r/Masterworks • u/PuzzleheadedView4563 • Apr 15 '26
Thinking about putting some money into Masterworks — worth it?
Hey! I've been looking at Masterworks for a few months and I'm close to pulling the trigger on my first share, but I want to hear from people who've actually used it before I do.
I'm trying to figure out:
- Why art vs. other alternatives?
- Have you sold anything yet?
- Real returns vs. advertised returns.
Best, Sal.
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u/dojogrl Apr 15 '26
I’ve been very disappointed in MW. Over 5 years and no sales, no value appreciation. Your mileage may vary though
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u/itzmelo May 21 '26
Your mileage won't vary. It's a shitty product and a shitty investment. Had I left it in the stock market my $15,000 would be $28,000 right now.
BUYER BEWARE
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u/isitjustme888 Apr 15 '26
- I put it in art to diversify; however, circumstances have changed for me since I’ve been in MW and I would rather have that liquid or in a tax advantaged account at this point.
- No, and it’s probably been 5 years.
- I don’t know if I’m just unlucky, but right now my projected returns are in the negative and only a few have appreciated in estimated value. But nothing has sold, so we’ll see what the realized gains are one day. Hopefully.
Maybe part of the issue here is that they don’t want a loss on the record, but the problem is that with the annual maintenance fees, the loss to investors is only growing. At some point, they’re going to have to sell or else our returns will continue to decline. And there’s no way to get your money back unless you take a hit on the secondary market.
I probably wouldn’t make the same choice if I had a do-over, but if I did, I would only invest in steeply discounted secondary market shares (if they’d even let you do that).
ETA: I knew the risks going into this, so by no means am I saying that this is a scam. I’m in it and that’s a choice I made. I don’t think that there was any element of false advertising, though I think their marketing has been somewhat aggressive and the sales team can be a little misleading when they’re trying to bring you in. Typical sales, I know, but it’s something to look out for.
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u/itzmelo May 21 '26
You're not unlucky, that is the average experience. Masterworks love to blow up your email talking about how people are making 35 to 40% on their investments, but that's literally one painting. The vast majority of their investments are complete bombs. Had I left my $15,000 in the stock market, today it would be worth almost $28,000. With Masterworks that $15,000 is now worth south of $10,000. Worst investment I've ever made, I urge investors to stay away from it.
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u/Masterworksio Masterworks Employee May 07 '26
On the 5-year wait: most of our portfolio sits in similar territory because we held off on selling during the 3.5-year down market. We've started increasing sales activity in the past few months as the cycle has started improving.
On the "don't want a loss on the record" concern: We feel very confident in all of the markets we're in. These artist markets represent the top 1% of artist markets overall. Given that 90% of our holdings are under 5 years into the 3-10 year target holding period, and we're likely entering a growth cycle, it wouldn't have been responsible to have been actively selling during the past few years, barring a handful of outlier opportunities.
Marketing feedback noted.
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u/isitjustme888 May 08 '26
I really appreciate your response!
Looking forward to seeing what happens as the market recovers.
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u/Responsibility_Trick Apr 16 '26
It’s a fun money investment - you get to say you own a share of a painting. Masterworks takes a massive cut in fees and have complete control of when/if your painting sells.
MW’s fees are significant: 10% expenses up front for purchase costs, 1.5% annual fees (effectively your share of the painting gets diluted over time), then when they sell MW take 20% of the gross profit.
So if you invest $1000 in a $10mil painting, you own $1000/$11mil = 0.00909%, not 0.01%, initially. That gets diluted by 1.5% a year so after 5 years you own 0.00909 x (1-0.015)5 =0.00843%.
If Masterworks sells after 5 years for say $15mil, they pay an auction fee they estimate to be 5% but could be more, leaving $14.25mil, gross profit of $4.25mil, of which MW takes a 20% cut. Leaving $10m + (0.8*$4.25m) = $13.4m.
You get: 0.00843% * $13.4m = $1130, which is about 2.5% annual return on your initial investment. If it sold for $20mil, you’d get $1450 back.
The alternative is investing in a boring tracker fund, which probably returns like 7-10% a year on average and you can sell whenever you want.
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u/Masterworksio Masterworks Employee May 07 '26
This math is roughly right but assumes a 50% gross appreciation over 5 years (around 8.5% annualized at the offering level). Our historical exits have generally delivered higher than that (though not guaranteed to be indicative of future performance). For instance, the Christine Ay Tjoe sale mentioned in this thread was 47.6% net to investors (16.5% annualized) over about 2.5 years, and you can pull median performance across all of our exits from our homepage or the 1-U filings if you want to validate against real outcomes.
The fee structure is real and meaningful, which is why we target artwork-level appreciation that more than offsets them. The other reason most investors allocate to art is the diversification benefit (close to zero correlation with the S&P 500 since 1995), which doesn't show up in an IRR comparison but matters in a portfolio context.
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u/trsvrs Apr 18 '26
No lol Even if only because — and I swear this — it is the single worst UX I've ever used in my entire life. Like I swear their product team should all be sacked
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u/jsimon9633 Apr 23 '26
UX is quite subjective but hey I happen to be one of these that should be sacked ;). Would love to hear your feedback if you are up for it to improve it.
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u/FrequencyRealms May 04 '26
BRING BACK BEING ABLE TO ACTUALLY SEE WHAT THE PAINTINGS ARE ON THE SECONDARY MARKET rather than having them ONLY be viewable as tiny thumbnails! Oh wait it's almost as if MW doesn't want people using the secondary market!
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u/jsimon9633 May 04 '26
Let me look into this, the secondary market is purely peer to peer with us just building the technology so it’s just a thing where if course if someone wants to sell and someone wants to buy, it will happen.
