Photo: https://unsplash.com/@danielkcheung

By Hanniz Lam

My first memory of LEGO was as a kid digging out toys from the toy basket and discovering LEGO men. What are these interesting characters?

LEGO didn’t come too cheaply at the time. I remember having an ambulance with a doctor, a helicopter, maybe 5 LEGO people and the rest were just bricks and windows to be put together on green “grass”.

I used to love going to Parkson Grand and looking at all the LEGO boxes. Castles were a favourite of mine!

A favourite question posed by people who find themselves thinking about the future is “What should I invest in if I had an extra RM50,000?” Well, they’re usually not specific about the number but I put it in for context. Usually Malaysians will ask “Eh, how to start investing ah?”

Well, if that’s the question you’ve had in mind or your friends have been bugging you about, we’ve got two things for you today.

One, you can start investing in LEGO sets. Not all LEGO sets though!

A new study from the Higher School of Economics in Russia suggests that LEGO offer more return on investment than “bonds, gold, and many collectible items, such as stamps or wines, yield.”

How can LEGO sets make for such smarts investments, you ask? Well, according to the economists, several variables come into play. First, LEGO sets often get produced in limited quantities. Especially collectible LEGO sets that tie into pop cultural events. Second, the number of them available to purchase from a secondary seller remains low.

The study shares, “many owners don’t see value in them (and lose or toss parts).” (The horror!) Alternatively, others do value them… And thus don’t want to part with them.

According to a release from the Higher School of Economics:

Prices of small and very big sets grow faster than prices of medium-sized ones, probably because small sets often contain unique parts or figures, while big ones are produced in small quantities and are more attractive to adults. Prices of thematic sets dedicated to famous buildings, popular movies, or seasonal holidays tend to experience the highest growth on the secondary market (the most expensive ones include Millennium Falcon, Cafe on the Corner, Taj Mahal, Death Star II, and Imperial Star Destroyer). Another attractive category includes sets that were issued in limited editions or distributed at promotional events: rarity increases their value from the collectors’ perspective.

LEGO

The study does caution, however, that returns on LEGO sets do vary quite intensely (returns ranging from -50% to +600% annually). Additionally, investment in LEGO becomes worthwhile “only in the long term (i.e., over three years) and incurs higher transaction costs (e.g., delivery and storage) than investment in financial securities.”

MyMoneyInsights managed to get our hands on three local LEGO investors and grilled them with some questions.

MMI: What kind of LEGO collections do you have and how long have you been collecting?

Wan Arief Imran (WAI): I’ve been collecting LEGO since 2017 & have been focusing on LEGO Star Wars primarily as well as LEGO Friends & LEGO Disney for my daughter.

Marcus De Silva (MDS): I generally collect Modulars, big monuments (from what is now known as Creator Expert series, and NOT from Architecture series), LOTR. I also have a bit of Technic, Star Wars, City, trains, and various minifigures in the mix. I tend to lean more towards the theme of city-building.

Z Hazwan (ZH): I started building City and Technic since the 1990s and started investing in LEGO since 2010.

MMI: What got you started in investing in LEGO in the first place?

WAI: Completing a set gives your the kind of satisfaction you get when you solve problems. Just like assembling IKEA furniture. The only difference is that I get to do it with my daughter.

MDS:  I start out collecting and building as a hobby for myself. The “investing” came as a side effect of wanting to acquire parts and sets cheaper and quicker – I would buy in bulk and sell the extras. Parts gave me a high margin due to a simple supply vs demand issue (you couldn’t just buy the parts you wanted easily in Malaysia), and sets were just extras that happened to appreciate as I held onto them for a while.

ZH: I discovered that I could make money from LEGO instead of just spending money for recreation or hobby

MMI: What was your first collection that you invested in?

WAI: My first LEGO sets were set 60144 Race Plane & 60101 Airport Cargo Plane before I shifted my focus into LEGO Star Wars.

MDS: Hard to pin that down, though I’d say various minifigures from the Collectible Minifigure Series. I would identify supply/demand trends (as a natural byproduct of me just being interested in them myself), buy them in a large quantity on speculation (they would normally already yield a nominal profit if sold on the spot, due to the limited availability of sellers locally). Many of the more profitable minifigures have margins of multiple times the cost = up to 5x the cost.

ZH: LEGO Cities and Technic

MMI: Do you only collect LEGO or do you build also?

WAI: I currently have built half of my collections. The rest are still in their boxes in mint condition until I get to find more space to build & display them.

MDS: I am primarily a builder – the investing came as a means for me to acquire all the parts and sets I wanted.

ZH: When I started investing LEGO, I stopped building

MMI: Do you have only rare LEGO or both “classic” and rare LEGO bricks?

WAI: Classic LEGO sets can be very expensive to find so I buy the kind of sets that I think will only increase in value with time.

MDS: I have included a lot of rare parts and a few rare sets in my collection – parts are meant for own use and extras for sale, but rare sets are mainly for myself. I would sell them when the price is right, though.

