One of the best ways to create wealth is to invest in different types of assets. Stocks, bonds and property are, by conventional wisdom, “must haves” in any portfolio.

In a quest for potentially hefty long-term returns, some smart investors also collect works by contemporary South African artists. If you’re looking to diversify into a tax-free investment – and you happen to be an art lover too – paintings and sculptures by established and emerging fine artists are worth a closer look.

Before you take the plunge, we’ve provided top buyers tips to help ensure you invest with your head, as well as your heart.

Learn about South African art

To maximise your chances of making the right investment at the right time, educate yourself. Visit galleries, go to auctions, and chat to private and public collectors. Get up to speed on local and international trends, and on what styles seem perennially popular.

A useful online tool that provides a current snapshot of the international and local art market is the Citadel Art Price Index (CAPI). As well as providing a breakdown of sales and average prices, the index points to whether the current period is a buyers’ or sellers’ market.

Identify top contemporary artists

South Africa has a vibrant art scene. Works by celebrated artists, such as Irma Stern, Gerard Sekoto, Robert G Goodman, Maggie Laubser and William Kentridge, regularly attract record prices at auction.

Waiting in the wings is a group of emerging artists whose pieces are piquing the interest of collectors around the world.

Here, again, the CAPI is helpful – it lists significant South African artists that feature in its data. Of course, this list isn’t exhaustive.

Read magazine articles, browse through works featured at online galleries and get feedback from the experts. Once you’ve narrowed down your search to a few names, find out as much about each artist as possible.

Set a budget

The general rule for all forms of investing that involve risk applies here too – set a budget based on what you can afford, and stick to it. An initial investment of R50 000 to R150 000 is average for an amateur art investor.

Some experts believe you should start your collection with one or two pieces by well-known artists.

Others espouse the wisdom of paying less for works by emerging artists. In this case, the risk is obviously much higher.

All agree an art collection should be built slowly and surely, and with long-term value in mind.

Invest for the long term

Investing in fine art is a patience game. If you’re looking for quick returns, stocks and bonds are a better option. To realise the true value of a piece of art, it’s likely you’ll have to wait an average of 20 or more years.

Works of art typically jump in value when the artist dies. Investing in works by your contemporaries may mean your children, or even grandchildren, are the ultimate beneficiaries of what could become multi-million rand returns.

Rarity is key

When starting out, it’s best to avoid buying pieces by artists who are still producing, and/or have prolific bodies of work for sale.

A rare art work by a well-known artist is usually an excellent investment.

Buy from reputable sources

Be sure to buy art from the artists themselves, or from a gallery with an established track record. Genuine art works by established artists should be sold with documented evidence of provenance, or history of ownership.

If a work is by an emerging artist, the gallery owner should be prepared to buy it back at a later stage, if and when you decide to sell.

Fine art is a long-term wealth creation asset. It can also be used to unlock extra cash, when and if you need it. At Lamna, we offer short-term asset-based loans against valuable pieces of art. For more information or to secure a loan, contact us on 086 111 2866 or simply complete and submit our online application form.