Making Money from LEGO Bricks…

Making Money from LEGO Bricks…

People are always looking for the next hot investment.  With today's volatile stock market and falling real estate prices, people are looking for someplace safe to invest their money.  I'm here today to make a case for LEGOS.  That's right, you read it correctly...LEGOS.  Hard to believe?  Maybe, but let me show you some interesting tidbits and data that help me substantiate my claim.

In 2000, LEGO was named "Toy of the Century” by Fortune magazine as well as by the British Toy Retailers Association, beating out such other classics as the teddy bear and Mattel's Barbie.  These simple, colorful and durable blocks have been around since 1958 in their current form and are more popular than ever.   The LEGO Group works with other top entertainment franchises, such as Star Wars and Harry Potter, to keep their ideas fresh and popular.   Fifteen 'billion' components are produced every year by the LEGO Group.  They even have a line of LEGO video games that are available on all current video game consoles.  Impressive, to say the least.

I know what you are thinking...How does this information make me money?  Well, first of all, it indicates that LEGO is a solid company that keeps up with the times and puts out a quality product.  Secondly, it shows that people, both young and old have a love affair with these little plastic bricks and will pass this interest to the next generation.   Both these ideas are important in building a strong foundation for the LEGO Group's future and gives an investor a little piece of mind when plunking down hundreds of dollars to buy a new LEGO set for investment purposes.

Before we look at the data that backs up the idea that LEGOs are a solid investment, let us discuss what LEGO investing actually is.  When I 'invest' in LEGOs, I usually buy a new or used set that is MIB(Mint In Box).  MIB means that the LEGO box was never opened or the parts used in any way.  The box is still factory sealed and in good condition and is stored carefully in a smoke-free and clean environment.  Investing in older and rarer sets that have been assembled(box has been opened, obviously) is also an option for investment, but for our discussions here, we are talking about sealed boxes.

When speaking of LEGOs as investment vehicles, I like to associate LEGO sets with stocks.  There are thousands of different LEGO sets, just like stocks.  Both can be bought and sold rather easily.  As with stocks, there are LEGO sets that are top performers when it comes to investment purposes and then there are your dogs, or poor performers.  But unlike stocks, most of the LEGO sets that have been created over the last 50+years have increased from their original MSRPs(Manufacturer's Suggested Retail Price) if they were kept in MIB condition.  That's more than a lot of stock investors can say.  How many times has a new company's stock price tanked soon after launch?  Too many to count,  I'm afraid.

Take a look at the chart below...

IMAGE LEGO SET RETAIL PRICE CURRENT PRICE % INCREASE
10018-1: Darth MaulPieces: 1868 149.99 393.47 162%
10019-1: Rebel Blockade RunnerPieces: 1747 199.99 713.75 257%
9302-1: Community Builders SetPieces: 1670 179.99 73 -59%
3724-1: LEGO DragonPieces: 1530 98.99 464 369%
8466-1: 4X4 Off-RoaderPieces: 1102 119.99 412.5 244%
10001-1: MetrolinerPieces: 782 148.99 275.28 85%
3804-1: Robotics Invention System V2.0Pieces: 717 199.99 224.22 12%
7317-1: Aero Tube HangerPieces: 706 89.99 94.17 5%
6290-1: Red Beard RunnerPieces: 698 99.99 170 70%
4709-1: Hogwarts CastlePieces: 682 89.99 161.98 80%
8538-1: Muaka & Kane-raPieces: 633 69.99 61.4 -12%
3451-1: Sopwith CamelPieces: 574 49.99 133.37 167%
7316-1: Excavation SearcherPieces: 471 49.99 36.96 -26%
6472-1: Gas N' Wash ExpressPieces: 470 49.99 114.09 128%
8539-1: ManasPieces: 457 89.99 149.32 66%
7186-1: Watto's JunkyardPieces: 443 49.99 194.35 289%
6776-1: Ogel Control CenterPieces: 422 49.99 35.12 -30%
6292-1: Enchanted IslandPieces: 419 69.99 143.75 105%
8549-1: TarakavaPieces: 411 49.99 50.74 2%
4708-1: Hogwarts ExpressPieces: 410 49.99 90.4 81%
8465-1: Extreme Off-RoaderPieces: 365 39.99 79 98%
8008-1: StormtrooperPieces: 361 34.99 41.5 19%
8007-1: C-3POPieces: 341 34.99 67.75 94%
4707-1: Hagrid's HutPieces: 299 29.99 44.35 48%
10002-1: Railroad Club CarPieces: 293 37.99 359 845%
6291-1: Armada FlagshipPieces: 280 49.99 104.81 110%
10000-1: Guarded InnPieces: 253 24.99 75.08 200%
8242-1: Slammer TurboPieces: 253 19.99 28.08 40%
7315-1 :Solar ExplorerPieces: 242 34.99 34.77 -1%
7166-1: Imperial ShuttlePieces: 238 34.99 84.96 143%
2300.7 4911.17 113%

