Unusual investment: Lego bricks as an investment

The small building blocks have been available in different colors, shapes and sizes for 72 years. Also this year they were under many Christmas trees. But the LEGO sets are no longer just toys.

Harry Potter, the Marvel superheroes or the legendary Star Wars characters like Luke Skywalker and Darth Vader – they are all screen heroes whose films wash billions into the coffers of US media groups. But not only the production companies like Disney and Warner Bros. benefit from the success of their characters. A Danish family business is also doing billions in business with the heroes of the big screen: with small building blocks that everyone can use to build their own film world at home. And there are also the matching figures from Harry Potter or Luke Skywalker – from LEGO.

LEGO is one of the largest toy manufacturers in the world with an annual turnover of 5.9 billion euros. It all started with wooden toys when the Danish master carpenter Ole Kirk Christiansen founded the company in 1932. Since then it has remained in the family: Kjeld Kirk Kristiansen, the founder’s grandson, ran the company until recently. In the meantime, Thomas Kirk Kristiansen has taken the place of his father and sits on the board as a representative of the fourth generation.

The most expensive set currently costs 2500 euros

In 1949 the first bricks were produced that already had certain similarities with the LEGO bricks that are so famous today. The colored plastic cuboids were studded on the top. However, the bottom was completely hollow, which meant that the stones could not be stacked stably on top of each other. To solve the problem, tubes were built into the underside of the stones. This also made it possible for the stones to be stacked on top of one another laterally.

The LEGO bricks as sold today were launched in 1958. Since then, LEGO has steadily expanded its product range, there are countless figures and building instructions. Some of the sets, which were originally intended as toys, are now worth several thousand euros because of the great interest among collectors.

The “Millennium Falcon”, for example, a fictional spaceship from the Star Wars series, costs more than 2000 euros. The spaceship went on sale for 500 euros at the time. Another example is the “Taj Mahal” kit, which with almost 6,000 components is one of the largest. The Indian sight in miniature format currently costs around 2500 euros. When the set was launched in 2008, it was available for 250 euros.

Limited editions as an investment

These price increases make LEGO sets appear attractive as an investment – some collectibles that are traded on the secondary market have an annual return of up to eleven percent. This is what scientists from the University of Economics (HSE) in Moscow found out. They examined the financial returns of alternative investment opportunities – with the surprising result that the LEGO sets sometimes even bring higher returns than conventional forms of investment such as gold, stocks or bonds. Because: “Lego sets are not related to the financial crisis and can be seen as an attractive investment with diversification potential,” says study author Victoria Dobrynskaya.

For their analysis, the researchers examined prices of more than 2000 LEGO sets that were produced between 1987 and 2015. One of the findings was that the secondary market prices, i.e. the prices that were achieved in online auctions, usually begin to rise two or three years after the end of production of a kit.

“There are tens of thousands of deals made in the LEGO secondary market. Even considering the low prices of most sets, it’s a huge market that is not very well known by traditional investors,” said Dobrynskaya. LEGO has numerous adult fans who would rather keep their sets than sell them. And especially the limited editions, which are only produced for certain occasions, are traded dearly, the scientists report: “The prices for sets that were produced 20 to 30 years ago are going through the roof.”

It is better not to play with it

But the playful investment is not entirely risk-free: Often, after some time, products are reproduced with changes, which prevents a shortage. That can make the prices for limited editions plummet quickly. It has already happened, for example with the “Millennium Falcon”. At times it cost over 4500 euros. When LEGO brought out a new edition, the value plummeted to 2000 euros.

By the way: It’s better not to play with these LEGO bricks. Because the LEGO sets can only bring in prices in the five-digit range at auctions if they are still unopened. As a Christmas present, the limited editions are probably only a real joy for collectors.