Author and investment adviser William J. Bernstein points out that much of the appreciation in art and other collectibles is really just a lesson in the magic of compounding. One painting by one of the Old Masters bought from the artist for the equivalent of $100 and sold 350 years later for hundreds of millions of dollars returned just 3.3 percent annually, he calculated. “If you save and you have even a modest rate of return over hundreds of years, then you’ll have a fabulous amount of money” he said on our Masters in Business podcast.
Selecting appreciated investments after the fact is easy. Instead, consider this challenge: What work of art are you willing to buy and hold for sale in 2052? That question reveals just how difficult investing in collectible assets really is.
This column was provided by Bloomberg News.