 

This is a chart of the 30 largest LEGO sets from the year 2001.  The year 2001 was chosen to show a ten year time frame when comparing the MSRPs to current values, which is a common investment time period.  Next to the LEGO set name and piece count, the set's MSRP and current market value according to www.BrickPicker.com are displayed.  After that, the percentage increase/decrease over a ten year time frame.  www.BrickPicker.com gets its information directly from eBAY auction results and averages out these results to get current new and used values.   eBAY is the most accurate source for used and older LEGO sets in the market today.  On any given day, there are 200,000+ LEGO listings on eBAY, both domestically and internationally.  LEGOs are one of the five most active categories on eBAY, which also includes collectible baseball cards, stamps, coins and Barbie Dolls as other active categories.

 

As you can see from the data, over 80% of the LEGO sets increased in value, some drastically.  Some of the sets even tripled and quadrupled in value over a 10 year time frame, such as set# 10019(Rebel Blockade Runner) and set# 3724(LEGO Dragon).  That's some serious money if you had the foresight to purchase a few of these sets 10 years ago.  To put it in perspective, compare these 30 LEGO sets to the 30 largest US companies that make up the DJIA(Dow Jones Industrial Average), which is the benchmark for stock investing.  Back in October of 2001, the DJIA was at 9075.14 points.  In September of 2011, 10 years later, the DJIA was at 11153.98, for an increase of 22.9%.  During the same time period, the total increase for the 30 largest LEGO sets of 2001 is 123.5%.  That is over FIVE times the gain in value over the DJIA.  Impressive once again.

 

To be honest, it is amazing how these 'toys' increase in value.  The world wide economy has been in a major recession for years, yet there are some sets that show 100-300% increases during that time period.  Www.BrickPicker.com has a feature, called the BRICK INDEX, that will show you the Top 25 LEGO sets/items that have increased in value the most over a 6 month time frame.  The BRICK INDEX also has another option that shows which sets have increased the most over their MSRP.  It is quite common to see 100%+ increases in market value in popular categories like STAR WARS and the TOWN(Modular Homes), even after a couple of years.  One reason for such an increase in value could be the fact that LEGO discontinues sets after a couple of years, thus creating a sort of a 'limited' edition for each set.  That, plus the fact that most of the LEGO sets are opened and built, not put away and saved to sell at a later time for profit, also increases their value.

Investing in LEGOs is not without its drawbacks, though.  As with any sort of collectible, the safe storage of the collectible is very important.  It is no different with storing LEGOs.  Although the actual LEGO brick is pretty much indestructible under normal conditions, the LEGO boxes and instructions need special care.  Due to the fact that maximum value is obtained when a LEGO set has a box and instructions that are in excellent and sealed condition, an organized and safe storage method is required.  A system of shelves in a spare room works well, but it takes up a lot of space and a lot of potential investors might not have the extra space to put aside for thousands of LEGO bricks.  LEGO boxes come in all sizes, but if you have a rather large collection, they start to take up entire rooms, unlike coins or stamps that take up minimal space.  Also, the storage area needs to be dry, smoke-free and out of direct sunlight.  The LEGO boxes also show shelf wear relatively quickly, thus reducing values even more.

