Why I stop buying LEGO ... for investment

LEGO has always been one of my favourite toys since I was a child.

As a child with limited means, my collection back then was a  humble small box or two of LEGO City sets. Yet I remembered the numerous times  I played 'make believe' and created many different transportation mode with my modest collection. The playing stopped when teenhood arrived.

Fast forward a couple of decades later (Yes, yours truly is THAT old) , I revisited LEGO with my two boys. With better purchasing power, their collection of LEGO was much better than mine. The fact that the boys have 3 LEGO playing area in the house showed the extent of LEGO madness in the family.
Buying LEGO was never meant as an investment  for me.

Most of the sets that was bought was opened and played like how it should be. There were occasions where I did make a little 'kopi' money with LEGO. These are additional sets I had on hand rather than sought after to make a return. These included sales of a set of LEGO Movie minifigures series (love the movie , so bought one for my son and myself) , a set of Shell LEGO Cars (pump too much petrol) and a LEGO dragon playground (thought my boys would like it but they decided otherwise). In such cases, the returns were as much as 50% in a short span of a year.

In recent times, LEGO investments had been highlighted  in the press to fuel the interest in LEGO. This was especially so when LEGO had made money for those that had invested in them a couple of years back.
Then it dawned on me that LEGO had been perceived by society to be an ideal investment tool. That was when the magic of LEGO started to diminish. Instead of viewing it as a toy for kids , it became an adult's obsession. As such it may have lost its intrinsic value among the younger generations.

Speak to any financial consultant and they will tell you that 'investments' are meant for long term. Such a divergence  where adults' interest increased exponentially vs the declining interest in children may make 'investment' into LEGO a pretty bad idea for the future.

Theses are some of the tell tale signs that LEGO investments may not be as profitable in the past.

It is too commercialise

It used to be that LEGO minifigures that represent famous movie characters a rarity. That was why LEGO Star Wars  was so popular back in the early 2000s. Now every other popular movies seemed to have a link with LEGO.

There are numerous Star Wars sets and even 'improved' versions of old sets such as Millennium Falcon. Add the many other franchises as such Marvel Superheros, DC Superheros, Ghostbusters, Jurassic World, Indiana Jones, Simpsons, Lord of the Rings, Teenage Mutant Ninja Turtles, Guardians of the Galaxy and even Lone Ranger (This List is NOT exhaustive!), this 'limited edition' position suddenly became overcrowded. It will be tougher to spot a set that people would really love to pay a premium for in the near future due to these commercialization.

A possible victim of its own success, commercial growth may mean that the LEGO sets may be abundance in supply. With these supply increases and possible decrease in demand due to saturation , it would mean a set may not bring in as much returns as sets of yesteryears.

Sets are more expensive, making returns challenging

The latest Ghost buster set cost a whopping US349.99 ( About SGD 505) , At that price, it would be very difficult to sell at a huge profit.

Locally overprice
In honesty, I think local buyers are taken for a spin. LEGO sets were already costing an arm and a leg. If you purchase it locally at retail price, you might need to give up the other arm. The same Ghostbuster set cost $599.90 in Singapore , a whopping 18% price increase compared to overseas purchases.

Nonetheless if you are really keen on investing, it would be special themes like this that would probably make it more worthwhile. It will not be surprising to see the price rises to $800 after 5 years or so especially if the set EOL (End of Life)

The catch is, where are you going to store this humongous set?

Rare is a relative word 

Not all LEGO are created equal. Investing into LEGO does not mean just buying any set and wait to collect profits after a few years. Popular Theme sets will be the ones that may rise in value. Take for example, the above LEGO Harry Potter Hogwart Castle cost USD129 when it was launched in 2010. Today it will cost you at least three times as much brand new or twice as much when opened. Not a bad investment indeed.

That thus begs the question...

Should I buy the set because it may get popular and increase in price or should I buy it because my children love it?

Beware of scalpers
Nowadays it will be surprising to see scores of adults queuing up at LEGO stores when there is a popular product theme launch. They would buy the items in cartons and thereafter selling them at Carousell for a 20% price increase the very moment  these sets are 'sold out'.

Children are left out of the equation

As a result of scalpers and adult collectors, kids are often left out of the equation. How often do you see a child at the store during a product launch. Even if you see one, they are the minority. LEGO target market seem to shift from kids to adults.
Today's kids would not be passionate about LEGO as much as their parents. I know because my boys interest in LEGO has waned. This reaction will affect future demand for LEGO. Any price appreciation is about demand and supply. When the current generation of LEGO fans grow older and collect lesser, who would replace them in the future to maintain the demand?

