Historically, LEGO sets have had a better rate of return and are less risky than the stock market. Some have said LEGO bricks are more valuable than gold. Even the Wall Street Journal has written about the profitability of LEGO investing. With the right set, investors can often earn double their money or more within a span of only a few years. But not all LEGO sets are created equal, and some make much better investments than others. This article is a comprehensive guide on how to choose great sets for investing using three main criteria; supply, demand and value.
Disclaimer
Please note that I am not a financial advisor and the information provided in this article should not be considered financial advice. All forms of investment, including LEGO investing, carry inherent risks. The value of investments can fluctuate, and past performance is not necessarily indicative of future results. It is crucial to carefully assess your risk tolerance and financial situation before engaging in any investment activities.
Supply
The supply of all LEGO sets is finite, determined by production runs and discontinuation decisions made by the company. A lower supply exerts upward pressure on prices due to the basic economic principle of supply and demand. As the availability of certain LEGO sets becomes scarce, collectors and enthusiasts have fewer options to acquire them. The heightened competition among buyers results in higher prices in the secondary market. The LEGO Group is not a publicly traded company, and there is usually no way to know the exact supply of any given set. However, if you look at how the set behaves in the market over its lifespan, you can get a reasonable idea of how many there are in circulation. Here are some questions to ask yourself to help determine supply.
When is the set retiring?
The date the LEGO Group will stop making a set is by far the most important thing to consider when choosing whether or not to purchase a LEGO set for investing. Why would anyone pay a premium for a set when they can still get it at its original price. On the other hand, once a set retires people who want the set have to go to the secondary market to get it. There are some websites that can tell you when a set will retire. These websites are not 100% accurate, but they are pretty close most of the time, especially towards the end of the year. The best time to get a LEGO set is almost always on sale right before it retires.
What was the set’s shelf life?
For every LEGO set there is a time when the LEGO Group began making the set and a time when they stop making the set. It is reasonable to assume that the longer this period of time is, the more sets that LEGO made. The average shelf life is about two years, but this can vary widely based on theme. Also, shelf life can be a double edged sword because it can be indicative of demand. If LEGO decides to discontinue a set early, that might be a sign that not many people are buying it.
Was the set exclusive to a particular retailer?
Every year LEGO makes several sets exclusive to certain retailers. When there are fewer places to buy a set, it often means there will be fewer sets in circulation. Every set can be purchased at LEGO stores or from LEGO.com, but some sets are exclusive to LEGO stores and/or LEGO’s website and that can be a good sign. Other sets may be limited to certain big box retailers like Wal-Mart or Target. Generally, if a set is exclusive to a retailer, it will say so on their website.
Are there purchase limits?
For many sets, especially retail exclusive sets, the retailer will place a limit on how many of the set can be purchased by one account online. Investors need to be mindful of other investors because if a set is very popular for LEGO investing, there may be other investors hoarding huge quantities of the set, jacking up the supply in the aftermarket. Purchase limits make hoarding harder, so the lower the purchase limit, the better.
How many current ebay sellers?
Before buying a set for LEGO investing I always check how many sellers there are on ebay. Fewer sellers means lower supply. As a rule of thumb, I look for sets with less than 100 sellers. Some of the more popular themes, like Star Wars, often have 200 sellers or more which is not necessarily bad, but when you see numbers like that you need to be really sure about long term demand.
What is the MSRP?
Generally, LEGO will produce fewer expensive sets as compared to cheaper sets. MSRP is a double edged sword because the greater the MSRP probably means the lower the supply, but it also means the lower the demand. The more it costs the fewer the number of people who are willing to pay that costs. There are also some practical considerations for this. A ten dollar set could double in value and you’ll still only net $10 on the sale, and every sale usually requires shipping, fees, and related labor which can eat into profits and get time consuming. However, an expensive set is riskier because if it isn’t a winner that’s more money tied up in one set, and the higher price makes it less likely to increase as much on a percentage basis. I tend to choose sets in the mid range, with MSRPS of $50-299, but of course there are exceptions when the set meets a lot of other criteria on this list.
Has the set been frequently or significantly discounted?
Almost every LEGO set will go on sale at some point in its life, and when a set is discounted is often a great time to buy. However, some sets are seemingly always on sale. Also, sometimes sets may be discounted 50% or more. When these discounts are combined with high or no purchase limits, it may be an indicator the set will be over hoarded. It may also mean that demand is less than supply and retailers need to clear out overstock .
