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!
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Lego fan on a Lego blog saying Lego is not a good investment. It’s almost like trying to prevent more people to jump on the bandwagon 🙂
I echo a lot of you points here, many of which why I don’t encourage people to invest in plastic. I think your point of finding a buyer is understated. Sure, a set is “worth $500” but at the end of the day, can you actually sell it? Chances are people are much more willing to buy at a lower cost.
I’d also be wary of how much smarter Lego is getting to combat the secondhand market. Over the past five years of just Star Wars sets with the revival, they’ve brought back the UCS Millennium Falcon and the UCS Star Destroyer, two of the most sought after UCS sets. After all these years, Lego has produced so many that all fans can buy what they want with plenty still left on the shelf. Who’s left to buy a UCS Falcon on the secondhand market? Hardly anyone. Extremely risky hoping hoping for another Star Wars revival when it seems like it’s here for the foreseeable future (thanks Disney).
Also the COVID pandemic has taught Lego a lot about production forecasting. They are now offering preorders not only on their online shop but major retailers such as Amazon as well. Lego no doubtedly wants the money that would have gone into the secondhand market in THEIR pocket and will do what it takes to get there.
Yup, add to that, the Tumbler, as we recently saw!
That said, when the UCS MF does eventually retire, I think it will appreciate in price, but perhaps not as much as previously.
I actually agree and disagree with your assessment on lego being an investment. Alot of the points you make are valid. But for investing, it takes a lot of skills to make it work with a lot of profit unless you happen to have a lot of cash and goes in during crisis like the one we had last year or in 08, then you’re certain to make some solid returns.
Just like stocks and shares, if you don’t actively study, dont understand options, spacs, don’t do technical analysis or just read online and follow buys on meme stock, penny stock, or do crypto, nft, you can quite easily lose alot of money or be sitting on something for a long time. Stocks don’t necessarily move upwards with good quarterly financial reports, etc, in fact sometimes they fall and if you calculate the average index or roi, you can say most people over an average of 10 years maybe makes a 7 percent.
I can say lego will get you a 20% a year even with shipping fees selling on a platform. They simply don’t depreciate as much or at all. Yes, depends on the theme, but same for stocks and shares, buying a mature stock wont move you much and in a correction might move you dont, those returns on selling has tax implications as well unless we’re all not talking about having it in a ROTH and sitting on it till you retire. I. The States where every summer target, walmart or even costco put out 40-70% discounts you can easily make a good chunk back not even have the sets sitting for years. Is it work to constantly have to check those deals? For sure. Do you need storage space, for sure. And if you dont want to do that almost idea sets, modular, creative expert set can net you a good profit without having you to run around stores to lego hunt and you always have opportunity to get double vip points plus with gifts that you can resell through lego.com. the christmas sets always sells a lot and sells easily unless you’re say asking for extreme market price. I personally have moved twice in the states and has always been able to find someone on Facebook that can sell you brand new fresh lego sets at 20% off msrp. No idea how these people get their stocks but they can. So really, it takes quite a bit of work to male lego and investment but it’s not anywhere as difficult as trading stocks.
Thanks Nick! Investing is super tricky, and investing in collectible items (LEGO, Pokemon TCG, Funkos etc) is a whole other level.
I agree with clearance sales – those almost guarantee instant profit, especially if you’re after beer money or to supplement this hobby, but it doesn’t scale really well!
I agree and disagree with you Jay. I agree with the fact that it might take a while to sell sets, because of their size, the price or the market.
But I have sold many sets that aren’t that old, for a few times their original price. Some of them were small sets with only a few hundred pieces, all the way up to sets that have thousands of pieces.
But I agree, I’m not an investor, I sold many City Train sets about 20 years ago, and made some very decent cash with them. And I sold some more recent ones as well that made twice, and three times, their original price. Same with some old Technic sets, The 10193 Castle set (even featured in this writing), PotC sets, Creator Cars sets and some Modular Buildings as well.
Some of these I bought double, hoping they would get special and hard to get, so I guess to “invest”, and then later make some money with them.
But I do not have a hard time selling any of my sets, I might just be a friendly seller that doesn’t charge exorbitant prices I guess. I want to make a little profit, a lot of profit sometimes, but I’m not sucking peoples wallets dry to sell sets.
Most of me selling is to thin out the collection because most of them are large sets in even larger boxes and it does take a lot of space to store them all. I also decided that I’m going to try hard to stick to a few “lines” and not expand anymore. Which is very hard with what LEGO has been doing the last years.
In short, there is money in Lego, but you need space to store, time to sell, and a good head on you to weed out the ones that don’t appreciate as well. But I do 100% agree with you that LEGO will not lose its value over the years. I’m kind to my sets and store them very well, but even my used sets will get their original MSRP when sold again.
