strengthening of the crown by 3.7% per year. So, if the euro now costs CZK 30.50 and the dollar CZK 31, one year later both currencies will be about one crown cheaper. According to ČNB, the ratio should be 26 crowns per euro by 2006.