Investing in art

There's no question that the upside of art investing can be way, way up. An untitled Jean-Michel Basquiat painting — purchased by New York collectors Barbara and Eugene Schwartz in 1981 for $3,150 — sold at Sotheby's last year for $14.6 million to benefit a museum. If that original amount had instead appreciated in step with the S&P 500, its value would have been about $36,000 in 2007. But for every Basquiat with breathtaking returns, there are thousands—millions?—of paintings sitting bashfully in attics or boastfully on walls, worth even less than some admiring buyer paid for them years earlier. So is it foolishness for the average boomer with some savings and a little spare time to try to buy beauty with the parallel goal of building wealth for retirement?

Not if you ask Walter Manninen, a 53-year-old collector and former executive who now is a senior business adviser in the small-business-development center at Salem State College in Massachusetts. Manninen grew up in the nearby artists' magnet of Cape Ann and began buying art with his grocery money in his early 20s. "I grew up with art in my backyard, but I wasn't born with a silver spoon in my mouth," he says. His purchases—each, in the beginning, no more than $2,000 to $3,000 — now are one of his most valuable assets. As investments, his collection has "really outperformed everything," he says, stocks, bonds, and real estate included.

Read the USNWR article here.