What Is Masterworks?
Masterworks is an investment platform offering any investor the chance to buy fractional shares of a valuable piece of art. It opens up the possibility of investing in artwork to anyone, not just the rich and famous. The company was founded in 2017 in an effort to make blue-chip artwork investments accessible to anyone. Between the founders and employees, they have 75+ years of experience curating art.
Should You Invest in Art With Masterworks?
The good news is you don’t have to be an accredited investor to invest in Masterworks. You need only a little money to start, which leaves investing in art open to individual investors as well as institutional investors. Each piece of art has its own minimum requirement, but some are as low as $20, and you can diversify your investments across several works of art.
So should you invest in art using this platform? If you’re looking for a way to diversify your portfolio (everyone should), then yes, investing in art this way can be a great way to diversify your portfolio. With gross appreciation of 40—150x the original value, it’s easy to see why everyone should try investing in art.
How Does Masterworks Work?
Investing in art may seem complicated or overwhelming, but Masterworks makes it simple. Here’s how.
The company curates high-quality works of art to invest in. They buy the piece they think is best and register it with the SEC. Once registered, they issue shares to investors like you. This gives you partial ownership of the work of art. If you keep the investment through its entirety, you’ll earn a prorated amount of the appreciated value, which can be as much as 150x the original value.
Masterworks holds onto a piece of art for 3 – 10 years. Once sold, they divide the proceeds of the artwork’s appreciation amongst the investors according to the amount they invested.
Keep in mind, the minimum investment is around $20 per piece of artwork, but you can’t own more than 10% of the total shares of one piece of art.
Masterworks Features
- Uses proprietary data: Masterworks uses technology and experienced researchers to find the highest value artist markets that will also provide the best returns. You have access to the artwork database to make your own decisions rather than relying on third-party research alone.
- Buys art examples at the best prices: The company experts purchase examples of the artwork at the best prices, but also examples of the highest quality for the best resale prices and appreciation. They do their research before offering the investment to others.
- Sell the shares on the secondary market: If you’re in the US and have a US bank account, you can trade artwork shares with other traders without going through Masterworks if you need to liquidate your investment early.
Masterworks Cost and Fees
It’s free to sign up for Masterworks, but like most platforms, you’ll pay an annual management fee. You’ll pay 1.5% of the annual amount invested. This helps cover the costs to store, insure, and manage the artwork.
Once they sell a piece of art and you earn your portion, they’ll also take 20% of those earnings. This allows them to find the highest bidder, increasing your revenues.
How to Sign up for Masterworks
Here’s a simple overview for getting signed up as a Masterworks investor.
- Complete a Masterworks application. Currently, there is a waitlist, so if you’re interested, get on the list ASAP.
- Complete the phone interview. An employee will reach out to you for a phone interview but don’t worry. There aren’t any right or wrong answers. They just need to verify your identity.
- Invest in art. You can buy fractional shares of any artwork Masterworks currently owns.