Another issue that confronts the LEGO investor is insuring the entire collection. Insurance companies look at you like you have two heads when you tell them you want to insure LEGOs, but with some collectors and investors, they might have tens of thousands of dollars worth of bricks and boxes in their basement.  After speaking with my insurance agent, he stated it was possible to insure a LEGO collection, but a breakdown of the individual sets and their current market values are required.  A site like www.BrickPicker.com can help with a current market value of a person's LEGO collection by using their BRICKFOLIO tool.  The BRICKFOLIO tool of www.Brickpicker.com enables a collector to input their entire collection of LEGO sets and get up to date values for the entire collection.  It can be printed out and then turned over to the insurance company, so the collection can be insured under the investor's home owner policy.

Thus, in conclusion, it is this author's opinion that LEGOs are a worthwhile and fun investment.  Although it is not your typical sort of collectible like coins or stamps, LEGOs appreciate quickly if the proper sets are bought and stored correctly.  A site like www.BrickPicker.com can help show what LEGO sets are hot and increasing in value and which ones should be avoided.  Their BRICK INDEX shows the top value gainers in the past 6 months and from MSRP.  Now in days, online auction sites like eBAY are very useful in buying and selling these collectible LEGO sets.  Also, www.LEGO.com and www.Amazon.com are useful in purchasing new LEGO sets.  All three options are listed on the www.BrickPicker.com's SET GUIDE for comparison.  Personally, I have seen my own collection double in value over the last 3-4 years and that coincided with one of the worst economies of the last century.  LEGO investing is something that has gone under the radar for years now, with only a few smart people tapping into the market.  I'm here to say that everybody can get involved, even to a small degree, and make money from LEGOS...and have FUN doing it.  Keep those bricks clicking...

Edward Mack
AFOL and LEGO Investor...

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Comments (20)

  • xtofcorthay

    So do you mean that we have to buy sets only ?? or one day the MOC will win money ??

    December 26, 2011 at 11:07 am
  • MCNwakeboard

    While I agree with the information stated in this article and the potential appreciation, I want to add just a bit more information from my experience from buying and selling Lego.

    Buying Lego Stock/Inventory: Always buy low- This site tracks the appreciation from regular retail price, so if you can purchase sets on a discount you will be that much further ahead. ToysRus often marks their products above retail price but has promotions more often than other chains like Walmart and Target. (e.g. ToysRus ran a buy one get one 50% off through most of December. This could equate to 25% discount if the item was being sold at retail price and the two sets were the exact same price. Also, take advantage of loyalty/points programs (ToysRus rewards program, RewardsRus, offered ToysRus dollars equal to 10% of amount spent.)

    You can visit websites like Toysnbricks.com or Slickdeals.net to find out about when sales are being offered on Lego sets. Slickdeals will let you set up email or text alerts on search terms, so you will receive an email when there is a new post about Lego, etc.

    Costs of Selling: Ebay charges a commission of 6-10% for items sold and paypal will take another 2.5% for credit card processing fees. Shipping and packaging fees are an important consideration since those costs will need to be passed onto the buyer or eat into your profit margin. You should also carefully package your item when it is sold so that you have a happy buyer. Feedback is an important asset on ebay and will help increase bidding (i.e. sales price) on your item since the buyer will have more confidence that you are a reputable seller.

    Time is also a factor in selling Lego since you will have to sell most sets individually, which includes listing the product, answering questions, packaging, and shipping the product. USPS and UPS will both allow you to print shipping labels from your home which will reduce the amount of time you spend at the UPS store or post office. This will even save you a bit of money on postage costs.