Keep up the stories Jay ! I like reading these and reacting to them, and reading other peoples replies as well. 😃
I mainly only buy technic sets… there definitely is money to be made within 2 years of buying sets… for instance the mack anthem truck… retail was $260 in 2018 and now you can not find a set under $400
Or set 8043 excavator they are selling for $800 minimum
Plus many other sets… the 90s pirate ships seem to be a good investment if you can find 1 under $200
Also I bought 4 mack anthems at the right time… I had a feelingv hey were going to be a increasing value…
And I bought 2 8043 excavators as soon as I seen the price rising
Very interesting article, and being quite new to LEGO myself, I have to say I absolutely agree with your points. I specially agree with the last part: LEGO is a good way of having a hobby, and in case you get tired or really need to sell your sets, you can get back a good percentage of the money you invested relatively easy. But thinking about making really good business with LEGO is probably too complex. Definetely not for me.
Keep going with this section, it is really nice.
Javi
I think if I had to worry about what my Lego was worth and having to buy and sell it it would lose all attraction as a hobby. I think, too, you have to keep sets in pristine condition to realise the best gains and that presents issues in itself.
I suspect it’s going to be the “lucky breaks” that make money – anyone buying the Osprey as a reseller for example, or those who can get their hands on multiples of the hard to get GWPs. Otherwise it’s just too stressful.
Invest in traditional asset classes and enjoy your Lego ;).
I beg to differ sir! (Image of Doc Holliday hoisting up his finger with a lit cigar. ) if you buy the right themes and at the right times you can make a huge percentage of profit. Take for example the beautiful imperial flagship that i initially bought for 200 usd. I sold it last year for almost a thousand bucks. That’s like a 500% profit! Did I do my math right? Only if I bought more.
I don’t call what I do investing – more of a relaxing pastime. If I was to pay myself my hourly rate I would be losing money.
But I find it enjoyable to sort through a tub of unwanted Lego picked up from FB Marketplace – pulling out the crud sorting out the minifigs/minidolls/dinosaurs and animals. Rebuilding sets. Deciding what buildings can be defriended / desuperheroed and added to my city, also keeping any female minifigs.
If I can complete a set that I don’t want up on to FB marketplace they go, mainly police and fire sets.
If incomplete I bundle up lots of cops, firies, criminals, chima critters, ninjago characters, SW figures and minidolls and up onto FB marketplace they go.
Friends coloured bricks – sell generally within a fortnight of being uploaded into my Bricklink store – the colours are cool and break up the blandness of a cityscape.
Ebay is king for selling new sets – I only buy sets for resale that have been deeply discounted and are what I would want to build myself. I never understood Chima, Nexo Knights and pre Lego Ninjago movie Ninjago sets – so passed on all.
Rushing out to buy the latest hyped set for a quick flip is of no interest to me. The mad rush to get the Boba Fett helmet – madness – especially when Kmart is selling it now for $69, they also heave the probe droid for $89 (which is a fantastic build).
Between 2017 – 2019 made enough to take a family of 6 to the US for 2 week holiday – best holiday ever. Galaxy’s Edge unforgettable, Harry Potter at Universal Studios – mind blowing.
I never thought 60yrs ago when I was building houses & towns with basic bricks & windows, that Lego was an investment, but now I do think some iconic sets have rocketed in price. I was happy to buy Star Wars UCS sets at time of release for a few hundred pounds (UK price) and now I see they sell for Thousands.
But you can never rely on Lego to fund your retirement, its a short lived investment & its a minefield finding the next money spinning kit.
Great piece. Enjoy reading these every Monday. Can’t wait to read next week’s Monday Musings
great summary; some of us have had to liquidate parental “collections” of various so-called investment quality items – looking at you “Collectors Plates” and STAMPS (OMG the story I could tell) that we had trouble giving away, like for free. If they had invested the SAME $$ in you know, ACTUAL investments/stocks…I’d have more LEGO right now. So no, it’s not an investment. But I do tell my fam that at least they should be able to recoup some money when they have to …um, sort out the estate. And I like to think that each of them will want a set or two for themselves or kids and think of me.
Good post, Jay (as always).
A couple of points you missed:
1) Lego provides no INCOME return (similar to gold, and non-dividend paying shares) and unlike eg an investment property) – GROWTH is only one aspect of the overall return of an investment.
2) there’s an opportunity-cost of buying and holding large amounts of expensive Lego sets. That is – what else could you do with that money? Could you invest in something else that would provide you regular income? Or perhaps more growth than Lego?
3) Lego appears to be a good store of value over the long term – however, if you buy new and sell 2nd hand, without boxes or in bulk, you are probably going to lose money! (Unless your collection is full of desirables themes and sets, as you point out).
4) one way to make money out of LEGO would be to buy cheaply on FB marketplace, eBay and Gumtree (as I often do – I rarely buy new sets in store), and flip them for profit, or else buy bulk and sort through and sell once you’ve rebuilt sets (this is time consuming: what else can you do with that time, to make money?).
Keep the Monday Musings coming!