Master the art of investing for fun: How to pick up a Picasso or get into the movies – without the risk of losing your shirt

By TOBY WALNE FOR THE MAIL ON SUNDAY

Updated: 09:32, 3 March 2014

Art lovers don’t have to be super-rich to become investors in their favourite works.

You can track down the next Damien Hirst, Picasso or buy into an Oscar-winning movie or West End hit –and even be able to afford a Stradivarius violin (or at least a share in one) if you spend wisely. The Mail on Sunday shows you how.  

One of the biggest investment winners in the past 15 years has been  contemporary art, with values soaring fourfold according to data collector Art Market Research.

Inspired: Samantha Nash paid £3,250 for a painting by Amy Judd

But if you want to be the new Charles Saatchi – who bought a Damien Hirst pickled shark for £50,000 in 1988 and sold it ten years ago for £5   million – you must scout around for the top talent. One of the best places to start is an end of degree art college sale, usually held in the summer.

They include the Royal College of Art in Kensington, West London, where David Hockney and Tracey Emin studied, and Central Saint Martins College of Art & Design in London.

You can also visit local art fairs, advertised in publications such as Antiques Trade Gazette, and The Affordable Art Fair. The next will be held at Battersea Park, South-West London, from March 13 to 16.

Samantha Nash, 29, of Esher, Surrey, bought an original canvas by Amy Judd from the Hicks Gallery in Wimbledon, South-West London, last summer for £3,250. She was inspired by a visit to a local arts fair.  

She says: ‘The prospect of going into an art gallery was terrifying, but having done a bit of homework I built up the courage. It is a long-term investment as the artist’s work is in demand and sells out fast – but an emotional connection rather than a wish to make money is behind the purchase.’

The Affordable Art Fair warns that financial gains are rare – as few as two per cent of new artists see their work appreciate in value. And the piece will be subject to capital gains tax when sold – kicking in at gains above £10,900 a year. You pay 18 per cent if your taxable income is up to £32,010 a year and 28 per cent if higher.

It is also an unregulated asset that produces no income. But you can apply for an interest-free loan for up to £2,000 to get a foothold in the market from the Arts Council under its ‘Own Art’ scheme.

Investors should also consider insurance. While lower value art collections can be covered under a standard household policy, specialists such as Hiscox charge 0.15 to 0.3 per cent of the combined value of works to cover annually against theft or damage. 

Buy an old master

Even the super-rich would struggle to buy the most admired artworks, such as those from an Old Master or French Impressionist. The record is £158 million for an 1893 Paul Cezanne The Card Players sold to the Qatari royal family in 2011.

A more affordable option is to pool resources with others and invest in a fund that buys art. You will not have a picture to hang on your wall, but you will make money from any appreciation in the value of the works held.

Former Christie’s director Philip Hoffman, chief executive of the Fine Art Fund Group, manages £200  million of art on behalf of 120 clients. He says: ‘If you invest without advice you can lose a lot of money – so pay for help.’

To join the Fine Art Fund, launched by Hoffman a decade ago, you need a minimum investment of £600,000 and it takes a 2 per cent management fee every year – plus a 20 per cent cut of any profits above the six per cent a year target return.

The Fine Art Fund Group also offers an advisory service for customers looking to buy art costing from £6,000 to millions – taking a ten per cent fee.

Art prices across all genres fell more than 3 per cent last year, according to the Mei Moses World All Art Index, but Old Masters and 19th Century paintings rose by more than 6 per cent.

Own a Picasso

You may find you can afford to invest in a Picasso if you choose a medium other than his paintings, such as pottery. The artist created designs produced as limited editions. Small pottery plaques can still be bought from as little as £1,000. In contrast, a 1932 Picasso painting Nude, Green Leaves And Bust sold for a record £66 million in 2010.

Marc Murray of art dealer Sylvia Powell in Finchley, North London, believes ceramics offer a great investment opportunity.

He says: ‘Over the past three years values have shot up – a ten-inch Picasso dish previously fetching £1,000 might now go for £3,000 or more.’

Affordable: Pottery designed by Picasso

He adds: ‘Another artist and writer who turned to pottery later in life is Jean Cocteau. His plates are still relatively good value but sell for up to £8,000 and are also great pieces of collectable art.’

Murray warns not to buy without expert advice from dealers who can prove authenticity and offer guarantees should problems arise.

Other affordable Picassos include napkin doodles and silhouette figures – these sell for more than £1,000. Signed photographs by the artist can also be valuable and original photos of Picasso can fetch up to £4,500 while a snap of Dali can go for £2,000.

A great place to view examples of affordable pieces by established artists is the BADA Antiques Fine Art Fair in Chelsea, South-West London, between March 19 and 25. 

Back a blockbuster

The glamour of Hollywood can leave you wanting a piece of the action – but most investments end up on the cutting room floor. 

The best way to get involved is via an Enterprise Investment Scheme. These provide generous tax breaks.

Investors get income tax relief of 30 per cent as long as they promise to tie up their money for three years. Other benefits include capital gains tax deferral – meaning a tax bill for gains on other assets can be offset if these profits are redirected to an Enterprise Investment Scheme. And as long as the shares have been  held for at least two years, they escape inheritance tax.

Another perk is that shareholders often get to visit film sets, meet the stars and enjoy private screenings and awards ceremonies.

Martin Sherwood, founder of the Enterprise Investment Scheme  Association and partner at film fundraising firm Enterprise Investment Partners, in Marylebone, central London, says: ‘Film producers are desperate for funding. There are some exciting opportunities, but it is high-risk.’

Among the biggest successes in recent years is the 2010 Oscar winning British hit The King’s Speech. The £10 million film took £150 million at box offices. Yet investors in the £25 million

Prescience Film Finance fund, which bankrolled 70 per cent of the film, only got ‘more than a 14 per cent return’ as it was pooled with less successful investments. Prescience co-owner Paul Brett says: ‘Talk to a financial adviser before taking the plunge.’

Dermot Campbell, managing director of Kuber Ventures, which tries to lessen the gamble of investing in movies by putting a number of Enterprise Investment Scheme investments under one fund umbrella, says: ‘A film opportunity may sound exciting, but most ideas don’t get made – so diversify your portfolio.’