LEGO investing can be a lucrative endeavor. Even the Wall Street Journal has highlighted how many LEGO sets rise faster than other commodities or stocks. Some LEGO sets even double in value only a year or two after retiring. However, there are some drawbacks that anyone interested in Lego investing should know about before spending their money.
Shipping & Fees
If you plan to sell Lego sets on the internet, shipping and fees will take a hefty chunk out of your bottom line. Depending on the weight and size of the package and the destination, basic shipping could cost anywhere from $5 to $30 dollars or more. International shipping is even more expensive. Also, the platform you use to sell the set will charge a fee. I use Ebay. They charge around 16% of the buy price. My understanding is that Amazon is about the same, but you have to get an approval to sell on Amazon.
For example, let’s say you buy a set for $10. The price doubles and your buyer pays $20. Ebay will take about $3.20 and then it will cost $5 or more to ship. So, even though the set increased by 100%, your total profit is only about 18% or less.
Storage
Unlike stocks, which can be bought and sold with the click of a button, LEGO sets are tangible objects that take up space. You need somewhere safe to store all those boxes. The more sets you buy, the more storage space you need and that space can fill up very quickly.
Taxes
Just like any source of income, you may need to pay taxes on your profit from selling LEGO. If you sell over a certain amount on Ebay within a year they will send you and the IRS a 1099. You may be able to deduct the amount you spent on a set, but you will need to keep very good records and potentially pay an accountant.
Time
LEGO investing is not a turnkey business. It takes time and work. Serious investors have to treat LEGO investing like a bona fide side hustle. First, you’ll need to spend time researching to figure out which sets are the best to buy. Then once it comes to sell, you’ll need to post the listing. Once it sells you have to package the set and then take it to the post office, or if you sell it locally, you’ll need to meet with the buyer. Even after you sell, you might need to deal with returns. This may not seem like a lot, but it can add up quickly if you plan to sell a large quantity of sets.
Risk
Not every LEGO set skyrockets in value after it retires. You need to know how to pick sets and get them at the right price. Even if you do pick a winner, the LEGO group sometimes rereleases a set causing a precipitous drop in the price of the original set.
Also, LEGO investing has increased in popularity in the last few years, which means there is a small chance a bubble is forming. Do you remember Beanie Babies? A bubble happens when the price of an asset gets heavily inflated. Fueled by investor optimism, people begin to think that the upward trend will continue indefinitely. Then all of a sudden, there’s nobody left willing to pay the inflated price. That’s when the bubble burst and prices rapidly drop. The good news is that LEGO has been around for 90 years, and it has been popular for a very long time. They have expanded their fan base for sets marketed to adults and women, so LEGO fans are often life long LEGO fans. However, if you begin to see more people buying sets for investing than buying sets to actually build them, it may be time to worry.
Bottom Line
LEGO investing can be a lucrative way to make a little extra money and fund your LEGO hobby, but it is definitely not a get rich quick scheme. If you aren’t already a fan of LEGO, then LEGO investing might not be right for you.