Getting interviewed by Standard Life

A few months ago I was contacted by a representative of the financial services firm Standard Life. They were working on a series of articles titled Collectors’ Corner, discussing some of the most valuable collectibles available today for their readers based in the UK – including less traditional categories like vinyl records, comic books, vintage toys, and LEGO. A 2015 analysis by the Telegraph newspaper found that LEGO sets have been gaining value faster than gold. According to the study, LEGO sets in pristine condition have been appreciating 12% annually (gold, in comparison, only returning around 9.6%). So it made sense that LEGO got on the radar of collectors and investors. But is LEGO a good investment or just a fad? This is what Standard Life wanted to explore through an article, and to do that they reached out to the LEGO fan community. 🙂

Standard Life interviewed four LEGO fans; Max Engel from Brickd.com, Ryan Hafer from ThePlasticBrick.com, Ed Maciorowski from BrickPicker.com, and myself. They specifically wanted to explore how viable it was for everyday people to invest in LEGO to save up for future plans; like buying a new car, moving to a bigger house, or other major financial goals. We were asked a series of questions, and our responses were interwoven into an article that was published on the Standard Life website. Here is the link: COLLECTORS’ CORNER: ALL SYSTEMS LEGO

Since the article didn’t include all the questions that we were asked, nor our full answers, I thought I will repost both the original questions and my responses below. It might be a good topic for discussion, especially if you have been considering investing in LEGO.

➡ Can you tell us a little about how you got into LEGO collecting? – I grew up in a large family with lots of children, and LEGO was always part of our lives. Our parents valued creative toys, so we regularly got LEGO for Christmas and birthdays. LEGO was the most popular toy in our family and we often spent days – and even weeks – developing and playing out stories with LEGO bricks. In addition, our Dad is an architect, and he has been using LEGO for modeling some of his work projects. By seeing his example while growing up, building our own thing was normal for us kids. We rarely built from instructions – only when we first got a new set – then we took it apart and made it better in our own way.

I’m definitely a LEGO fan and LEGO hobbyist who is very involved with the product and the community, but I have never identified myself as a LEGO collector. I do buy regular LEGO sets, but only as springboards for my own creations. There are no unopened LEGO boxes stashed away in our household; they all get built, played with or repurposed into other models. LEGO collecting – especially for profit – is a very new phenomenon that emerged during the last decade, and has some interesting history…

Previously LEGO fans were like my family; kids and teens who played and built with LEGO, and adults who valued the high quality and versatility of the brand. And some adults continued to use LEGO in their work, or in other artistic and creative ways, like my Dad. If and when a family grew out of LEGO, they passed down the bricks to younger generations, or donated them to other families. It was rare to find someone who collected LEGO sets just for the sake of collecting, but there were some; usually people who were interested in the history of the company, and tracked down old and unusual LEGO sets and pieces for the purpose of cataloguing them.

LEGO and making money started to mix with the invention of the internet, and more specifically eBay (and later BrickLink, which is like eBay but only for LEGO). People from distant places were able to connect and trade amongst themselves LEGO sets, parts, and minifigures. LEGO fans could buy that old and discontinued set they always wanted, or just get extra parts for their custom models. These were mostly transactions between likeminded hobbyists, who were helping each other out with their projects. Prices were fair – more like trades – and there was a feeling of community and friendship.

But then something else happened; the LEGO company started getting deeper into licensed product lines, which brought in a whole new group of people to the hobby; collectors. Collectors didn’t play and build with LEGO like we did, but they wanted to collect and display sets and minifigures from licensed lines like Star Wars and Super Heroes. So, those of us who were mostly into building, could buy sets, sell the minifigs to these collectors, and essentially own our LEGO bricks free and clear. This was definitely helpful, as LEGO is quite an expensive hobby to begin with.

As the LEGO brand continued to become more mainstream through licensed properties, and attracted even more fans through The LEGO Movie, the secondary market continued to grow as well – pushing prices on discontinued LEGO sets and rare minifigures to new heights. The culture of a tight-knit hobbyist community with the focus on helping each other out was replaced by a thriving marketplace with people making significant money by selling LEGO products. This, of course, caught the interest of investors, another new group of people that became involved with LEGO. They had little interest in playing and building, but were mostly focused on making money with the latest hot item.

➡ How viable is collecting LEGO sets as a way of making money? – When the mainstream media start to ask such questions, it is usually a sign that the market is oversaturated and the great opportunities are already over. LEGO is no different in this regard. As I mentioned before, selling LEGO sets, parts, and minifigures is definitely a viable option to maintain the hobby and break even. Some people also run online LEGO stores as a full or part-time business. But this requires significant investment of time, effort, and money – just like any other retail business. It is not a get-rich-quick scheme.

