Is it Possible to Invest in LEGO?

Hype or a valid investment chance?

On June, 23rd 2018 Nike released Jordan 1 Retro High Off-White University Blue, a sneaker that I wanted to have so badly but I couldn’t get. Nike priced the sneakers at 200€. When I searched on eBay and other websites for the shoes, it was being resold for over 2000€ at that time. I was surprised, what an awesome return of investment if I had managed to get one.

That was my starting point to follow sneaker releases and market value. StockX is the app to use. But getting your hands on well-valued sneakers is very unlikely, there is a lot of competition out there.

Now talking about sneakers, their reselling values, and their market is a story on its own. But, from there I started thinking, which other easy to buy items have such a community online? Is it possible for example to invest and make a decent ROI from LEGO?

The best example of investing in Lego would be the Millennium Falcon, which was released by LEGO in 2007 (Set #10179). The Original price of this set was 500€, today, on Amazon, this set can be found for 6725€ (1245% value increase). This value increase beats anything an investor could have gotten from MSCI world ETFs and beats the S&P500 index as well.

From this example, one can figure out that investing in Lego sets is a valid option. Like any investment, we should know the risks, the opportunities, and the most effective way to invest in order to maximize our ROI. This will be a short introduction on what to look for when investing in Lego sets and what you need to be able to utilize this passive income stream.

What is LEGO?

LEGO is a line of plastic interlocking bricks construction toys produced by the company The Lego Group, a private company from Denmark. LEGO is derived from the Danish words “leg godt”, which means “play well”. The company was founded in 1932 and in 2015 the Lego Company became the world’s largest toy company by revenue.

LEGO was not always such a profitable company. In 2003 the company had a budget deficit of ca. US220$ and had to rethink its entire strategy. This deficit can be ascribed to the low LEGO popularity at that time and the increasing popularity of video games. LEGO started opening LEGO branded stores, they licensed multiple franchises to be released in LEGO, such as Starwars, Marvel, DC, and more (not all in 2003, but this marks a policy change within the group). In 2011 LEGO started Ninjago, which was the first LEGO line to be based on Ninjas. This line is considered one of LEGO’s most popular product lines.

LEGO also has multiple theme parks around the world called LEGO Land. There are also multiple video games, TV shows, and movies, which are based on the interlocking bricks.

How to invest in LEGO sets?

Like any investment, investing in LEGO requires the investor to analyze the different offerings, the supply, the demand, to buy cheap, and sell expensive. When it comes to physical items such as LEGO sets, storage is also an issue that needs to be taken into consideration. A step-by-step guide for investing in LEGO sets is given in the following:

Find the right set

Not all LEGO sets have a high demand or are limited. The first thing you need to check is the rating for the different LEGO sets available. A good place to check for the value of the sets is Brickpicker. There, you will find all the news, deals, prices, and end-of-life information regarding the different LEGO sets. Analyzing the site will help you determine which sets are worth the investment. A list of current sales and offers can be found on the site as well. It is also a good idea to set a price alarm. Then if certain sets are on sale, you will be notified.

Finding the right set is not an easy task. The right set can be a unique limited set, a set with a unique LEGO Mini-figure (those are very hyped), or a set which will be discontinued soon.

For example:

LEGO Central Perk set (#21319) is a limited edition collectible set to celebrate the 25th anniversary of the sitcom show Friends. This limited set with its unique mini-figures was released in 2019, and has; thus, not reached its EOL (end of life) yet. But eventually, this will happen and the set will be discontinued.

LEGO Voltron (#21311) is a set I bought in summer 2018. It is now discontinued by LEGO. The current reseller price is 35% higher than the original price. A 35% ROI in this period is better than the MSCI world.

Patience is the key

Investing in LEGO sets is not a fast buy-and-sell as in the sneakers market. It is a buy-and-hold investment strategy. The more you hold onto a set the, rarer it will become. However, be careful, LEGO might announce a newer version of this specific set at any time. The original Millennium Falcon was released in 2007 and discontinued in 2009. LEGO has re-introduced the set in 2017, which took away from the resell-value of the original 2007 set.

Storage is important

Fight the urge to build the sets. LEGO in unopened original boxes stacked on top of each other will hold their value over time. Opened sets on the other hand will lose value. Do not mix work and pleasure. If you want to build a certain set then buy two sets. One for you and one for reselling.

Good storage of the LEGO sets is important. Keep them away from direct sunlight (sunlight causes the box colors to fade over time), keep them away from moisture as well. When purchased online, it is better to buy the sets individually, in this case, you will have a separate box to send the set in once sold.

Make sure you have a good, isolated, sufficient place to store your assets.

Limit your investment capital in LEGO

Investment in LEGO sets should be a stream of your passive income streams, but not the main one. Therefore, limit your LEGO sets’ investments and do not go all-in in LEGO sets. Remember, the reselling market is risky and you should not have all your eggs in one basket. Keep a clear head and fight the temptation to invest more and more. Do not get upset if you missed the chance on a certain set. There is plenty of fish in the see and missing one set or two is not the end of the world.

Do not overwork it

We want to use the LEGO sets as a passive income stream. Therefore, do not stress over it daily and do not try to sell the sets throughout the year. Limit your sellings to a month or two per year. For example, the holiday season is a good time to sell the sets. Set your selling energy and focus only on that period and just hold onto the sets for the remaining period of the year.

Before you sell the items on a certain platform, make sure to understand the fees of that platform. Some platforms demand up to 15% of the selling value as their commission. Selling on Greg’s list, for example, is free, but the discussion effort with potential buyers is time-consuming.

Investors know that they should diversify their portfolio and investments. The reason behind this story is to encourage you to investigate and discover new opportunities and investment options. What is valid for LEGO sets is also valid for other items such as luxury watches, handbags, sneakers, and some clothing items (think of Supreme and Off-While). I’m not saying forget your retirement funds and stock investments and invest all your savings in LEGO and handbags. I’m rather suggesting to keep an open mind for other opportunities in the market, some of which have a very good ROI.

If you like this, please read my other stories regarding finance and investments:

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.