LEGO® as an investment
In recent years, investing in LEGO® has become increasingly popular. Typical investors hold LEGO® collector's items in their original packaging (unopened) as a buy-and-hold investment for several years or even decades. Bloomberg has demonstrated that the long-term return for LEGO® is approximately 11% per year and that this return is independent of the stock market return. This provides true value for efficient diversification. LEGO® sets can deliver returns that surpass well-established investment options. During the global financial crisis in February 2009, the S&P 500 Index hit its lowest point at approximately 735 points. If you had invested your money at that time, you would have experienced an average annual return of 11.1% up to the present day (June 2023).It's important to note that this performance excludes storage fees.
On the other hand, in April 2007, the first LEGO® Creator Expert Modular Building, known as the 10182 Café Corner, was introduced with a suggested retail price of €149.99. If you had invested in this set back in 2007, you would have enjoyed an annual return of 20.6% until now. Presently, the LEGO® set is being sold for as much as €3,020. This example is not an isolated incident, as there are other similar cases.
Why it’s worth investing in LEGO®:
High return potential: LEGO® sets provide average annual returns of 10-11%, and can be even higher if the set is purchased at a discounted price on the primary market.
Low correlation to traditional markets: The LEGO® chain index shows a low positive correlation to the S&P 500 index of just 0.13 points and therefore brings stability to a portfolio.
Can also be a short term strategy: Purchasing highly demanded sets close to the end of life at a discounted rate offers the possibility for a short term investment.
Rarity and Exclusivity: LEGO® frequently releases limited-edition sets and collaborations with popular franchises such as Star Wars, Marvel, and Harry Potter. These sets become sought-after collector's items, commanding premium prices in the secondary market. Owning such exclusive LEGO® sets can lead to substantial profits in the future.
Did you know? LEGO® Minifigures are the world’s largest population, with over 4 billion of them around the world!
⚠️What are the risks factors to consider?
Counterfeit: Due to the popularity and exclusivity of premium LEGO® sets, counterfeit sets are not uncommon on the market. As popularity of the category increases, the issue will become even more paramount. It is important to only buy from trustworthy sellers.
Damaged sets: The handling and storage of the LEGO® sets are crucial in maintaining their fundamental value. Whenever purchasing a set on the primary and secondary market the condition of the box needs to be assessed upfront.
The reissue of existing LEGO® sets: The price of a set can decline if LEGO® decides to relaunch the product in form of a newer version
Investment case: As it is with physical assets, fees and taxes apply. The higher the value of the asset, the higher these costs are. Hence when purchasing, the potential income should exceed such costs for the investment to be valid.