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When it comes to artwork investing, Masterworks is a top option today.
Instead of purchasing a piece of artwork outright, you can actually purchase shares of iconic and blue chip art right on the Masterworks platform.
I actually invested $500 with Masterworks in the Summer of 2021 to test out the platform.
In this article, I’ll be providing you with an update on my Masterworks investment portfolio so far.
So, how exactly does Masterworks work? And what can you expect when investing on their platform? Let’s dive in!
What Is Masterworks?
Masterworks is a leading art investment platform. The company got started in 2017 when founder Scott Lynn recognized an imbalance in the art market.
For years, art investments were limited to institutions and high net worth individuals. Frankly put, purchasing an art investment can cost in the millions! Lynn set out to create a platform that made these investment more accessible for everyday investors.
With Masterworks, investors can get started with as little as $500 and purchase shares of famous artwork. After a targeted holding period, typically 3-10 years, Masterworks will sell the piece and profits will be distributed to investors.
Alternatively, if investors want to liquidate early, then they can look to sell their shares with Masterworks’ secondary market.
To learn more, check out our complete Masterworks review here!
Invest In Artwork Today!
|Prism Fund (Includes Artwork), Build Your Own Portfolio
|Buy Shares Of Blue Chip Artwork
|Stocks, ETFs, Crypto, Alternatives (Including Art & NFTs)
My $500 Investment
So, back to my investment. I decided to put the $500 minimum in to test the waters.
This was in a transaction dated June 25th, 2021.
This investment was called “Masterworks 050, LLC” since a separate legal entity is created for each piece of artwork offered for investment.
What Painting Did I Buy?
Although I could’ve spread my money out into shares of multiple paintings, I decided to put all of my money into shares of one painting being offered at the time.
The painting I purchased shares of is called Kosha, created in 1992 by an artist named Kazuo Shiraga, pictured below.
How Many Shares Did I Buy?
One of the key things to understand with Masterworks is that although the minimum initial investment is $500, you can purchase shares in increments that are usually around $20.
In my case, the shares of Kosha I purchased were originally priced at $20.00 each.
If you do the math, that is a total of 25 shares for $500.
My Total Masterworks Return
First of all, it’s important to understand that returns are generated from the artwork market over the long haul. This is not a short-term investment, and even 1 year hasn’t been much time to benchmark this investment.
That being said, so far, my shares have grown from an initial value of $20.00 to a value of $20.09 each.
Masterworks calculates the Net IRR or internal rate of return for you. So far, mine has been a return of 0.5%.
This alone should be a testament to how artwork needs to be viewed as a long-term investment.
Overall, my return from a little over a year invested with Masterworks has been lackluster. However, this is at a time when stocks and other assets like crypto have sold off tremendously. In addition, artwork is only appraised every so often.
Masterworks expects most art investments to have a 3 to 10 year holding period, so the first year isn’t an accurate benchmark for returns generated from this platform. Still, it gives you an idea of what you could expect should you become a Masterworks investor yourself.