Monday Musings #2: Is LEGO a good investment?

June 22, 2021 | 16

Welcome to a new fortnightly series – Monday Musings – devoted to random musings on the LEGO hobby, community, my collection and beyond. This is a new content series I’m trialling for the second half of 2021, and will be published every two weeks on Mondays.

Some of these musings will be long-form, or short bursts of whatever strikes my fancy, and be more traditional “blog-type” content. You may have noticed that I’m doing more news and launch posts, which I enjoy and still find ways to inject my opinions, instead of say, just drop a random gallery of images and call it a day, but I like writing, and want to give you guys a peek into how I’m perceiving things in the LEGO World – hence, Monday musings.

I had a really great response to Monday Musings #1 Having to limit the LEGO themes you collect, and would like to thank everyone for sharing their thoughts on the topic!

For Monday Musings #2, I’m going to wade into slightly controversial waters here – on the topic of investing in LEGO!

I occasionally get asked questions on investing in LEGO, and which LEGO sets make good investments. In fact, in my 5-point review system, I have “Keepability” which is a proxy for how well the set will age, and depending on how you interpret it – will it maintain its value in the long-run.

Is LEGO a good investment?

My answer to this is no, not quite.

But whoa, what about those articles in financial publications like CNBC extolling the virtues of LEGO as an investment-class that’s better than gold?

Have you seen the price of Ninjago City or vintage Classic Space sets on the secondary market? Or what about Modular buildings? Have you seen the prices that people are asking for Cafe Corners on Ebay. What about Mr Gold?

I’m not denying that LEGO, being an adult collectible can and will go up in price, especially if sets are part of themes or ranges that appeal to completionists – Modular Buildings, Collectible Minifigures, and Star Wars UCS sets come to mind as “safe” investments”, and you’re almost guaranteed that they’ll tend to appreciate over time.

I just don’t think it’s a particularly great investment class.

What makes an asset a good investment?

There are generally 3 important criteria that need to be fulfilled when evaluating the investment potential of something – will it appreciate in value over time, how liquid it is, and the overall size/health of the market.

Let’s dive into this.

1. Will it appreciate in value over time?

Yes and no. I think LEGO in general, outside of high-priced, niche and completionist-based sets like modulars don’t appreciate in value over time. If you look at the vast library of LEGO sets released, there’s a lot of LEGO that doesn’t go up in price.

Think of all the City, Creator, and even random themes that have fizzled out such as Nexo Knights or Chima that constantly show up on Facebook marketplace, and take forever to sell.

You also have to look at the rate of how LEGO appreciates – you may be sitting on several sets that you’re keeping away in your closet, that may be go up in value by about 10% a year, which sounds like a lot, but for a US$200 set, that’s only about $20 extra in value a year.

2. Liquidity

Here is where I think that LEGO makes a great investment falls flat. You may be tempted to jump on the LEGO investment bandwagon after looking at some of the aftermarket prices of old modulars and UCS sets on eBay, but a key to any asset being a good investment is how easy it is to turn into cash.

LEGO is not as liquid as you may think, and moving sealed BNIB sets on the market can often take weeks, or months of listing before someone bites.

Also, one of the biggest downsides of LEGO as an investment vehicle is just how much of a pain it is to store it – you need plenty of space (preferably indoors, far away from sunlight in a cool, dry environment), and let’s not even get to the cost it takes to ship large sets around the country. When you factor in overseas shipping, the proposition becomes so much more challenging and it often becomes a massive pain to move, sell and ship out sets that it’s barely worth the effort, hassle and cost.

3. The overall size of the market

Which leads on to my next point – the overall size and health of the LEGO secondary market. I spend a lot of time trawling ebay, Facebook marketplace and my local Buy Swap Sell Groups, and there usually isn’t a ton of activity with hard-to-find sets.

Sure, you may be sitting on a Ninjago City that you purchased for AU$500, and want to get $1,500 for it, but the amount of people who can afford and are willing to pay that price is tiny.

Add in geographical constraints because LEGO is hard to ship around the world, and that pool become even tinier.

And if they can afford it at the price, they probably would have already got it, leaving you with a very, very small number of interested buyers.

Contrast this against more traditional “markets” like the stock market, or even Crypto exchanges, where the volume of trades/transactions can number in the millions, or even billions per day.

LEGO sets are worth a lot, but something is ultimately only worth what someone else is willing to pay at that very time, and not everyone is looking to pay exorbitant amounts for rare LEGO sets.

Do I invest in LEGO?

So this might sound super hypocritical, but I do have a few sets I keep sealed. Not because I want to dispose of them for cash one day, but you never know.

I once sold an Architecture Marina Bay Sands to pay for an overseas holiday, and made a really tidy profit, but those instances are quite rare, and I mostly just like the idea of having rare sets in my collection that I have spares of.

If they’re worth thousands one day, sure, I may sell them off, but it’s not a massive deal for me.

I certainly wouldn’t call myself a LEGO investor, but I have a few sealed sets that I have stashed away for a rainy day. Maybe I might crack them open when I’m retired – who know?

Also and I need to stress that this isn’t financial advice, or that you should cheat the tax system, but because LEGO isn’t a widely recognised investment class, I do like the idea of not paying Capital Gains Tax when I dispose of my LEGO assets…

The true value of LEGO

I do think – and this isn’t advice at all, that LEGO really shines because it doesn’t lose value over time. This is drastically different from thinking it will gain value over time, but I think where LEGO is really special is that if you decide to leave the hobby, or focus on some other parts of your life, or are forced to sell your collection for emergency reasons, you will very well make back most, if not all of the money spent over the lifetime of your LEGO hobby.

I am a bit of a Vintage LEGO collector, and there are many people like me who simply enjoy rounding out their vintage collections, and couldn’t care less about having sets in pristine collections, so there’s always quite a healthy market for used LEGO, especially from 10, 20, 30 years ago, so in the off-chance that you decide that LEGO isn’t for you any more, and you were wise with your purchases, it’s quite likely that you’ll be able to recoup your money back.

So yeah – I don’t think LEGO is a good investment. There are better investment assets out there like stocks, bonds, property, ETFs or heck, even Crypto is you enjoy taking on lots of risk.

Assets that you can quickly find buyers for, that you don’t need to pack up and ship across the country, or meet in some dodgy McDonald’s carpark.

Enjoy LEGO, enjoy knowing the “worth” of your collection goes up over time, and enjoy the peace of mind that comes knowing that if you do need to dispose of your LEGO collection, you probably wouldn’t lose a ton of money.

I’d love to know – do you invest in LEGO, or have dabbled in LEGO investing? What has been your experience so far?

Thanks for readinh!

To get the latest LEGO news and LEGO Reviews straight in your inbox, subscribe via email, or you can also follow on Google News, or socials on Facebook, Instagram (@jayong28), Twitter or subscribe to the Jay’s Brick Blog Youtube channel.