Yes, they are a good investment if you are aware of the brands and the level of their current market appeal in the market. It’s an industry that’s grown gradually over decades, appealing across every genre and age set.
Investment experts from Forbes.com slot them at an 8% annual return after removing inflation for 1987 and 2015.
It is an excellent alternative investment where you can gain more than stock market average returns. We love investing in Legos and have recently taken a large position with them in our inventory portfolio.
Are They Better Than Investing In Gold?
You might be thinking, is this some crazed statement. Well..after examining some compelling research, we found gaining strong returns with Legos to be true.
By looking at the ROI (Returns on Investments), records show that gold investors score 10.6 % against Lego investors at 12% according to price guides. It is not surprising to come across a set selling at a six-figure price -beating traditional investments.
Other underlying factors drive the prices for sets, and ultimately those of investment figures higher: They include scarcity of the sets and a significantly high exchange within a black market.
What fuels the black market is non-traceability. The Lego models do not have serial numbers, making for an unbeatable milestone for tracing them among likes within the public.
The illegal market is a surprising driver of market demand. And it arises from a combo – relatively very high market demands and popularity with people.
One other significant reason a stronger investment portfolio arises due to very low risks. Bricks win against gold and other online investment portfolios.
What is the main reason? Unlike gold, they do not face standard-risk drivers like momentum, volume, volatility, and market valuations.
So what does this mean for would be Lego investors? It means that investing in Legos is solid choice that has a medium to low risk.
How Exactly Is Money Made In Selling Lego Collection?
Most people take it for a childhood hobby or relaxing activity. Yet, the reality is, things have massive changed, and over the past 15 years, Legos are scoring returns at 12% annually.
And the 12% is way above that of gold!
Wealthsimple notes that kids who’ve grown playing are grownups by now. Their transition into a state of higher-income means bricks of their childhoods comprise a vast portion of the secondary markets.
As with every investment hype, always take due diligence from your point of view. While pieces are raking in cash returns, never go at it blindly.
Take time, consider viable options, make comparisons. At best, start off buying a smaller amount to invest in. Maybe buy 2 sets, one for personal and 1 as an investment.
Having an inventory based portfolio does come with some risks, but it is still less risky and easier to get started than most traditional investment opportunities.
What Makes for Worthy Investments?
The unit sets are costly. Reasonably, the cheapest ones start at an average price of $30-$50, while best performers begin at $100+ in the market for Legos.
One Lego investing strategy involves finding the best values and spreading out our risk among lower priced and higher prices sets.
One more important investment note: Lego sets are not produced into the millions. They are typically a scarce commodity and may not have many runs. It’s that scarceness and very high unit prices that make the entire industry worth billions.
Bricks are no longer a kids’ empire.
Big companies (think Disney & Harry Potter) and adults are falling crazy into it. If not for investment reasons, it’s for the love of Legos.
It’s a wonderful avenue to rekindle countless childhood memories.
Also, ever heard of AFOL? It stands for – Adult Fan of Lego.
Yes, you can count me in as one of the many AFOL.
The Adult Fan of Lego is a community that’s gaining prominence by allowing themselves to share their childhood memory of plastic bricks. They meet, share interests, buy and sell. It’s an expensive hobby.
Instances Of Past Cash-in Opportunities With Brick-Pieces
Here are a few historical values of some older sets. Please note that some of these sets have newly released similar sets.
1. Millennium Falcon 10179
In 2007, retailing for only $499.99. You can now find this between $1500 to $2500. Checking in with 5195 pieces equates to $0.28 to $0.48/piece.
2. Café Corner 10182
In 2007, you could purchase this Lego set for about $140. You could now purchase this new set at $3000+. At 2056 pieces, this means the current value is $1.45/piece. Wow!
3. Grand Carousel 10196
As of 2009, the retail price tag was at $249.99. The current sold prices on eBay range from $2,100 -$2500. This brings its price per brick at about $0.77/piece.
4. Statue of Liberty 3450
Way back in 1998, the retail price was going for $199. Nowadays, you may not find it for anything less than $800. That check in at about $0.37/piece.
5. Death Star II 10143
In 2005, retailing for only $269.99. But nowadays you can only find them for at least $1,900 and more. This check in at about $0.55/piece.
Buy Low and Sell Much Higher
The reality is you make money like on stock markets. The old sequence still thrives:
- Buy the stocks at the lowest retail prices
- Hold on for some reasonable time
- Sell at a high price at an opportune time
Having a strategy is vital in order to maintain some success and continue to add to your investment gains. Having a system in place will help you to get started and ensure you maximize your profits.
4 Key Pillars To Help You Invest and Gain
Chances are you might be fairly new to Lego investing and unsure of how to proceed. no matter where you get your information & advice, you always want to do your own due diligence and understand your risks.
Here are some gems for Lego investing advice to help you profit.
1. Spot Undervalued Set & Purchase at Below Retail Cost
The best target is to buy at low discounted retail prices. Meaning, you dig into the alleys of stores to spot a suitable LEGO deal that you can sit on for some time.
Lego sets investors profit from the secondary markets. So, it takes time to hold on reasonably. It is not an overnight win though and does take time to see a healthy return.
