While some people may consider gold, jewelry, art, wine, or antiques good investments in the long-term, a new study challenges that notion and presents a unique and more lucrative alternative: Lego sets.
Economists from the Higher School of Economics in Russia have found that the market prices of retired Lego sets sold on the secondary market grow by at least 11% annually, which is higher than the average returns provided by gold, large stocks, bonds, and alternative investments. For their study, the authors analyzed the prices of 2,322 unopened Lego sets from 1987 to 2015 and information about primary sales and online auction transactions.
The study will be published in the January issue of Research in International Business and Finance.
“We are used to thinking that people buy such items as jewellery, antiques or artworks as an investment,” Victoria Dobrynskaya, an economics and finance professor at HSE and a co-author of the study, said in a university news article. “However, there are other options, such as collectible toys. Tens of thousands of deals are made on the secondary LEGO market. Even taking into account the small prices of most sets, this is a huge market that is not well-known by traditional investors.”
The researchers offer some reasons to explain why people pay big bucks for Legos. A significant one may be the small number of sets produced and the limited number of people who want to sell their Legos after they buy them. In addition, LEGO has been making Legos since the 1960s and has amassed a legion of nostalgic adult fans who value older sets.
Before you start wondering whether you have any Lego sets laying around your house that could be secret treasures, there are some things you should know. First off, prices for Lego sets on the secondary market, which vary greatly and range in returns from between -50% to +600% on an annual basis, typically start to increase two or three years after a set has been retired. This means you have to factor in high costs like delivery and storage into your investment.
Secondly, the prices of small or very big sets will grow faster than medium-sized sets, the researchers found. The sets that see the biggest growth in value on the secondary market are those related to famous buildings, movies, or holidays. As such, it shouldn’t be a surprise that some of the most expensive Lego sets include the Millennium Falcon, the Death Star II, and the Imperial Star Destroyer. Other highly valued Lego sets include limited edition sets and those given out at promotional events.
And finally, the secondary Lego market is not something you can jump into easily if you’re not a fan, Dobrynskaya said. There are a lot of Lego sets out there, and it takes a true fan to analyze the market and make a bet on a set that might be worth a lot more someday.