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An investment that will look good hanging over your bed

It’s a whole lot prettier than the rest of your investment portfolio.

And it doesn’t look bad on paper, either. A “well-chosen” art piece can serve as a hedge against inflation and potentially outperform traditional vehicles over the long term, says this year’s World Wealth Report, released by Capgemini and RBC Wealth Management. And potential investors are well aware: First-time buyers constitute 20 percent of contemporary art sales, according to the study.

But starting an art collection can be a tad harder than ringing up your investment adviser to crunch some numbers. It requires a lot of research, some hard thinking and a bit of a romantic side, says Paul Gray, director of Richard Gray Gallery on Michigan Avenue.

“Of course, you want to know as much as is convenient to learn about the things that appeal to you. But mainly, you want to be sure to collect things that have certain personal meaning to you,” Gray says. “The ones who collect a bit from the heart, who allow themselves to be swept off their feet occasionally, those are the ones who tend to build really exciting collections.”

That’s certainly the case for Amy Taylor, 26, who saw Belgian photographer Frieke Janssens’ exhibition “Smoking Kids” at the Catherine Edelman Gallery a few months ago. The works ranged in price from $2,500 to $4,600, and Taylor hadn’t planned to purchase anything — until she saw “Classic Red,” a photo of a little girl in red lipstick and a black cloak holding a cigarette.

“Seeing it in person, it was just breathtaking, and it was one of those pieces where I knew if I walked away without buying it, I would be kicking myself forever,” Taylor says.

Taylor’s nearly 50-piece collection centers around her interest in textiles, underground pop surrealism, and street and graffiti art — she recently purchased a sculpture of a wrinkled, aging Mickey Mouse by Chicago artist Darick Maasen. She bought her first piece at age 19, a print of Michael Hussar’s surreal portrait “Daddy’s Girl.”

Edelman’s River North gallery has several programs aimed at new collectors, including an online artist talk video series, a dinner-with-the-artist event called Appetite for Art, and participates in Brave New Art World, a monthly event for people interested in the arts.

“We’re cultivating actively right now the younger generation to start collecting. Because most of our clientele have grown with us,” Edelman says. “It is the new generation that we are looking to to start the collecting bug.”

Budget is foremost. Most of the works in the Edelman Gallery are priced between $2,000 and $10,000. Edelman also runs the Chicago Project, an online gallery of up-and-coming artists (typically priced from $300 to $1,000) that she can’t quite fit on the walls of her gallery. She also keeps a few pieces in-house for buyers who are hoping to spend a little less.

William Lieberman gets first-time buyers at Zolla/Lieberman Gallery in River North, where he says works typically range from $3,000 to $20,000, but he keeps fewer items for lower budgets.

“I don’t think younger people are as instinctive, ready to start making financial decisions all the time — to buy a Deborah Butterfield, which is anywhere from $120,000 to $500,000,” Lieberman says.

Complete picture

Doing your research and immersing yourself in the Chicago art scene is also encouraged by Joshua Rogers, CEO of Schaumburg-based Arete Wealth Management.

“If you go about it with this sort of pure Machiavellian, totally commoditized sort of approach like, ‘Oh, this is another investment, no different than a stock or a bond’ — that is unfortunate and not the right approach,” Rogers says.

He says artists and dealers can sniff out “pure investors,” buyers who aren’t interested in the work as a creative expression. Rogers advises potential buyers to perform due diligence by attending lectures and openings, and getting to know midcareer artists who are instructors at schools like the School of the Art Institute. They’re likely to know who’s up and coming — as well as who’s going to stick around.

The contemporary art market in Chicago is full of galleries showing artists whose commercial success and pricing is not yet at “crazy New York levels,” Rogers says. Those are good places to make “small-cap” investments in pieces.

“There are some great young artists they represent, they may have had a show at the Museum of Contemporary Art here in Chicago and that’s a pretty big springboard,” he says. “What you’re looking for are these artists that have had nice little successes under their belt. That’s like a signal that they’re going to continue to rise.”

Buying from a dealer instead of from the artist can be a more stable investment than a stock, Rogers says. Some dealers will buy back pieces for the same or higher price than they sold the item for, wanting to maintain the market for their artists.

Future of art

Though there are murmurings of a contemporary art bubble for big-ticket living artists, Chicago players say the art market still has room to grow.

“If more wealth is being created, as long as that continues, more of that wealth will go toward art as a place for that wealth to be expanded, or as a placeholder of that wealth,” Roger says.

Gray says he believes the Chicago market has grown tremendously since the ’60s, with far more collectors and galleries today. He says the competition for art is driving prices up.

“The demographic bulge of people in their peak earning years, the bulge of people who have a certain amount of accumulated wealth the higher levels of education internationally, the speed of communication … and the proliferation of art fairs, all of this has made art collecting a bigger business,” he says.

Though money spent on gadgets and big-screen TVs will continue to go that way, Gray says art will continue to be a next-step purchase for new collectors.

“They usually buy education and cars and TVs and furs and jewelry and big vacations and things like that,” he says. “But ultimately I think we all look for meaning in life, and it starts to not be enough to have more things. They have to be things that are meaningful,” he says.

And while artists and gallery owners may flinch at the word “investment,” it’s true even as a pursuit of passion.

“It’s so hard to predict what will be hot in 20 years and what won’t,” Taylor says. “If I buy something, I hope that it will accrue value. But that’s not my sole intention for buying it.”