Investing in Lego: Outpacing the market, one brick at a time

Like many other children, mine also found the desired Lego set under the Christmas tree. My son received set 40601, "Majisto's Magical Workshop," which, though small, made him very happy. In a few or several years, when he decides it's time to downsize the collection, he might be pleased once again. This is because it is one of those Danish brand toys that—if maintained well—can increase in value over time.

Between 1987 and 2015, unopened Lego sets provided an average annual return of 11 percent, allowing investors to outpace inflation by 8 percentage points. This conclusion comes from Wiktoria Dobrynska and Julia Kiszilowa's findings in 2022 in the scientific journal Research In International Business and Finance. The authors analyzed sales prices for over 2,300 sets produced in previous decades from 2015 to the present.

Similar data can be found in Falco Ziehl's book on investing in Lego between 1961 and 2020. The creators of the Brickfact app, intended for collectors of Danish bricks, claim that from 2011 to 2023, this market's returns averaged 15.6 percent annually. However, this period includes a phase of heightened inflation, so real returns on Lego investments were likely similar to those indicated by other studies.

In the long run, a children's toy allows one to earn more than other alternative assets like art or wine, and more than gold, bonds, and a large portion of stocks. For example, over the last 40 years, the American index of S&P 500 stocks gained slightly over 8 percent annually (nominally), and gold only 2 percent. Furthermore, returns from Lego have, thus far, been more stable. In the case of used bricks, it is, of course, challenging to expect similar results. But even they can appreciate in value.

How did Danish toys come to be seen as a capital investment? The key is the sentiment adults hold for them, having played with them as children. Many are willing to pay a significant amount to relive the past, especially if they find a complete set in its original box, even if it was used. In fact, empty boxes from the 1980s and 90s can cost more than the entire original set.

It's only a step from concluding that at least some of the sets on sale today could increase in value in the future, especially if they remain in pristine condition. Some collectors who bought valuable sets for themselves have also started taking a copy for later resale. Following them were typical investors, who are not themselves adult fans of Lego (known as AFOL), but see an opportunity for profit in the bricks.

The manufacturer from Billund, Denmark, does not particularly try to limit the secondary Lego market, although it sometimes increases the supply of a set when it notices it is popular among adults, or decides to introduce another, very similar set to the market.

This should theoretically discourage investors ready to buy a large number of copies of one set to sell them after a few years. One notable example is the Lego Ideas 21309 "NASA Apollo Saturn V" model, which was on sale until December 2019. Just a few months later, Lego began offering an almost identical rocket model, differing by one brick and set number (92176). On the other hand, in 2013, Lego produced 5,000 gold-painted minifigures, fully aware they would become trading objects. Today, their prices reach about $5,700 CAD.

Which Lego sets are suitable for investing? Several factors determine their future prices. One is, of course, limited supply. Another is the theme. Historically, high returns have been ensured by sets from the Star Wars universe. To this day, the 2007 model 10179 "Millennium Falcon" reaches prices several times higher than the larger 2017 reissue (75192).

Old sets with medieval themes have shown significant price increases, as do relatively new bricks from the Lego Ideas series, aimed at adults, with short runs, and often reference past sets, playing on emotions. Sometimes, the value of a set is determined by one minifigure, as in the case of Hulk, a character from Marvel comics. In every case, the timing of the purchase is also crucial: sets are often discounted shortly before the end of their series.

The studies by Dobrynska and Kiszilowa suggest that the largest (percentage-wise) price increases were achieved by small sets—possibly because they were relatively cheap even upon resale, making them accessible to many fans—and very large ones. According to them, among the fastest-appreciating sets were those from the girls' Lego Friends series, which debuted in 2012. However, this could be due to the limited production of the first sets, as the Billund manufacturer was not yet convinced they would be popular.

Several of the above features, which increase the likelihood of price increases in the future, highlight the 40601 set that inspired me to write this article. It is a slightly modified reissue of a medieval-themed toy from 1993. It entered the market in 2023, but Lego did not offer it separately, only as a gift with larger purchases. The supply of the set was small enough that today's prices are already twice as high as the catalog price (although the set was meant as a gift, it had a catalog price for purchase and return calculations). An even larger price increase was noted for the 2022 gift set 40567 "Forest Hideout"—a new edition of the author's childhood favorite toy.

However, it's important to remember that investing in Lego bricks has certain limitations and is not risk-free. This market is shallow, meaning large amounts cannot be invested in it, and at the same time—to achieve good results—a lot of time must be spent building a "portfolio." The brick market is also not very liquid—although more so than, for instance, the art market. This complicates quickly pulling out from an investment. Meanwhile, the manufacturer may introduce a set that reduces interest in similar ones from the past.

Finally, two caveats. I do not encourage readers to persuade their children to refrain from playing with their dream sets just because adults see them as a good investment. It also seems ethically questionable when adults, for speculative purposes, scoop up a large portion of the stock of a popular model from under children's noses. But perhaps the status that Danish bricks have achieved creates a good opportunity to teach children that it's beneficial to take care of their toys?

Grzegorz Siemionczyk