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Art is an investment you can appreciate - whether it appreciates in value or not.

Are bouncing bond prices driving you berserk? Spiraling stock prices scaring you silly? And you're certain you don't have the stomach for pork bellies and frozen orange juice futures? Where else is an investor to go? Collecting art can be fun, interesting and a great way to diversify an investment portfolio.

Though some people collect art solely for investment purposes, most experts agree that the best way to invest is to buy something you love. That way, whether it appreciates in value or not is immaterial; the pleasure of its company will be enough.

Of course, it is possible to make a killing in the art market - that is, if you can predict what new artist will become the next Jackson Pollock or find a Dutch master at a yard sale. While the chances of that are slim, and not all investors can afford to purchase a Monet or a Mondrian, you can still get a lot out of collecting even if you don't have a few million to toss around.

* LOVE AT FIRST SIGHT

The best collections are those put together by art lovers with a passion for their subjects. Whether it's Venetian glass, Egyptian pottery or Chinese porcelain, before you go on a buying spree, do your homework. Experts suggest your first purchase should be books on the subject that interests you.

Select one area and focus on it. Spend some time visiting museums, galleries, auction houses and dealers to get a feel for what's out there. Take note of what catches your eye and why. Join local museums, and take classes to help you develop your eye.

When you're ready to purchase, think of it as you would any investment: You wouldn't buy without reading its prospectus, checking up on its track record and knowing whether its style will fit in your portfolio.

Beginning investors should work with a dealer to be sure they're getting what they pay for. Before buying, make sure you're getting the most for your money. Novices should avoid buying damaged works or those whose origin is in doubt.

Your initial foray into collecting doesn't have to involve oil paintings. Works on paper are usually less expensive and easier to resell. Some collectors prefer ethnic art, such as Mexican pottery, American Indian kachinas or African masks. When you do buy, be sure the piece is what the vendor says it is, not some recently mass-produced mask masquerading as an ancient tribal artifact.

"Appreciation potential has to do with the level of art you're purchasing," says Jerald Melberg, owner of the Jerald Melberg Gallery in Charlotte, North Carolina. "You may buy an unknown artist's [work] for $1,200, he hits it big, and you've got it made."

But most dealers and serious collectors agree: If you spend less than $10,000, you may have a work of art, but you don't have a financial investment. Melberg notes that six figures is usually the low end of investment-level art. Buying art on this level is like buying blue-chip stocks: There's a lot more chance that it will appreciate than the work of an unknown artist . . . or the stock of an unknown company.

However, any honest dealer will tell you that appreciation is not guaranteed, and just because prices have risen in the past doesn't mean your purchase will be worth a fortune later. The warning should sound familiar to any investor: "Past performance is no guarantee of future returns."

* NOTHING LIKE THE REAL THING

Picture this scenario: On vacation, you wander into the gallery of an upscale dealer, where you find a great buy. Putting your research to work, you're sure this Miro aquatint is the one you want. The dealer even provides a certificate of authenticity, so obviously it's the real thing. At home, it looks even better on the bedroom wall, and you admire it every night.

Sound like a dream? Well, this supposedly astute investor (me!) has now retitled the work the "Fake Miro." While the signature looked genuine and the certificate of authenticity from a supposedly reputable dealer seemed to be in order, the $800 invested would have been better spent on a blue-chip stock.

What can you learn from my mistake? Before buying, ask for the history of the work, including who owned it before you and where it was purchased. Unless you're buying directly from the artist or from a gallery that specializes in a particular artist's work, make the gallery agree to take the piece back if it turns out to be a fake. Many galleries will allow you several months to have a piece authenticated. Take it to a museum or an expert in the field to get a professional opinion. They usually charge a fee, but it's worth it.

In some cases, you may end up with a fake, even after expert certification - and you won't be alone. In a recent show titled "Rembrandt, Not Rembrandt," museum director Philippe deMontebello explained how even experts can mistake a fake for the real thing. If the Metropolitan Museum of Art in New York City can be fooled, so can you.

Buying a fake can be a useful lesson - one that, hopefully, won't cost you a fortune. After all, I still enjoy my "Fake Miro" - and until now, I was the only one who knew it was a fake.

* IN THE POCKETBOOK OF THE BEHOLDER

Unless you've been in outer space for the past year, you've undoubtedly heard of the greatest auction on earth, where buyers armed with more cash than brains paid over seven times the estimated value of pieces from the estate of Jacqueline Kennedy Onassis. Buyers parted with a sweet $34.5 million - absolute proof that the market for collectibles is alive and well. But don't feel miserable if Arnold Schwarzenegger crept off with the golf clubs you craved; in a few years, he may be quietly selling them for a price closer to what used golf clubs should be sold for.

In collectibles and art, as in securities, demand sets the price. When the majority of investors wants shares of the latest, hottest initial public offering, prices can go into orbit. But disappointing earnings can turn a high-flier into a meteor . . . bound for a crash landing.

At the peak of the art market in 1989, Japanese investors, flush with cash from profits in stocks and real estate, paid previously unheard-of prices for works of impressionist masters, including Degas, Monet, Gauguin and Van Gogh. Paintings that had previously sold for hundreds of thousands of dollars were bringing bids in the millions. But what price is too high for a priceless object? Stock shares can split; it's unlikely Monet can paint another "Water Lilies" unless he can do it very long distance.

Nevertheless, in buying and selling art as well as in trading securities, the best deals may come in areas that are not so hot at the moment. If 19th century American art is all the rage, the smart investor might develop a taste for, say, Asian art or European old masters, which have yet to become very hot, but which some experts believe may be the next rage. Not sure how to spot a trend? Find out what second- and third-tier art museums are acquiring. Smaller museums with fighter budgets may hit on a trend before the big boys do.

One area that can provide spectacular profits - or spectacular losses - is contemporary art. Like penny stocks, collecting the work of little-known artists could lead you to the next Mondrian - or a lovely work to hang on your wall. Unlike a penny stock, if you love the piece, you get the aesthetic pleasure of enjoying it. When your penny stock becomes worthless, all you have is a certificate (though I hear they make nice wallpaper).

How do you know what your acquisition is worth? Says gallery owner Melberg, "You won't know until you try to sell it - and most people don't want to sell something they love." The question, then, is when do you sell? If you love a piece and have bought it for the aesthetic satisfaction it gives, the answer is never. On the other hand, if the objet d'art you once adored has lost its charm to you but somehow becomes more in demand, sell while the market is hot.

* BEAUTIFUL FIGURES

Which is a better investment, then, art or securities? Most people can't afford a diversified art portfolio carefully composed of works with price tags starting in the six figures. And, unlike stock certificates that can reside in your brokerage account or safe-deposit box, works of art may need additional care and insurance.

Liquidity can also be a problem. You can sell 100 shares of IBM quickly, at a price that can be as easily substantiated. If no one likes your 20-by-20-foot Andy Warhol, though, you could get less for it than you'd hoped . . . a lot less.

But Michael Moses, an author on art, takes another view: "How many stocks have been around since 1600 or 1700 or 1800?" he asks. "Many paintings that were important in those pe-hods are still considered treasures today. You can't say that about too many stocks."