Instead of investing in stocks or bonds, considering toy collectibles could be a more valuable return on investment, according to a new study.
Researchers in Russia published an analysis that found LEGO toys outperformed traditional large stocks, bonds and even gold. Their study found iconic toys like LEGO have diminishing supply over time and their high collectible value can yield high returns on the secondary seller market.
In a sample period between 1987 to 2015, researchers found that LEGO investments returned an average of at least 10 to 11 percent annually, which is a faster and stronger rate of return than stocks, bonds, gold and many other collectible items like stamps or wines.
“‘Investors in LEGO generate high returns from reselling unpacked sets, particularly rare ones, which were produced in limited editions or a long time ago. Sets produced 20-30 years ago make LEGO fans nostalgic, and prices for them go through the roof,” Victoria Dobrynskaya, one of the study’s authors, said in a press release
Many people may assume that only certain collectibles serve as good investments. A survey by Barclays, a wealth management company, found about 10 percent of rich people invest their wealth in jewelry, art, antiques, collectible wines and cars.
The return on investments on these traditional items is much more well studied, which Dobrynskaya says is unlike unusual goods like LEGOs, that may seem less serious.
Dobrynskaya and her co-authors analyzed the prices of 2,322 LEGO sets from 1987 to 2015 and found that the secondary market prices for those sets would range anywhere from -50 percent to over 600 percent annually. The value of small and very big LEGO sets grew faster than prices of medium-sized sets, which Dobrynskaya says is likely because small sets contain unique parts and figures while big sets are made in lower quantities and are more attractive to adults.
In her research, Dobrynskay also points out that once a LEGO box is opened the supply of that particular set falls and eventually the set becomes rarer, collectors hunt for it and the price inevitably rises.
A unique characteristic of toys like LEGOS is sets are often retired and based on specific, often iconic, themes. For example, Dobrynskay’s paper mentions LEGO’s minifigure Mr. Gold, which was released in 2013 for $2.99. It’s considered highly desirable to collectors and is offered on the secondary sellers market for around $2,000 today.
Barbie dolls, Beanie Babies and superhero minifigures are also similar to LEGO in their ability to create high return on investments in the secondary market, based on their limited supply and rarity.
LEGO is especially unique, as it’s a toy company that’s been around for almost 90 years and is considered the largest toy producer in the world. According to Dobrynskay’s research, LEGO’s factory in Denmark produces 2.2 million toy bricks every hour and the number of LEGO bricks made every year is five times as high as the current world population.
LEGO is also not just a toy for kids, thousands of adults around the world collect the toy, which adds to LEGO’s ability to retain value.
However, Dobrynskaya said that not all LEGO sets are equally successful, and the true LEGO fans can sort out the market nuances and see the investment potential in a particular set.
READ MORE STORIES FROM CHANGING AMERICA