Did you know that art sales topped $60 billion in 2014, a 67 percent increase over 5 years? And, 75 percent of art collectors bought art for collecting purposes, but with an investment in mind—this figure is up a significant 53 percent from just two years earlier in 2012.

What’s more, pieces sold at auction in 2014 jumped more than 25 percent to $15.2 billion, with a record 1,679 sales worth $1 million or more. [CNBC]

These numbers may seem promising, but there’s a lot more to art investing than meets the eye. And when it comes to your finances, you need to make sure you have all the facts before you take the plunge.

So, is art collecting a valid investment strategy?

The truth is, it depends. Collecting may not be right for everyone, and your knowledge about collecting, the art market, and investing all play a factor. Answering these seven questions will help you determine if art collecting is a smart investment for you.

Have you done the research?

Learning about the history of the artist and the specific piece you’re interested in can boast better returns on your investment than blindly buying an artwork. Why? The more you know going into a purchase, the better you can assess the value of the piece.

Value can be affected by everything from sales price history and the condition of a piece to the story and life of the artist. So, ask yourself these questions to educate yourself about an artwork.

Do you have the work’s provenance?

Art collecting can be a valid investment, but again, it comes down to the valuation of your pieces. And, the best way to prove an art’s value is through provenance. This documentation of an artwork’s story, ownership history, and accolades provides authentication and context that can point to the long-term value of a piece.

Do you have a good strategy?

There are so many moving parts when it comes to art collecting that it can be hard to know where to begin. Like any other type of investment, you are going to need a strategy in order to come out in the black.

A successful art investment strategy will include defining your scope, doing the research, building relationships, determining a budget, and understanding the market. Learn more about developing a winning collection here.

Do you understand this type of investment?

Art collecting can be worth investing in as long as you understand what you are getting into. CNBC compares art to venture-capital investing: “Just as every startup is unique, so too are works of art. Some have a track record of success, but many are prone to the whims of the market.” And like startups, it can be difficult to determine the exact value of a piece’s worth.

While the art world is changing thanks to technology, the reliance on a traditional gallery-focused system still plays a part in the valuation of art. And, the bigger problem, explains financial advisors at Personal Capital, is that the fine art market is highly manipulated by collectors, galleries, and auction houses—and this can greatly affect the perceived value of a piece.

Another layer of complexity added to the equation is the costs associated with buying, maintaining, and selling art, adds Personal Capital. In fact, you may be responsible for a lot, including a buyer’s premium at auction, sales tax, insurance, travel costs, maintenance, appraisal fees, and so on. Just don’t forget that the Internal Revenue Service will collect roughly 28 percent in capital gains taxes when you sell.

Do you understand the market?

If one thing’s for sure, it’s that the art market fluctuates, and this must be understood when trying to see a return on your art investment. For instance, the contemporary art market which is most popular amongst today’s collectors is also the most volatile.

Forbes explains that a high demand for one artist’s work can, and usually will, affect the market for a similar artist. For this reason, having a diverse collection of artists and styles is key for your investment, as well as following the age-old investing motto “buy low, sell high.”

It’s also important to understand that collecting in the primary market—when an artwork is sold for the first time—is the riskiest investment move to make. Of course, it’s truly impossible to know if an emerging artist’s career will take off.

And, unlike Warhol and Picasso, the increase in value you will see from a lesser-known artist’s work is typically much smaller. However, you are also buying the art at a much lower price, so it could be worth the investment if you find the right artist. Just be ready to pound the pavement, make connections, and see lots and lots of art. 

In short, you have to know what you are buying, and it has to be great art. Learning about art movements and history while staying up-to-date on the latest art trends will enable you to follow along with the changing market.

Do you have a reputable art advisor?

If the world of art investing seems complex, you are not alone. That’s why many art collecting experts recommend hiring an art advisor that’s not only knowledgeable but trustworthy. Art advisors can guide you through this complex terrain and assist with a myriad of collecting endeavors. They can guarantee you have the proper insurance, inform you when it’s time to sell, and much more.

Art collecting is like any investment.

Investing in art is not as straightforward as one would hope. It’s important to understand what goes into the investment, how the art market works, and the people and strategies that will make collecting art worthwhile. Thinking through these issues carefully will help you decide if collecting art is a valid investment for you.

Find more in-depth discussion about collecting in our Essential Guide to Collecting Art to understand the whole lifecycle of a collection.