LEGO as Investment

Yellowcastle

^ and ^^ FYI - New text goes after the block formatting... :o)

Pacific493

I blame it on the Ipad I wrote that message on.

dougts

if you are using cash-basis accounting (which is highly likely), then you cannot deduct inventory from your income per IRS rules, so "loading up at the end of the year" won't reduce your tax bill at all. I believe more sophisticated accounting methods might allow you to deduct some of your current inventory, but I doubt most people here are doing anything that complicated

** I am not an accountant or tax attorney, and don't warrant this information to be anything other than my own personal opinion **

Si_UKNZ

... OK back to the original thread! After much deliberation and in fact 2 new purchases venturing into the uncharted waters of starwars lego, I've now got 2 boxes ready (or rather, I have 2 lists ready, and my next job is to venture into my storage areas and hunt them down and seperate them out)...

BOX OF 'PLAY SETS' FOR HIM TO OPEN WHEN HE'S TEN
(these are all sets which I dont have an opened copy of, so theyre definitely for _him_! Ive chosen them for their play value, and reckon they might all be of interest to a ten year old, in different ways)
- City transport 8404 .. £60
- City Police station £50
- Creator Hillside House .. £45
- Creator Sonic Boom .. £35
- Superheroes batcave .. £50
- Trains Maersk .. £90
- Trains Red Passenger train £70
- Harry Potter Diagon Alley .. £100
- Harry Potter Hogwarts Castle #4 .. £70
- Harry Potter Hogwarts Extension .. £35
- Pirates Whitecap Bay £45
- Pirates Imperial Flagship .. £145
- Star Wars Millenium Falcon .. £90
- Technics Excavator .. £100
- Gear Brick Calendar .. £10
====TOTAL = £1000 ====

BOX OF INVESTMENT SETS FOR INVESTMENT ONLY, TO SELL IN 2020
(to sell only, mostly duplicates of opened sets)
- Tower Bridge .. £130
- EN .. £70
- Modular Grand Emporium .. £110
- Modular Fire Brigade .. £100
- Architecture Farnsworth house .. £35
- Architecture Falling Water .. £65
- Kingdoms Kings Castle .. £65
- Kingdoms MMV .. £70
- Kingdoms MVR .. £50
- Star Wars Imperial Shuttle .. £165
- VW Camper .. £80
- WV Toy Shop .. £30
- City of Atlantis £25
====TOTAL = £1000 ====

rasmustali

I have currently some money to spend, around 1000E and I have decided to put it in legos (mainly star wars, maybe some super heroes) to sell them one day or if their price drops heavily then keep them.
It seems the cheapest place to buy for me is from european sellers from bricklink as the prices in Estonia are same or higher than in finnland.
Could anyone recommend any other places to buy from europe or is bricklink good enough?
Thanks.

Also any recomendations on witch sets to buy are welcome.

Si_UKNZ

I'm not a star wars collector, but I'd say
- death star for sure
- imperial shuttle for sure

And these I dont know so much about, but id say
- new MF
- new X-wing
- new imperial fighter thing
- republic freighter if you can get it
- forthcoming jabbas palace
- battle of endor if you can get it
That should probably get you close to €1000 :)

rasmustali

Thanks for the advice,
I was also thinking imperial shuttle, MF for sure and maybe even 2 death stars (1 to open and build my self)
Endor and also X-wing seem attractive

Also Anakin's & Sebulba's Podracers seem quite interesting.

Before I start buying it would be nice to get some info about bricklink and how safe it is to buy from there.

rasmustali

what do you guys think about - Republic Dropship with AT-OT Walker
does it seem to be something that would gain value over time?

gmpirate

@LegoFanTexas Might be just a temporary thing with the FB in your area. "Every" Lego store in my area has them fully stocked all the time.

@LegobrandonCP Gotta love big brother watching out for us ;)

LegoFanTexas

@gmpirate - fair enough... the store can only deal with what they have, and they sell out of FB as fast as they get them in. They have been out of stock the past week or so, and what they got in, is gone already...

So someone else here is doing what I'm doing... :)

I've got 18 of them so far, with the goal of ending up with 40 of them by the time it retires. Even if it only does half as well as GG, it will be just fine... Better place for $6K than the stock market... :)

gmpirate

I'm just trying to go at slower pace right now. MMV, FB, DA, other HP, Tanks maybe, Pearls, Annes . . .