    For US based seller, income taxes is another area that might cause concern. This income could be reported a number of different ways; either as a sole proprietorship on Schedule C, as Hobby Income, or as a Capital Gain on Schedule D, depending on how you run the business. A schedule C would probably be for a reseller who is buying Lego at a discount and turning around and selling those items or offering them for sale immediately, The revenue would be listed on the schedule C and then each of the expenses (Costs of Goods, supplies, shipping, etc) would also be listed to arrive at your net income. (this will be subject to self employment tax, about 14% in addition to income tax) Hobby income (total revenue) is reported on the first page of the 1040 (line 21) and the expenses are listed as an itemized deduction on Schedule A. One advantage of reporting Hobby Income is that it is not subject to the self employment tax. The disadvantage is that expenses must be reported on Schedule A. For those individuals that use the schedule A already, this isn’t really a big deal, but for those that take the standard deduction, they might be losing more from the standard deduction than the benefit they receive from itemizing their deductions with hobby expenses.
    For more information see; http://www.irs.gov/newsroom/article/0,,id=169490,00.html

    If you are buying and holding on to these sets for a while before selling, it should be reported on Schedule D as a capital gain. Selling appreciated Lego would be considered selling collectible and the current tax rate on collectibles capital gains is 28%. Of course you would factor in your cost and the cost of selling the item into your basis, but this could result in a smaller gain than you were expecting.

    You might think that you can ignore tax consequences as the IRS is not likely to come after small Lego sellers, but there was a law enacted and soon after repealed that would require paypal to report sellers who earn as little as $400 on schedules 1099 miscellaneous income to the IRS. While I think $400 is quite low, I wouldn’t be surprised if there were future laws that required Paypal to report their cash payments to the IRS for sellers who meet some criteria.

    Best of luck

    December 30, 2011 at 2:30 pm
  • Ed Mack

    Hi…Nice reply. I agree with your post. The main thing with Lego ‘investment’ is that you must be in it for the long haul to overcome these various fees. Taxes are a fact of life with any making making endeavor, but EBAY does is not required to report sellers that sell less than $20,000 a year or less than 200 transactions. I’m sure a lot sellers on EBAY do not report it as income. That’s illegal as we all know, but it won’t stop the majority of Mom and Pop sellers from making some side money. I’m not here to give people tax advice, just letting them know that there is money to be made collecting Lego sets.

    As for myself, I love Lego bricks and love collecting them. My major issue with Lego investment/collecting is the storage of these sets. They take up a lot of space. Also, they are not cheap as we all know. Thanks for your comment…

    January 4, 2012 at 5:33 pm
  • MCNwakeboard

    ^agreed, that is Ebay’s current reporting requirement on sellers. The potential appreciation is very true for Lego sets. I just get worried when people get starry eyed when they hear about selling Lego sets for twice the cost and think of it as a way to get rich quick. It is a long haul investment and requires some cost and work.

    January 6, 2012 at 7:27 am
  • Ed Mack

    Yes, the amount that some of the Lego sets appreciate is just unbelievable. You would never know the world was in a recession for the last several years. Me personally, I just buy them, store them and enjoy whatever sets and displays I have room for in my office. I’m hoping that one day, the hundreds of sets that I do have will pay for my son’s college tuition, but with any ‘investment,’ they can depreciate as quickly as they appreciated. I have my fingers crossed…

    January 9, 2012 at 3:54 pm
  • LegoPodcaster

    The only thing I would add is to look into selling on Bricklink.com. I used to sell all my Lego sets on Ebay until I found out about Bricklink. They only charge you a 3% fee up to $500.00. It is also much easier to list a set on Bricklink than on Ebay.

    Great article, really enjoyed it!

    March 29, 2012 at 9:30 pm
  • Ed Mack

    Thanks…

    May 18, 2012 at 3:25 pm
  • Maxou594

    Super article plus facile de vente

    June 3, 2012 at 12:44 pm
  • TedZeppelin

    Investing in lego is surprisingly lucrative! I loved this article, and I’m glad you spent the time to write it. I think the most exciting thing about the whole deal is that Lego sets these days look like they’ll be heavily sought after.

    June 12, 2012 at 5:43 pm
  • cody.riggins

    Investing in Lego seems to be pretty sound!

    July 13, 2012 at 3:17 pm
  • kphamilton

    Well written. It seems as though more and more people are starting to hear about how lucrative it can be to invest in LEGO sets and yet the gains keep happening.