2. Plan Out Your Investments
An ultimate trick is not stocking every set you come across. As you are starting out, it may be wise to pick one theme to start with initially. Maybe a theme you are more familiar with. This will help you deviate into sets you may not know the values of.
Once you feel comfortable, it is a good idea to have a set strategy of which particular sets you will add to your Lego portfolio. Pair it up with Double VIP points for some Lego exclusive sets and it adds more value.
3. Seasonal Editions Make Some Great Picks
Make it big for the sets, and try picking editions that have limitations. It’s best when you bring sets whose price varies season-wise. Combining rareness and high demand works wonders to help prices appreciate almost magically.
4. Keep Sets In Mint Condition
Do not play with your Lego sets that you intend to sell. Keep it new- unopened. That’s how you’ll have a portfolio gaining value.
You want to sell these years later – still brand new. If your boxes have creases or any damages, you lose your potential gains for that.
If you must play, buy two sets. Stock one safely in a storage box and play with the other as you wait for price spikes.
Rethink Your Market Timing
Once you hold a set, hold on a little longer and wait for buyers to exhaust whatever remains on the shelves. Subsequently, keep watching as the price climbs on Amazon or eBay.
Say you picked one at retailing at $99.99 at a discount, paying $75. If on Amazon it’s going for $400, you have a solid gain. You can continue to hold as long as you want.
Out strategy is to sell and reinvest in more Lego sets. Rinse and repeat.
You Don’t Control the Markets
As an investor, you have no control of market sentiments, but constant lookups can benefit you immensely. For instance, Disney Cinderella Castle hit the markets retailing for $350.
As an inspiration for a big company and brand – Disney‘s populace shot up through the roof.
The gem is every Disney fan around wants to go for the Cinderella Castle, and prices should hit past $1000 within months – well not quite exactly at least in 2021. Most are waiting if this set will ever retire.
Unfortunately, only Lego & Disney know when it may retire from production.
Your key focus is to buy sets in ideal situations when you can undoubtedly predict future happenings from the present.
It means acting on insider information. Scan the markets and get insider tips all the Lego groups and sites, but be aware that Lego is pretty tight-lipped when it comes to releasing information, so make sure you separate fact from most online advice speculation.
How Do I Get Started In Investing in Lego Sets
Getting a start calls for your passion of these timeless pieces. If you love them dearly or have some collections from your childhood, you can start with them.
The caveat, however, applies as in any other stock portfolio or deals for investment:
- Invest wisely to minimizing your risks and make lots of money.
- Seek out information before commitments. You can win best if you fall upon insider gems regarding a set.
You can solidify your skills and knowledge – commit to just getting started with 1 set that you are going to purchase for yourself. Grab an extra copy or 2 and store it away.
Set aside a portion to invest in them each month and do your homework and research some sets to target. Wait for the sales to hit and get going on building your Lego assets.
Lego Reselling Tips To Maximize Your Return On Investment
No investment ever has a 100% guarantee for returns. As such, if you chose to invest in Legos, it’s a personal decision. Yet take it with adequate information on the risks therein.
To maximize your returns, buy at lower than retail and hold looking for an opportunity to resell in the secondary markets for a good return.
Also, if you can tap into the power of online communities, there lies the core to winning great market opportunities. Keep your connections with fans and fellow investors alive.
Get most current information updates on the flow of brands, their uniqueness, and prices per unit.
Helpful Tips For Reselling
Ask Yourself Why You Love Bricks
Sorry if you are in it for the money only. You may be very disappointed. Passion has a way with business. Doing what runs through your veins like blood is often an absolute tinker.
If you love Legos from your heart, go for it, wisely though. Buy cheapest and put away, actually forget about it.
How Long Do You Want To Be At It?
You may not have a definite timeline. Imagine holding sets for a decade or two?
With Legos, the longer, the better.
Know What Is In It For You
Mainly, it’s spotting when the deal is sweetest for you. Bear in mind that opportunities to sell off and profit come and disappear.
Sniff out the best chance and get away with your earnings.
Keep Clean Records & Inventory Condition
If you target to resell, do not tamper with the packaging. Ideally, set a limit to how much you’d be willing to purchase per year and grow your holding over the years before selling out.
Sniff Out Your Target Audiences
Some genres like Star Wars & Harry Potter will be around for a long. Other models for lots may fade away over years.
Make efforts to imagine what the audience generally feels with time with the stocks of Legos under your belt.
Final Thoughts
Legos are a good investment if you buy at affordable prices to own amazing collections.
Essentially, it’s a general rule: buy cheap and sell expensively. Play around with time-lapse and the increase in demand for sets whose production ceases over the years.
The better you know about the different sets, the greater it helps you to make huge returns out of the sets. And no one is locked out.
Stick around here and sharpen your analytical skills as an investor. Also, there’s no limit or defined timelines for pouncing on opportunities- either buys or sells.
Doing it right qualifies you to hit returns rivaling those of the greatest assets like gold.
Related Questions
Does Lego lose value?
It is very rare to see any particular set lose its value. Some sets may not appreciate in value as quickly or more than some other sets.
Why are Legos so expensive?
Legos are like any other commodity. It comes down to supply and demand. Sometimes the demand outweighs the supply and the prices go up which is the case with Legos.