With all the sales and deals that keep popping up I'd rather be in a better position to take advantage here and there. Last year I stocked up big time on DS's, IF's and even PotC Ships (knowing how in past years they have run out of hot items during the holidays) and then they had the big sales and were overflowing with stock on the ships.

I normally just buy licensed big sets and exclusives as they are normally the best investments and don't want to waste my time on lower return items but I just went crazy with all the Target and Walmart stuff -- just got sucked into all the hype hear. And its not so much the funds as much as it all the space they take up!!!

LegoFanTexas

I normally just buy licensed big sets and exclusives as they are normally the best investments and don't want to waste my time on lower return items but I just went crazy with all the Target and Walmart stuff -- just got sucked into all the hype hear. And its not so much the funds as much as it all the space they take up!!!

I did the same, buying WAY too many sets at Walmart that were on 50% clearance for a REASON! :)

Oh well...

I am actually renting storage for them, they far exceeded the space in my house...

Will I come out ahead in the end? Maybe... Will I do as much next year? No way...

The cheap stuff is not worth the space and time unless you do this for a living, and I don't... (yea, believe it or not, this is a side hobby, all 2,000+ sets worth!)

Sheesh...

littletoki

Good thing that @gmpirate and @Legofantexas don't live closeby.

Especially because I was cursing the hell out of the person who bought ALL of the Target LEGO clearance a few weeks ago at one store. And then had the nerve to ask the store to hold it for him/her for the rest of the day.

A whole cart piled high with 50% off boxes waiting at the customer service that I wasn't allowed to buy. That was painful.

gmpirate

I have been putting off the idea of getting storage, thinking its ridiculas, but I'm starting to think it would actually make good sense. Maybe if I didn't already have a Pod in the driveway :P
Going to go check out storage options today. At least I can loose the Pod in exchange, can't discount the wife factor here either ;)

@littletoki wow, can't believe they would hold the clearance stuff -- especially given the fact that I had a Target manager "limit" me!

rocao

This discussion was created from comments split from: LEGO store return policy.

burnside

To the OP, I'd say you're half right with your plan. I would go ahead and buy $1000 worth of soon to be discontinued items. Don't buy them all right now, buy them in this order:

1) You find a good deal
2) They are about to be discontinued

Do not sit on them for 10 years! Sell and reinvest! I'd say you're most likely going to hit a steep profit point at around 3-5 years. This means that you're going to see the highest rate of profit during the 3-5 years after the set is discontinued. Sure, the value could go up even more after 10 years, but not at the same rate of the first 3-5 years. Sell those sets after 3-5 years, repeat steps 1 and 2 with your earnings, and then sit on them again.

I'd like to also add to not limit yourself to $1,000 over the next couple years. If you've spent your $1,000 in a year and in two years you see a deal on a soon to be discontinued item, then buy it! This will save you on regret 5 years down the road.

----------

To those who say to invest in something else, I have to disagree for the time being. I've done stocks, cds, real estate, etc. I've made the most in real estate, but as everyone knows, those days are gone. The goal today is no risk. You put your money in gold pretty much until we see things change. A CD today will net you a 1.5% return. LOL!!! You go put that money in Legos and I can assure you will see a better return.

Remember too, try to sell locally at your price point before going to ebay. You just need patience, but it's better than losing 12% of your sale to ebay/paypal fees. By the way, you can always list on Amazon and they'll take roughly 7%, plus it can just sit as a listing without you paying any insertion fees.

Have fun. Awesome topic! BTW, to all the experts out there, which is a better ROI, MMV or HP DA?

Coolsplash

@Si, are these the only sets you got as investment and to sell later on? Nice list by the way :)

rasmustali

7938 for 57E, worth it?

doriansdad

@burnside I would say MMV and HP DA will do equally as well. Both are easily in the best sets TLG has ever produced category and both have been available to buy at a discount multiple times, with more to come.

Si_UKNZ

^ DA will be rarer IMO due to the outlay and shorter availability.

^^ Hell yeah, where?

^^^ Yes, I do a lot of short term investment as well.

burnside

Yeah, I'm thinking DA too. I don't like the fact that Amazon is selling MMVs like crazy. Too many are getting locked away.

Rainstorm26

DA back in stock and shipping at [email protected] USA.

Kangojack

I’ve dabbled in Stocks and Shares, and to be honest I never seem to get the return on investment that I expected.

This brings me onto the BIG question.