Demand
When you purchase a LEGO set for LEGO investing you are assuming that at some point in the future, someone will be willing to pay more for the set than you did. High demand, especially when combined with low supply, drives up prices. There is of course no way to be sure what the demand will be in the future, but you can get a pretty good idea based on certain attributes. Here are some questions to ask yourself to help determine future demand.
What is the set’s theme?
Every LEGO theme has some winners and losers for LEGO investing, but some themes tend to rise more than others. LEGO Icons, LEGO Ideas and Brickheadz have tended to have some of the best performing sets in recent years. Licensed sets like Star Wars and Disney also tend to perform well. Architecture and Speed Champions sets have done well in the past but seem to have to slowed down lately. In contrast, most City, Friends, and Creator 3 in 1 sets do not do as well after retirement. There are always a few stand outs though.
Is the set collectable?
When the LEGO group makes several sets of the same type, like the Star Wars helmets or the Icons modular buildings for instance, there are collectors out there who will want to get every single one of that type. Similarly, sets that are unique and appeal to other fan bases outside LEGO, like the Upside Down from Stranger Things or the Simpsons House tend to be highly sought after long after retirement.
Are there unique pieces or minifigures?
One good unique minifigure can drive up the price of an entire set. The most famous example is Boba Fett from the Cloud City Set, which now goes for around $2,800 by itself. In general, when it comes to minifigures, Star Wars collectors are the most fervent, but other licensed sets can also do well if there’s a rare character or a character that looks really good in minifigure form. Also, there is an entire category of collectors who like to build armies of Star Wars clone troopers. Similarly, if a set has rare or unique printed pieces or uses a lot of a color that is rare that can also create demand.
What is the set going for on eBay and how often is it selling?
To search for recent sales on eBay, click on the advanced search options. Then check the boxes for “Sold Items” and “Completed Items.” The results will show what that item actually sold for most recently and also the dates for the most recent sales.
How are the reviews?
When consumers decide whether they want they set, they look at the reviews. Investors should too.
How does the set display?
Does the set look nice on a shelf? Would it look good displayed in a living room, bedroom or office? LEGO fans love to display their work.
Are there similar sets or are there likely to be similar sets made in the future?
There are certain ships and vehicles from Star Wars that LEGO makes seemingly every year, X-Wings, AT-ATs, etc. Likewise, LEGO has occassionally remade sets like the Taj Mahal and the Ship in the Bottle. People are less willing to pay a premium when they can get almost the same thing on store shelves for cheaper.
Value
It is much easier to sell high when you are able to buy low. Here are some tips to help you get the best price on good sets.
Discounts
The most successful LEGO investors almost never pay full price for a set. Even if a set never goes on sale, you can use cash back sites like Rakuten or Honey and loyalty programs to make your own discounts. Selling “gifts with purchases” from the LEGO store are another good way to make your own discount. When I buy a set for investing I always try to calculate what price I would need to sell at to break even after shipping and fees. Ideally, this is at MSRP or lower. I also calculate what price I would need to sell at to double my money. If it sounds ridiculous, I don’t buy and I wait for a better opportunity. One of the best times to buy sets for LEGO investing is on Black Friday because a ton of sets that are retiring at the end of the year will go on sale to make room for the new stock coming in January.
PPP
Ask yourself what is the price per piece ratio relative to MSRP. So for instance, if a set has an MSRP of $100 and it has 1,000 pieces, the price per piece ratio is .10 cents. If the price per piece ratio on a set is more than .10 cents, there’s a good chance that set will be going on sale. Licensed sets tend to have higher PPP ratios because LEGO has to pay to use the intellectual property. Also MOC builders sometimes like to buy loose bricks in bulk.
Printed pieces
It costs the LEGO Group more to make pieces with printing, so sets with lots of printed pieces tend to be more valuable than sets that rely on sticker sheets.
Bottom Line
Some great sets might be good in some of these areas and bad in others, so these are guidelines to consider as a totality in order to compare sets and ultimately pick winners. Looking at the supply, the demand and the value of a LEGO set as a whole should give you a pretty good idea whether the set will do well as an investment. Good luck.
Further Reading
Every LEGO Investor Must Know These 9 Terms