LEGO Sets Are Better Investments Than Stocks, Bonds, And Gold: Study
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There are questions on what to invest your hard-earned money into. Viable investments include stocks, precious metals, real estate, bonds, and most recently cryptocurrencies and NFTs. Have you considered investing in LEGO sets? One study claims that certain LEGO building block sets are one of the best kinds of investments.
In a study titled “LEGO: The Toy of Smart Investors,” researchers make a case for investing in collectible LEGO sets. The argument for investing in LEGOs was made by researchers at the Higher School of Economics in Moscow, Russia.
The study’s authors – Victoria Dobrynskaya and Julia Kishilova – point out the positives of the building block kits, “LEGO returns are not exposed to market, value, momentum, and volatility risk factors but have an almost unit exposure to the size factor.”
“We find that LEGO investments outperform large stocks, bonds, gold, and alternative investments, yielding an average return of at least 11% (8% in real terms) in the sample period 1987–2015,” states the study published in the Research in International Business and Finance journal.
“Average returns on LEGO sets are 10-11% annually (and even higher if the new set was purchased on the primary market with a discount), which is more than stocks, bonds, gold, and many collectible items, such as stamps or wines, yield,” Dobrynskaya said.
“A positive multifactor alpha of 4%–5%, a Sharpe ratio of 0.4, a positive return skewness, and low exposure to standard risk factors make the LEGO toy and other similar collectibles an attractive alternative investment with good diversification potential,” the study reads.
One large LEGO set snatched a 2,230% return over eight years, the study spotlighted.
The researchers examined unopened 2,322 LEGO sets from 1987-2015 – focusing on data from primary sales and online auction transactions.
“Secondary market prices usually start to grow two or three years after a set is retired, but there is a significant variation in returns ranging from -50% to +600% annually,” the study noted.
According to the study, these are the most expensive LEGO sets:
- The Millennium Falcon from Star Wars
- Cafe on the Corner
- Taj Mahal
- Death Star II from Star Wars
- Imperial Star Destroyer from Star Wars
“We are used to thinking that people buy such items as jewelry, antiques or artworks as investment,” Dobrynskaya said. “However, there are other options, such as collectible toys. Tens of thousands of deals are made on the secondary LEGO market. Even taking into account the small prices of most sets, this is a huge market that is not well-known by traditional investors.”
“Tens of thousands of deals are made in the secondary LEGO market,” Dobrynskaya continued. “Even taking into account the small prices of most sets, this is a huge market that is not well-known by traditional investors.”
“Investors in LEGO generate high returns from reselling unpacked sets, particularly rare ones, which were produced in limited editions or a long time ago,” Dobrynskaya added. “Sets produced 20-30 years ago make LEGO fans nostalgic, and prices for them go through the roof.”
Too bad your mom threw out your old LEGO sets.
All you 80s and 90s kids: Listen up! Your old LEGO and Pokemon sets could be worth thousands of dollars! pic.twitter.com/Y9AJS0DisD
— Matt Maisel (@Matt_Maisel) December 28, 2021
[Photo by Karolina Grabowska from Pexels]
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