Do you think that buying and storing Lego sets MISB to resell in the future (e.g. over a 5 year cycle) will outperform the stock market?

I believe the risk in buying Lego for resale, is far lower than risking your hard earned cash on stocks and shares, plus it should provide you with a good tax free return on investment.

LegoFanTexas

Lego does have the benefit of being a physical item, i.e. it's value should not go to zero, unlike stocks and bonds can (AMR and GM I'm looking at YOU!).

On the other hand, for whatever unfairness is built into the stock market, it at least is a playing field that is well watched and researched, and you can get in and out with the click of a mouse. A warehouse full of Lego is hard to liquidate quickly for "market value".

Plus, the supply of Lego is completely and totally controlled by a private company that can do whatever it wants. You're putting a lot of trust into that company's hands if you go all in...

Coolsplash

Real Estate investment still works, well in my region that is :P too many people I meet have made big money investing in Real Estate rather then stocks and shares. Even some of the big shots of the stock market are making good money in real estate. But every business has its downfall, which is not region specified. If you invest in a business which is old term and sound, you are going to make a good return whether its a short term or long term investment. I wrote this in respect to investing for 5 years.

Cam_n_Stu

I suspect that for every Poster on here there will be at the very least 3 lurkers on here that are buying LEGO for investment/speculative purposes and I believe some of them will be doing it in a pretty big way (yes, more LFTs and the guy with 70+ ENs ;-).

Given that a few people might have hoarded 3 or 4 of a particular set in the past or perhaps a few more if they found a bargain I believe this recent move to hoard in quantity, especially the higher value sets, will distort the aftermarket for LEGO resulting in prices being held down to retail or near retail for a long time after end of retail sale. I don't doubt there will be some odd sets that rise in value significantly - but I fear they will be the very ones we don't identify as potential investment material and hence do not get hoarded in quantity resulting in scarcity that drives the price up.

The only thing that will offset this move to hoard is a massive influx of new AFOLs that decide they want to collect sets that are no longer available and willing to buy from eBay and BrickLink* as against new AFOLs that are happy to just pick up sets in retail outlets or from the usual online toy retailers.

Although not as well researched as stocks and shares LEGO is probably a more 'perfect' market and you really are gambling on the supply and demand balance as against the global economic situation which seems to drive the stock markets more that company performance these days.

For the record I do have a handful of sets put aside for investment and I intend to add a few more over the next 12 months but I do not own more than 2 of each set and if they turn out not to rise significantly they will still have play value for my child (and I ;-) ) and I won't be unduly concerned.

*re BrickLink - a modernised, easy to use and transparent (think eBay from a buyers perspective) version of BrickLink would probably do more to help the aftermarket values than anything else I can think of!

Si_UKNZ

^ +1 to everything he said especially the bricklink part!

richo

Property (real estate) will generally always be good over the long term if you buy in the right area, that's the general theme in the UK. I remember a few years back I had a beautiful flat with views of a local castle that I sold for a great profit, but I just needed the money for my next house move. I wish I had kept it and rented it out now if I could have, despite the subsequent issues in the property market from 2008 onwards.

Stocks & Shares in my view are an investment that is best done individually and if you genuinely know the company well. Many people advocate Unit trusts, investment trusts, OEICs that will invest in baskets of shares/guilts/bonds etc, but in this instance you are putting your faith in market sentiment and the skill of the fund manager. Anybody who invested in a market tracker back at the beginning of 2008 at the top of the market would still probably be sitting on a paper loss today.

In general, a balanced investment portfolio is best, more heavily weighted towards cash at the moment. If you're young, it's good if you can have a slightly higher risk appetite. Emerging markets etc (do your own research!)

Personally I wouldn't see Lego as an investment for most people here unless they are serious business sellers that have 'stock'. Most investments you can liquidate immediately, and the ones you can't, say fixed term bonds, will have 100% capital protection. As LFT says, Lego as an investment is in the hands of the actual company and their policies on end of lining and re-issuing sets. That's risky in itself.

My strong suspicion is that most people here like to think about their collection having a 'value', but in reality they will never liquidate the vast majority of it as they love the product, and therefore it's a personal collection, not an investment.

Yes there are bound to be more speculators in the short term drawn in by seeing UCF Falcon prices etc, but they will come and go when the next perceived big thing comes along, especially when secondary market prices struggle, something they are likely to do where there is over supply (coming soon for some recent sets?)

