Something you may already own could provide an impressive return on investment
With Christmas fast approaching, many Canadians will be buying toys in the hope that they are a hit with their young recipients.
But even those gifts that are left to one side, unopened, should not be considered a waste of money; their value could be unlocked in many years’ time.
Investing in toys may not have the same returns, or kudos, as art, fine wine, antiques, or classic cars, but there can be strong returns and might be a great way to get younger family members interested in investing.
A new study from the Higher School of Economics (HSE) found that there is a strong secondary market for retired LEGO sets, with prices growing 11% annually, beating gains for gold, stocks, and bonds.
Demand for sets of the iconic plastic bricks, once they are withdrawn from the primary market, is particularly strong in China, Russia, and the Middle East.
“We are used to thinking that people buy such items as jewellery, antiques or artworks as an investment,” said Victoria Dobrynskaya, one of the study’s authors and associate professor at the Faculty of Economic Sciences. “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.”
Limited editions of LEGO are most in demand, especially those dedicated to films, books, or historic events. A Millenium Falcon is one of the most expensive.
The study notes that the secondary market is not flooded because many sets end up with missing pieces while many owners are not willing to sell.
Maximizing ROI
As with most investments, demand is not equal for retired LEGO sets.
Those that are either small or very large typically see price growth above that of medium sized ones. Limited editions and those that were only available at promotional events also attract a premium.
“Investors in LEGO generate high returns from reselling unpacked sets, particularly rare ones, which were produced in limited editions or a long time ago,” added Dobrynskaya. “Sets produced 20-30 years ago make LEGO fans nostalgic, and prices for them go through the roof. But despite the high profitability of LEGO sets on the secondary market in general, not all sets are equally successful, and one must be a real LEGO fan to sort out the market nuances and see the investment potential in a particular set.”
Toy investors are also likely to find interest in Barbie dolls, superhero minifigures, or model cars and trains.
The full study was published in the Research in International Business and Finance journal.