However because stories continue to circulate that a retired LEGO set sold for 10-20+ times over the original retail price, some people still think that investing in LEGO is a good idea. I would like to point out that most of those stories are from the days when LEGO’s popularity first exploded and there was a great demand for retired sets. Few people had old LEGO sets stashed away from the pre-internet times, so naturally, demand for them was high, and people were willing to pay more. Now that everybody is on the big secret that LEGO can make money, and have sets stashed away, the most profit you will see on the majority of LEGO sets is doubling your investment. And that doesn’t eve take into consideration inflation, the cost of storing large quantities of LEGO sets, and having money tied up for several years in sets that may or may not make any profit once they get retired.

In general, even in the worst case scenario, you can sell a LEGO set for the original MSRP (Manufacturer’s Suggested Retail Price), because just the parts are valuable for LEGO fans. So in this sense, investing in LEGO is fairly safe. Quick-flipping minifigures and sets for a bit of extra cash is also pretty safe, but it requires a deep knowledge of the hobby, constant involvement with sourcing out the best deals, finding out what sells best and when, dealing with listing, packing, shipping items, and customer-service. But to expect to make such profits that would be in line with traditional investments like real-estate, commodities, and businesses to save up for that dream house, dream car, or big vacation is just not realistic in my opinion.

To add to this, the LEGO company itself doesn’t like people who speculate with their products. They want to make children and hobbyist happy, not boosting the portfolios of investors. Once they find out that someone is a reseller, their purchases will be severely restricted. Also, the company is becoming quite aware of what products are popular on the secondary market. They have been getting better at judging demand and releasing enough LEGO sets to satisfy everybody. They are also re-releasing updated and improved versions of the most popular sets and minifigures – which in most cases mean that the price of the original retired product plummets, because most people prefer the new version.

➡ What qualities make some LEGO sets rarer and more valuable than others (unopened, mint condition, with instructions, etc.)? – LEGO retires all sets within a couple of years or so, so theoretically speaking, and from the perspective of diminishing supply, all LEGO sets can make money. However as I mentioned above, the LEGO company is getting better at providing enough supply for as long as there is interest in the set, or they re-release sets that were previously popular. In addition, because so many people are playing the reseller game right now (and more are coming aboard) having an unopened mint condition set doesn’t mean as much – there are plenty of other resellers who have the same – unless if it is an old iconic set from the ’70s or ’80s.

However there is one area where some LEGO resellers can still get an edge; and that is in very rare, regionally available sets and promotional items. LEGO sometimes releases sets and minifigures for a particular event, or in a particular region or country. These can be very interesting to collectors who are willing to pay high prices for such rarities. For example, the #21021 LEGO Architecture Marina Bay Sands (first released in 2014) is only available in Singapore. The set is 600 pieces, so would normally cost about $60, however because it is so rare, it goes for $600+ on eBay. The promotional minifigures given away at the San Diego Comic-Con are another good example. There is a caveat however; LEGO sometimes decides to make these unique products available for everyone at a later date with no prior warning, which of course makes those rare items not so rare anymore, with prices plummeting overnight.

➡ If I wanted to take LEGO collecting seriously, what would be your best advice for seeking out the good stuff? – Just like with any other investment, I would suggest investing in your education first. It is very important to understand the investment vehicle, the history of the investment vehicle, the supply and demand, and what is involved with investing in a particular field. LEGO is not like a stock, where you just buy into the product or company and enjoy the profits – or suffer the losses – without ever handling any of it yourself. Nor can LEGO provide cash-flow like a business or real-estate can. It is more like a piece of art, precious metals, or jewelry. You will have to hold and store the items, and physically deal with them both when you buy and when you sell.

There are many online LEGO fan communities that can help with questions about buying and selling LEGO. I particularly recommend the Brickset.com forum and the BrickLink.com forum. There are also books written specifically about investing in LEGO. One that I recently reviewed and found very good is The Ultimate Guide to Collectible LEGO Sets by brothers Ed and Jeff Maciorowski. They also run a website BrickPicker.com, which tracks the prices of most LEGO sets based on eBay sales. Here is my review of their book: The Ultimate Guide to Collectible LEGO Sets

Being interviewed by Standard Life was an interesting and engaging experience. Unfortunately they don’t get comments on most of their articles, so I’m not sure who their readership is, and what their readers think about investing in LEGO and similar collectibles. But I do hope that those who consider such a venture will find the article helpful.

What do you think? How would you have answered the interview questions? Do you think it’s a good idea to invest in LEGO? Feel free to share your thoughts and discuss in the comment section below! 😉

And you might also like to check out the following related posts:

• Has LEGO Sold Out? New York Times Interview
• Getting Interviewed by Creator Magazine
• The Ultimate Guide to Collectible LEGO Sets