As a final point, I can guarantee you that you could speak to 100 financial advisors and not one of them would mention Lego. lol!

rocao

^ this post can effectively end this thread IMO

Si_UKNZ

^ although it has nothing at all to do with the original thread (& title) :o)

rocao

^ in that case this thread could have ended about 10 posts in :P

But I did just notice your update from Feb 2. I think it's okay to have your general guideline of selling the sets in X years, but I would advise that you revisit the market for the sets at least yearly given that you've decided upon an end date of 8 years, which is quite long. A lot can happen in 8 years and you may find that even subtle shifts present a selling opportunity sooner whether it be from good fortune (i.e. spike in renewed interest) or calamity (i.e. impending re-release of a set).

morbiczer

If I would think about long-term LEGO investment, I would consider Harry Potter, as long as it is still available.

Even if there are no new books or anything else coming out, kids will still read Harry Potter 10 or 20 years from now. Parents who read the books in the late ninties-early 2000s when they were originally released out will give them to their own children when they will be of that age, that is 10-15 years from now.

With the Harry Potter line discontinued, there is no danger that LEGO will improve on existing sets (unless they restart the line). With Star Wars you can never know if a bigger or better Death Star will not come out 4-5-6 years from now. And while it is unlikely that, for example, another Tower Bridge will be produced, there will be many similar big sets of architectural landmarks that that particular set will have to compete with.

In a more general sense I agree with one of the previous posters that you can probably maximise your return buy not sitting on your stock for 10 years or more but by selling off everything after 2-3-4 years. The UCS Millenium Falcon sells now for 2-3 times its original value, but somehow I doubt that it will keep appreciating at the same for years to come. Somewhere there is an upper ceiling to the price, regardless of how rare the item is. Who in 10 years will pay 5 or even 10 thousand dollar/euro in 10 years from now for it?

Dougout

^^Yea, 8 years is too long to wait. The aftermarket sales seem to fluctuate over time like the real market does, so I would keep track of those investment sets. Other than that, your list of investment sets looks pretty good Si_Dorking_Surrey_UK. I would stick to sets you feel good about and also enjoy which is what it seems you have done.

richo

^^^^, thanks for that Si!! (I have forgotten the original title actually, what was it?) :-D

Coolsplash

Anyone here remembers the trend 2-3 year back? Were the then Batman 1 sets being 'hoarded' off like sets are bought these days? I keep bringing up Batman 1 as I actually saw a serious after market for that theme by just sitting on 5 sets from that theme (initially bought 2 of each and played with some and left some to sit MISB).

Back to my question. Were the Batman 1 sets back then were offered on clearance and sales like the sets we have been seeing on such amazing sales in physical stores and online stores? Because I really don't think so as I have been on constant watch for this theme ever since just because I wanted to buy more and I never found out about them being offered on sale or clearance and my thinking was the LEGO just retired the sets earlier then the 2 year time and prices went very high.

I have to agree somewhat with @Cam_n_Stu and also with @richo. But I also feel and have seen that demands can be generated. And global economics were a lot better then nowadays. I know I am very new to see this trend to see stores selling stuff for 50% off or more even, and sets still being seen on shelves for longer periods of time.

evileddie1313

I can see Lego prices in general increasing in the future, just from the the increase in oil prices. They are made of Acrylonitrile butadiene styrene (ABS) plastic, which is made from oil. Production of 1 kg of ABS requires the equivalent of about 2 kg of oil (raw material and energy). So any substantial oil price increase from future Middle East conflicts and the like can have a serious effect on Lego prices. The Lego bricks you have will become even more valuable if cruise missiles fly into Iran, so buy them while they are still reasonable. ;-)

mathew

I agree with the above. Just look at the prices for the LOTR sets. Something like the Mines of Moria set would of been $60 a few years ago but are instead now $80 MSRP.

LegoFanTexas

Keep in mind that some of that is just the drop in the value of the dollar.

What? Did no one think that printing a few trillion dollars over the past few years would have no effect on anything? Why does everyone think the price of oil is going up? Because of the Middle East tensions? Don't be silly, supply and demand... Saudi Arabia's oil storage tanks are bursting at the seams full, Iran just cut off most of Europe from oil deliveries and no one cared...

There is tons and tons of oil in the world, and guess what? It is all priced in dollars, so as those dollars become worth less from all the printing, the price goes up.

