Forget stocks and gold. Why investors are turning to LEGOs

Expert LEGO collectors say the beloved building sets are a smart investment with little risk and big reward. 

Investors say returns from gold, bank accounts, and the stock market over the last 15 years are no match for LEGO sets.

According to a Telegraph analysis last month, LEGO sets kept in pristine condition have increased in value from 12 to 36 percent per year since 2000, whereas investments in gold and savings accounts saw annual returns of 9.6 and 2.8 percent, respectively. And returns from stock market investments also underperformed: The S&P 500 has returned 4.2 percent annually and the UK’s FTSE 100 has returned 4.1 percent, the value no higher than it was in 2000. 

“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 investor Edward Mack writes in a blog post on the website BrickPicker, an online guide to Lego pricing and investing. 

“LEGO investing is something that has gone under the radar for years now, with only a few smart people tapping into the market,” Mack adds. “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.” 

There are several explanations for the investment value of Legos. 

US retail toy sales generated $18.08 billion in 2014, a 4 percent increase from $17.46 billion in 2013, reports industry tracker The NPD Group. And building sets like LEGO did especially well, accounting for the largest super-category of toy sales in 2014 at 13 percent. 

The building blocks appeal to an expansive market. Along with the obvious child consumer, LEGO also has a segment of older consumers who have their own money to spend on sets whenever they please. 

And even as pop culture trends change, the LEGO market will adapt. 

“The neat thing is that all sets are retired at some point, and several hundred are retired each year a movie run ends, a licence expires, or the LEGO company wants to refresh its range,” Ed Maciorowski, the founder of BrickPicker, tells The Telegraph.

And because consumer habits coincide with pop culture, Maciorowski says the December premiere of the movie "Star Wars – The Force Awakens," which broke box office records, will also awaken the demand for old Star Wars LEGO sets. The Ultimate Collector’s Millennium Falcon LEGOs set, which cost $500 at its release in 2007, now sells new for almost $4,000 according to BrickPicker. 

“It keeps ticking up. I wonder where it will stop,” Maciorowski, referring to the Millennium Falcon, told USA Today in 2012 when the set was valued at $2,165. 

But expert LEGO collectors say it’s not as easy as buying a popular set and stashing it away for a few years.   

Because the LEGO Group controls the supply of building sets, consumers don't know when a set will be discontinued. And just as the Millennium Falcon is a Star Wars-themed example of LEGO investment success, the Death Star LEGO set serves as a cautionary tale for investors.

After stockpiling the Death Star box set when it was released in 2008 for $400, investors assumed they would see a sizable return in a few years when LEGO discontinued the set. But almost eight years later, LEGO is still making the Death Star and collectors' past investments are thus far worthless. 

Storage is another potential issue. The boxes are often large and cumbersome, so it is difficult to keep them in pristine condition. Water damage, theft, and fire are serious risks, says Maciorowski, so some investors choose to insure their collections.

Of course, for a true LEGO lover, the risks involved are somewhat less. It’s not the worst thing in the world if his returns don’t pan out accordingly, Maciorowski tells USA Today, “Even if the price of the set tanks, I still have the set.”