The existence of replica
Spot the real LEGO

There is a black market out there for replica LEGO sets. Some of the replicas are exact copies of the real thing. It would be very difficult to tell them apart if you do not scrutinize them. Furthermore replica sets can be very innovative and there exist LEGO inspired minifigures that LEGO themselves have not been produce.

Lepin Fake Lego
Latest LEGO sets?

No problem, the counterfeits can get it done in a jiffy. Kids would not be able to differentiate real and replica LEGO. It would not be surprising that parents may opt to buy the replica sets for them. At 1/10 of the price for some sets, it would not be a difficult choice.(We are not condoning buying replicas, but merely stating the obvious)

The loss of LEGO trademark
Prior to 2011 , LEGO had been a monopoly. They are the only ones that can create the awesome interlocking bricks. After they lost the patent, there had been numerous brands jumping on the bandwagon. Kreo is an example of LEGO. The replicas from China is another sign that LEGO is losing the 'exclusive' tag.

Box collectors

Collectors of LEGO are NOT building the LEGO sets. There are those that will buy and  just display the boxes. If you frequent AFOL (Adult fan of Legos) forum, you will often see the fans posting pictures of several boxes of the SAME model, Very impressive, but it voids the spirit of buying LEGO . Obviously most of the time, these are meant to be resold at a later stage. These are not collectors, but should be rightfully term as scalpers (see above point)

Personally , I do have some boxes left unopened, but I have only 1 set each and it is meant to be build if I can find the time and space to do so.

There are builders who buys more than one set to build into mega structures. These are the true AFOL that I admire. Unfortunately these are far and few in between. It takes deep pockets and not to mention massive storage space to indulge in LEGO today.

You only need one set

In honesty, you only need one set of LEGO for kids. Take away all the popular licensing and themes, you will only have bricks. If I am to recommend a set to invest, this will be it. It will cost only $89.90 per box. Get 2 or 3 boxes and you can build yourself a decent building. Get 20 boxes and I reckon a mini city would evolve.

Construct anything with it. Just use your imagination and the creations will be limitless.  Take it apart after it is done and rebuild a brand new original creation!

It is suppose to be a toy, not an investment

Don't get me wrong, I will still get a set provided that the children would really play with it and  I am not paying exorbitant prices for it. Most of the time , these would be obtained overseas (Australia and Japan and even Malaysia are the cheapest places to get LEGO now). The LEGO set will be meant for building and not just kept sealed in a box.

Nonetheless , the child in me will still have an eye for unique sets that will ultimately become decorative feature pieces at home. For these special cases, I might get first and build later (especially for those large modular sets). I will still buy LEGO, but only for what it is, a fantastic toy to encourage creativity and play in both young and old.

Or I might do an exception and buy a few boxes of the latest LEGO Disney Minifigures
or even the beautiful interpretation of Big Ben. Not.

Investments in LEGO does not provide the same returns as before for scalpers. Falling demand and knock offs are slowly eating up the profits. Have you seen the discounts on LEGO Simpsons minifigures at 7-eleven? 

Maybe LEGO can still be an investment, but not all LEGO are made equal.

No LEGO was harm in this article. We still LOVE LEGO , but as a toy, not an investment.



Chocobo Games said...

screw the people who invest with a toys, toys is supposed to be as a toy !

Anonymous said...

its a buyers market. sink or swim

Anonymous said...

I would buy the Lego Disney Castle only because it's really iconic. The front is for display and the open back is a playbale princess doll house for little girls. And buy several boxes of simple blocks and wheels for truly creative play.

I like the Creative Expert Modular Houses, but at US$150+ a piece, it's not practical econimically or spacewise. And these seem to be FUN JOB for the creators but passively putting the bricks down from plan is not that challenging and after that it's not going to be torn down and rebuild anyhow.

I have the MindStorm EV3 which is really fun and it will last for a long time. I will likely get the Disney Castle sometime in the future. I bet this set will be in production for a long time ahead...

I'll watch Youtube for other people's Lego builds. :) Not interested in paying over MSRP for out of prodcution sets or knockoffs.

Unknown said...

All valid points. I've started collecting technic sets as I feel they appeal specifically to new fans. Will see how it goes.

Unknown said...

It's annoying that while browsing other page, I'm persistently being directed to this particular page.. Not a wise move to do such "hijacking" activity.

TWD said...

Hi there, do you have a specify page and which browser are you using? ( Phone or desktop)
Would be great to help us trouble shot the misdirect. Thanks!

that a coool shade said...

I buy fake lego, because I'm not that rich, and I only bought marvel lego, because I like the videogame...now lego have video games, and collectors collect the figures and the video games...

Anonymous said...

Shame on you.