    July 20, 2012 at 10:41 am
  • Clutch2

    Great article and great additional posts! I need to add comment to MCNwakeboard that buying low is very important: let’s not forget different countries have different SRPs. US market is far cheaper for buying sets than europe. So this is why i have always double baggage from my business trips in us :)

    July 28, 2012 at 7:41 am
  • Darth Lego

    Investing in Lego is pretty solid for the licensed themes.

    February 5, 2013 at 6:01 pm
  • Scissorino

    Excellent piece! Very well written!

    September 1, 2013 at 10:51 am
  • Inventrious

    I personally think that you guys should buy certain sets, on certain discounts. Right now, the LEGO Legends of Chima Lion Chi Temple is selling on eBay for $95.00-$110.00. Walmart is selling this set for $90.00. The shipping is around $12 though so you need a discount. I’d wait til black Friday for those sales, but I wouldn’t wait for the after Christmas sales unless you want to save the sets for a year or so then sell them. Even LEGO Ninjago on eBay is crazy with the demand. Lloyd ZX is being sold for $40 and it was around 3-4 months ago when LEGO was selling it. It really matters on the sets. First series is always the best. Remember Kai from LEGO Ninjago? He’s being sold for $75.00 on eBay, and $44 on Amazon. eBay is actually selling these Kais. People are really stupid when they buy of eBay. They don’t check other stores. Most people make money of that. The new LEGO Mindstorms EV3 is being sold for $450-$510. Minecraft sets are being sold for $105 for Nether, and Village, $165 for all 3 sets. You just gotta be smart with what you buy.

    October 5, 2013 at 5:45 pm
  • Inventrious

    The only thing I would add is to look into selling on Bricklink.com. I used to sell all my Lego sets on Ebay until I found out about Bricklink. They only charge you a 3% fee up to $500.00. It is also much easier to list a set on Bricklink than on Ebay. Great article, really enjoyed it!

    Problem with that is, everything is being sold cheaper then even LEGO website. Some of the older sets though, are only available in the UK (some of you might live there, I live in the US though) and costs a fortune to ship. So it matters on what you are selling.

    October 5, 2013 at 5:48 pm
  • jeff_14

    On the topic of insuring your collection, I have not inquired about lego but I did once ask my agent about comic books as I have 15,000 or so. I was told that the monthly insurance just for the comics would be $150 a month!!! That’s as much as I spend in a month on the actual books (and about 10 times what I spend on my regular contents insurance) so no sale. I expect toys and other collectibles would cost about the same

    October 8, 2013 at 5:01 pm
  • Graham Bailey
     

    Please PLEASE stop making LEGO a plural – TLG is a (single) company that produce LEGO sets, bricks and other parts.

     

    “LEGO’S, LEGO’s” are meaningless ~~ thank you

    November 2, 2013 at 8:37 pm
  • chopstick

     Please PLEASE stop making LEGO a plural – TLG is a (single) company that produce LEGO sets, bricks and other parts.

     

    “LEGO’S, LEGO’s” are meaningless ~~ thank you

    LOL. The term “LEGO’s” is really just slang. For some reason I don’t see this as a huge issue. Is there any particular reason why this bothers you so much?

    November 2, 2013 at 8:48 pm
  • bricksonline

    I use the term “LEGO´s” as abbreviation. So the “´s” stands for the s in “sets” , “bricks” and “figures”…  

    I also have several years of experience with lego and ebay (but only the german ebay market) and the prices, so I can assure from my data collected, that Lego sets are an interesting investment – even if you take new sets and sell the bricks in small portions in order to expand the own stack you use for own mocs.
    here in germany, I regularly observe, that department stores lower the prices down to the “50 % area”. for me that s the “magic price cut” that brings me in to buy. this years beginning it happened to the Dinosaur sets. Set 5887 is actually  the hottest one under them. sold out by the store with a price of 50 Euros compared to the original lego recommended retail price, it s value raised from 50 Euro to 130 euro on ebay – from january till now ! Thats really great.
    But then I calculated the annual average, I got a raise of allmost 15 %….which means, that it is a very interesting investment if you have the money to invest and a cheap room to store it.

    November 2, 2013 at 9:28 pm

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