But you won't see that harped on in the news, because the powers that be don't want anyone to notice. Printing money is a hidden tax, because it reduces the value of the dollars you currently hold, without having to actual take any of them from you.

As for the price of Lego, I have a hard time believing that the price of plastic is the reason for the increase... Plastic is just not that expensive, the marketing, shipping, automated molding machines, labor to run everything, and of course making it all in Denmark, is why it is so expensive... I suspect Lego's quality control costs more than the physical plastic does. (the cost to make sure all those little bricks are produced perfectly, over and over and over again...)

weaponxdeadpool

Investing in Lego is great. Better than investing in real estate, gold, and stocks. Lego supports something larger than itself. Lego promotes the sciences, especially Engineering and Mathematics. Intuitive and cognitive skills, Lego teaches children basic problem solving skills, patience, and ultimately Lego brings the family together.
Comparitively, I feel much better at the end of my day knowing Lego paid for my Applied Mathematics phd, rather than Real Estate, Gold, or Stocks.
Always give back to charity. Do it because you like too, because you feel good about it, not for a tax write off.

evileddie1313

@LegoFanTexas I agree with what you said, but my point was that oil prices are just 'another' reason to inflate Lego prices, not the main one. The real reason that Lego sets go up like they have(and will in the future) is people like you and I(The AFOLs), who probably have hundreds of sets stored somewhere, never to be built by our hands. We are our own worst enemy...LOL

gmpirate

^ Hundreds of sets vs the millions of sets Lego makes? We can hold down the secondary market for the short term only if we flood it, but that's it. IMHO

richo

^ plus you guys who are big sellers can't have volume of every set, just too much out there. seems like you concentrate on the big sets mainly.

evileddie1313

@gmpirate Multiply a couple of hundred sets by thousands(if not tens of thousands or more) of AFOLs and Lego investors/collectors. The Lego forums are just a small sampling of the actual interest in Lego collecting and investing. The die hards are here, but there are so many more that don't care about the forums, they just buy, collect, and/or resell without knowledge or interest in any forum.

I'm active in the XBOX forums and the couple of hundred people who post on there think that they are the only ones playing the video games, meanwhile companies like EA and Activision sell tens of millions of copies to the non-forum player. Take a look at this site for example. Daily, it has thousands of page views and has a yearly total in the millions, yet there are a couple of hundred forum posters. Somebody else must be looking through Brickset. Just my 2 cents...

cloaked7

^ @evileddie1313 so what is a Xbox Mass Effect 3 Collectors Edition going to end up topping out at? Now that they are sold out at retail stores and amazon they are getting at least $120 on eBay. Will that be going up?

Cam_n_Stu

@gmpirate The aftermarket is a market within a market. Tiny compared to the retail sales of LEGO and it is that market that hoarding until EOL will impact,

evileddie1313

@ cloaked7 LOL...I'm a sucker for those Collector's Editions. Some of the Call of Duty Collector's Editions sold for $200+ before release. To be honest, unlike Lego sets, video game Collector's Editions sell for more before release than after release I'm afraid, at least so far. I'm sticking with Lego bricks as my investment choice, but look to pay $150+ for the new Mass Effect box set. Buy it now. ;-)

gmpirate

^ Same with Lego when they first release sets. Get them early and you can makes few bucks.

cloaked7

^^ evileddie1313 I hear ya. I have a XBox ME3 CE set on reserve, and a PS3 version too. And, a regular Xbox ME3. I hope to sell one of the CE sets to pay for the one I keep. I may even sell the Xbox CE version because I played ME1 and ME2 on the Xbox. If so I will keep the CE stuff out of the PS3 version, sell the PS3 game and keep the Xbox regular game. All so complicated, just for a game. Yup, video games generally don't have the profit margin that LEGOS have, and the sell time is completely opposite. Games usually depreciate quickly. LEGO generally appreciate in the longer term.

evileddie1313

@cloaked7 I guess that's why Lego sets appreciate. A twenty year old set can be opened up and mixed with pieces from a new set and still interchange well. Games and systems are outdated after a couple of years. It's nice having that fancy COD Collector's Hardened Edition, but in 10 years you'll have to wipe the dust off an old PS3 or 360 to play it. ;-)

LegoFanTexas

Wayyyyy off topic, but ME3 looks like fun... Loved ME1 and 2, so have this one on pre-order from Game Stop (grr).

Normally I buy all my games on Steam, but EA doesn't like Valve right now, oh well...