Are Lego bricks a better investment than gold ones? According to a new study the answer could be yes, but not all sets are created equal.
While superheroes like Batman and Indiana Jones have the best returns over time, if you're holding onto an old box of The Simpsons, or Prince of Persia then you're fresh out of luck.
And that's just the beginning ...
In a paper called "Lego - The Toy of Smart Investors", co-authors Victoria Dobrynskaya and Julia Kishilova of Russia's Higher School of Economics, analysed three decades worth of Lego sets. The pair examined a total of 2300 kits sold from 1987 to 2015 and measured their price-return over time.
"We find that Lego investments outperform large stocks, bonds, gold and other alternative investments, yielding the average return of at least 11 per cent (8 per cent in real terms) in the sample period," the authors write. "Lego is not just a toy, but also a reasonable alternative investment with average returns comparable to stock returns, low market and crash risks and a positive alpha."
What does this mean in English? To be honest, I'm not entirely sure. However, the authors thankfully go on to explain exactly which sets are good investments and which are less attractive brickfolio options.
Standout performers include:
- "Darth Revan" (Star Wars)
- "Elves' Workshop" (Seasonal)
- "Seal's Little Rock" (Friends)
- "TC-4" (Star Wars)
- Ice Skating" (Seasonal)
The most attractive investment themes are:
- Advanced models
- Harry Potter
- Hero factory
- Indiana Jones
- Monster fighters
- Seasonal sets.
While the least attractive include:
- Prince of Persia
- Toy Story.
Interestingly, the Simpsons was the only theme to lose value, falling by 3.5 per cent on average.
When it comes to bricks, the authors also found that size does matter. "Small and very large sets yield higher returns than medium-sized sets," they note.
While the Lego market doesn't outperform the stock market, there's a distinct upside to trading in bricks. "The insignificant exposure to risk factors suggests that Lego sets provide good opportunities for portfolio diversification," the authors note.
And they're better than your dusty old stamp collection.
"Lego investments are more attractive compared to other alternative investments such as art, wine, stamps and automobiles which underperform the stock market significantly," the authors continue.
But before you start raiding your kids' collection or rush out to the toy aisle, there's a rather large caveat to their research.
"These results should be taken with caution, because the Lego market, similarly to markets for other alternative investments, is not as liquid as the stock market and requires relatively high transaction and storage costs," they note. Additionally, Lego investments require a particular type of Lego connoisseur with specific knowledge and interest in the product.
If that's you and you're keen to explore the world of Lego investment in more detail, you can head over to Brick Picker, which is where the data for the study was drawn from. Here, you can check out the The BrickIndex, a chart that displays the top performing Lego sets on eBay over the past six months and a comprehensive price guide for various themes.
Who knows, perhaps building wealth is simply child's play.