Iconic and collectible toys have become much more valuable in recent years. If you search through online marketplaces and auction sites, you could probably find all your favorite childhood toys. However, LEGO sets have become one of the most sought-after toys and provide an interesting new investment opportunity. Nostalgic fans and avid collectors seek out the rarest sets for very high prices. So much so that analysis conducted by a Russian research team suggests that LEGO sets yield higher returns than traditional assets. So, if you are considering new investments, here are 5 reasons why investing in LEGO is lucrative.
The Results of the Research
A Russian research team from the Higher School of Economics in Moscow recently published their analysis on the value of LEGOs. Looking for factors that have been driving up their value in recent years, the team compared the current prices of 2,322 sets that were released between 1987 and 2015. However, they only included unopened sets that were in perfect condition.
What they discovered has led some investors to rethink their position on less traditional types of assets. Sets that are 20 to 30 years old have skyrocketed in value. In fact, LEGO investments outperformed large stocks, bonds, gold, and alternative investments, receiving an average of 11% in returns to only 8% from traditional assets. Instead of investing in collectibles such as art, jewelry, antiques, cars, or wine, the study may have uncovered a new market for investors to make significant gains.
7 Reasons Why Investing in LEGO is Lucrative
1. There is a huge demand for rare and collectible toys.
Many investors who have put money into collectibles have seen good returns in recent years. There is a huge market for collectible toys from the 1980s and 1990s. People who grew up with these toys are now in their prime investing years, so there is a resurgence in popularity. International expansion and the popularity of the LEGO movies only fueled the demand.
2. Limited and mint condition items fetch a high price.
One reason investing in LEGO is lucrative right now is that this type of investment is not well-known or utilized by traditional investors. And, the diminishing supply means increasing value to collectors. So, the chances of finding a valuable set are much better if fewer people are looking.
However, you have to know what to invest in if you want to yield high returns. Some LEGO sets generated 700% returns; others had a negative ROI. When choosing which ones to buy, the condition is important. The value drops once the box is opened.
If you look at price guides, you will see that the most valuable sets are worth thousands of dollars. Sets from LEGO City, LEGO Star Wars, and LEGO Harry Potter are consistently at the top of these lists. If you find pieces like the Millenium Falcon, the Death Star II, and the Imperial Star Destroyer, you could get a good price for it at auction.
3. LEGO is celebrating a year of bumper revenues.
Last year brought huge profits to the company. In fact, it was performing so well that it rewarded its employees with an additional three days of holiday time. After the first half of 2021, LEGO reported a net profit of $954 million. That was 140% more than the same period from the previous year.
Rapid expansion in the Chinese market also spurred profits. LEGO opened 40 new stores in China, bringing the total to 291 stores in-country and 737 worldwide. Even if they don’t maintain the same acceleration of profits, LEGO is still likely to be a solid investment for 2022.
4. LEGO is a well-established brand.
Companies that have a long history and good reputation are low-risk investment options. Lego has been around for nearly a century and doesn’t appear to be going anywhere either. Furthermore, they have built a loyal customer base and a cult following around the world.
5. LEGO appeals to all ages.
LEGO offers something for every age group. There are simple sets for beginners and more advanced ones for aspiring architects. With the mass appeal and branded sets, there truly is something for everyone.
People who played with them as kids are helping LEGO gain even more popularity as adults. Not only do people buy them for nostalgia, but also to share them with the next generation.
6. Social trends changing due to the pandemic.
Another reason why investing in LEGO is lucrative is because social trends are changing. Social distancing and health concerns mean more people are spending time at home. However, people need something to do when they are stuck inside for long periods of time.
So, I’m sure you can see why there has been an increased demand during the pandemic. Not only is it one way to reduce your kids’ screentime, but building sets is a fun activity to do with your friends or the entire family.
7. If you have a good design, you could earn royalties.
Besides the obvious ways to capitalize on LEGO, there are other ways to make money. If you think you’ve got a million-dollar idea, you can try your hand at making money with your designs.
In 2008, the company began a collaborative project called LEGO Ideas, and openly invited anyone to submit their ideas for production. If your design is chosen, you will receive 1% of the royalties. So far, winning submissions have included inspiration from Seinfeld, Friends, and Ghostbusters.
Before You Invest in LEGO…
First and foremost, do your research and learn which sets are worth investing in. Not all LEGO sets will bring returns or prove to be a good investment. In fact, choosing the wrong sets could actually cost you negative returns.
Before you make any major financial decisions, you should also evaluate your portfolio and discuss it with your financial advisor. Any investment comes with risks. And, returns on these kinds of investments are not well-studied. Therefore, it’s better to make informed decisions even when a good opportunity comes knocking.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.