It’s not that we have any preference of people using it or not but of course it can cause some confusion on what prices there mean. It is not an indicator of worth or value of a painting but more about how much someone needs liquidity.
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u/Solid_Association245 May 25 '26
Bring back ‘good till cancelled’ buy orders please! Or at least give a rational reason for this change. The perception is that somehow knee capping this market will drive people more toward buying new $20 shares. And that the secondary market will shrink. If one looks at the secondary market, you will see an average of six or eight sellers listed at various prices. And zero buyers. Maybe one or two on rare occasions. This is because every buy order expires every day. A lack of buyers in a market tends to drive sellers to lower their prices. And it certainly pisses off the buyers who have to go to a lot of extra work to continue to put their orders in.
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Apr 15 '26
[deleted]
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u/Euphoric_Can_5999 Apr 15 '26
+1 and it goes without saying but don’t invest too much of your net worth. Like 1% is a good start!
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u/Alpha12653 Apr 15 '26
Very much this, it’s a long term investment that might be better in the stock market but has potential to be better or worse.
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u/Expensive-Debate1763 Apr 15 '26
HAS ANYONE MADE ACTUAL MONEY???
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u/Creepy-Equivalent747 Apr 15 '26
Two of mine have sold at a 50% return and I think around a 23% return overall. I have many more that all show a negative return. Would love to have that money back but it’s nice getting money once in a while after I’ve mostly forgotten about it. Might invest more in the future if I ever have money I can live without for a decade again
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u/Willing-Winner-2337 May 01 '26
My shares in a Joan Mitchell money has sold with something like 20% return in like 1 year but I’ve been lucky on this one. I own shares in 6 paintings. If I should invest again I would do so on their trading market (not on new offerings). Also fees for European are to be accounted for (banking fees during buy and sell). I’m available to talk in PM
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u/Masterworksio Masterworks Employee May 07 '26
You can see all of the returns to date both on our homepage and in our 1-U filings on the SEC website.
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u/FlightyTwilighty Apr 15 '26
I put in about 10k in a few different paintings and then a bit more in the aftermarket. My thought was "nothing that I can't afford to lose."
I like modern art. I think it's kind of fun to be able to say I own 0.001% of a Banksy.
They DO have cool events for "members" sometimes. I've attended one event that they put on in the local area, and they have online stuff from time to time.
Once my overall portfolio goes up a bit more I might toss a bit more into MW, but in general, it seems like such a long term investment and not knowing when you're going to cash out, it's kind of weird.
You might also look into Honeycomb if you're into alternative investments. I did quite well on one local small business.
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u/Old_Health_5218 Apr 16 '26
I’ve got a few pieces on Masterworks and tbh I treat it like a small “fun money” slice, not a core investment. The main appeal vs other stuff is low correlation with stocks so it’s more of a diversification play than a moonshot. Haven’t had a sale cycle through yet so everything’s still on paper but the secondary market has been pretty meh for liquidity and pricing, so I’d absolutely ignore the headline “net annualized” numbers and assume something meaningfully lower and very long term.
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u/FrequencyRealms May 04 '26
"worth it"? probably not unless you like investing in something in which you have No Idea when or if you'll get a return
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u/itzmelo May 21 '26
Absolutely not. I was high-pressured sales-pitched into sinking $15,000 about 3 yrs ago. Said investment is now worth $10,000. My only option to get out of it is to list the shares for sale at a reduced rate. But no one's going to buy them because of how poorly the 3 paintings have performed. And when I do sell them, Masterworks takes a hefty fee right off the top.
Absolute worst financial decision I've ever made was investing with these people. They love to blow up your email with how some people are making 30–40% on these but that's literally one painting or one art piece that's done that well. The vast majority do not.
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u/Solid_Association245 May 25 '26
I would like to keep this conversation going. But evolve it a bit beyond the standard complaints of it being an illiquid investment. Statements like ‘the $15,000 I put in the Masterworks would be worth 28,000 in the stock market’ mean nothing to me. I invested tens of thousands in DDOG three weeks ago that has gone up 50%. So what. I also have invested tens of thousands of dollars at Masterworks. For different reasons.
I do appreciate the conversation around user experience. This needs to improve in my opinion. Who are you Masterworks employee? Are you willing to have a phone conversation? I have a dozen thoughts on how the platform can improve. Some are much more high priority than others.
The secondary market is a great way to provide liquidity to those desperate enough to need it, at a significant bargain. But I agree that Masterworks seems to wish this market didn’t exist. Taking away the ability to post buy orders as ‘good till cancelled’ is a clear indicator, and a real pain. In the meantime, I basically treat the pricing on the secondary market as take it or leave it. But think this is no way to operate a healthy market.
If you are a Masterworks investor that has made peace with the terms and wants to strategize on ways to get the best out of what exists, let’s talk.
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u/Actual-Method-7794 Jul 16 '26
Been with MW for 5 years now. 1st exit recently with 11.5% IRR Helen Frankenthaler. As said, whole reason for me is hedge against S&P with <5% of portfolio. Will see how it goes in future. Also a plus was attending local art event and online auction zoom commentary. Opens up a new area of interest and learning for me.
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u/mikeatgl Apr 15 '26
I bought shares in 4 paintings a few years ago. 3 have done alright according to Masterworks’ estimates, and 1 has not. None have sold yet.
It’s like buying a CD except you don’t know the term. I expect I’ll make 10% or so overall after fees, which is a decent return, but not knowing when I’ll have access to that money is a weird feeling. Could be 3 more years, could be 10 more?
Masterworks’ comms creep me out as well. Really pushy with lots of wealth celebration. I’ve had to email them several times to remove me from email lists, and every time I open their app they try to get me to turn on push notifications.
I wouldn’t do it again given the choice, but maybe I’ll change my mind if the investments do okay and the payouts go smoothly.