ZH: I have both

MMI: For newbies who are interested in LEGO investments, what are your top 3 tips?

WAI: Lego has so many themes so focus on one theme that you’re really interested in.

Join groups & forums of Adult Fans of LEGOs (AFOLs) worldwide to gain insights.

LEGOs can be expensive so register for a membership so that you can collect points & get discounts.

MDS: As with all investments, invest only what you are willing to lose. A good way to do that with LEGO is buy the sets/parts you wouldn’t mind keeping/using for yourself, in a quantity that you can handle.

Find a niche in your locality that people are not doing – usually something “harder” to manage, like large quantities of rare minifigures (each minifigure being relatively inexpensive to a big set, but you work by volume). This also has the benefit of creating a large customer base because you’re selling smaller quantities to a larger number of people.

Reinvest all your sales.

ZH: Identify your market. Understand how LEGO sets have been valued. Understand  the requirements to resell.

MMI: Where do you sell them?

ZH: eBay, lelong.com.my

MDS: Having established a reputation as a guy who has “all the rare minifigures”, people come to me via Facebook groups. I participate there on my own interest but it happens to also be a good marketing tool. Primarily, I sell my parts on Bricklink, where you don’t need to do any form of marketing – it’s a high-traffic site for people actively looking to buy lego parts or minifigures.

WAI: I have so far sold only 1 of my sets. It was set 75257 Millennium Falcon with little to no profits. But I have zero regrets so far as I already have the more exclusive set 75192 Ultimate Collector Series Millennium Falcon. It was the largest mass-produced LEGO set when it was released & currently still is the largest LEGO Star Wars set containing 7541 lego pieces.

MMI: How many sets have you sold and how much have profit have you made so far?

MDS: This is more of a hobby to me, and I tend to reinvest everything I sell into more parts. I have been doing it as a hobby for a little over 5 years, and using calculated estimates, I should have over RM200k worth of Lego parts and minifigures in my off-residence store room, a large portion of which is meant for my own collection, but I might just turn most of it into cash when time permits.

ZH: I’ve sold more than 10 sets

MMI: Any regrets? (Eg sold a collection too cheap etc)

MDS: Any LEGO collector would have regrets of “I should have started earlier” or “I should have bought more”. I don’t believe in regrets, I believe in taking lessons from what might have been a regret.

That being said, perhaps I shouldn’t have bought the original Taj Mahal on auction, since LEGO did a re-release on an almost identical set recently. If I could have started earlier, I would have bought all the Zombie minifigures (from Collectible Minifigure Series 1 – retailed at 2USD and on last check about 5 years ago, worth about RM160 each), and all the Cafe Corners (modular building) I could handle – those can be sold for a huge profit, very easily, even if you sell it at a relatively low price.

MMI: Do you have a dedicate a space to store your sets/figures?

WAI: I don’t display the sets that I play daily with my daughter but I made a coffee table displaying some of the sets involving the planet Tatooine including the UCS Millennium Falcon Set.

I have a couple more projects I have planned but currently put on hold until our family move into our new house with more room for display.

MDS: They are currently off-site, but to give you a rough idea, 80-90% of what you see in the box shelves are LEGO, unpacked out of boxes (therefore, filled to the brim with LEGO parts or minifigures). So, that’s almost everything on the left and right walls pictured, plus about the same quantity in shoe boxes stored in the wardrobe (barely pictured) on the left. This is a very recent photo which was taken by the landlord when I asked to inspect for any surprise fires, floods, or unwanted incidents.

MMI: Which is your favourite collection that you cannot part with?

WAI: Currently, all of them (until I run out of space to display them all)!

MDS: All my large architectural sets. I particularly love the Sydney Opera House and Tower Bridge.

ZH: My City and Technic collections!

MMI: What are the common mistakes LEGO investors make?

WAI: Like any other investments, many don’t do thorough research hoping that what they buy today will drive up in value. It doesn’t happen to all LEGO sets & you have to really take care of them. Some collectors go as far as having them insured.

ZH: Build them, destroy the box!

MDS: Following a trend too late – prices could decrease (price correction; or The Lego Group might re-release a similar set which they tend to do for certain sets which are “too popular”), and assuming all sets/minifigures will appreciate significantly very quickly, and holding a set for too long (if the rate of appreciation is tapering off, it’s worth selling and reinvesting in something that has a steeper curve).

So there you have it! There are a lot of Lego sets out there, and it takes a true fan to analyze the market and make a bet on a set that might be worth a lot more someday.

“But Hanniz, you promised us two things today!” I hear our eagle-eyed, sharp-minded readers protesting in their heads.

Here’s the second thing I promised you. If you’ve been planning to start investing and are unsure about what Bonds, Stocks, ETFs, etc are and where to start, My Money Insights has created a free guide for you. CLICK HERE to download your Investing 101 guide!

Happy New Year!