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Transcript:
Merry Christmas, everyone! As I’m sure you’ve all noticed, this is the season of love, togetherness, and most importantly, the birth of our Lord and savior, Jesus Christ. Just kidding, it’s “toys.” Toys are the most important thing about this season. The only way I’m interested in baby Jesus is if he comes with laser eyes, Kung-Fu grip and a Malibu beach house.
In fact, when my husband asked me what I wanted for Christmas this year, I told him that one thing I would absolutely love is a fully intact Sears Wish Book circa 1992, just so I could be transported back in time to when I would leaf through it, imagining that I had won a contest where I could have any one toy on each page.
In retrospect, it’s kind of incredible that I ended up as this, let’s be honest, insufferable anti-consumerist prude as an adult. But it’s all a delicate balancing act: I basically buy absolutely nothing for 11 months of the year and then I lose my ever-loving mind for one month.
For instance, so far this year for Christmas I’ve purchased a Life Day orb, a tiny tree made of tinsel and covered in sparkly dinosaurs, and this 4,000-piece LEGO set featuring the McCallister’s house from Home Alone, complete with head-torching, ziplining, cheese pizza-eating, paint bucket smashing, stair-sledding action. Yes, it cost $250, but I spent zero dollars on toys for the previous 11 months so all told it’s really like I had a $20/month toy budget which really isn’t that bad when you think about it.
At least – that’s how I used to justify it, until this week when I read this new study published in Research in International Business and Finance called “LEGO: THE TOY OF SMART INVESTORS.” That’s right, world, look out! Rebecca Watson is a SMART INVESTOR!
This is particularly funny because for the first time in my life, this year I decided to start, you know, saving money? Like an adult? So I opened an IRA, which is this investment account where you can put money away and you don’t have to pay as much in taxes on it or something, look, I don’t know, I can’t really get that interested in investing. It’s either a boring way for well-off people to passively make their money make them more money (like broad-based equity mutual funds) or it’s an exciting fast-paced way for people who don’t live near any 3-card monte dealers to lose money (like cryptocurrency). Not really interested in learning more, thanks! Until now. Now that “Lego: the Toy of Smart Investors” has been published, I’m very much interested again in being financially responsible, thank you very much.
So! A couple of economists decided to examine the purchase price and secondary market price of more than 2,000 LEGO sets from 1987 to 2015, and they found that the average ANNUAL return on investment for all these sets was 11%. So let’s say that in 1987 you committed to spending $100 on LEGO sets each year instead of spending it on something that doesn’t make you money, like books or Life Day orbs. By 2017, you would have saved up $22,000. I’m sorry, what? Is that right? Look, I don’t know, I just put the numbers in this online calculator and it gave me that completely ridiculous answer.
In contrast to the 11% return offered by LEGO sets, the boring broad-based equity mutual funds I mentioned earlier only tend to offer 4 to 8% returns, while LEGO also beats other common non-stock market investments like gold, wine, and fancy cars.
Of course, you wouldn’t end up with $22,000 in cash after those 30 years – you’d have $30,000 in LEGOs (that you spent $3,000 on), and the study points out a number of important caveats:
First of all, you should probably keep them in the box. The study only looked at sets that were unopened, explicitly stating, “Once a LEGO box is opened, the supply of this particular set falls. Over time, old LEGO sets become more and more rare, collectors hunt for them, and their prices inevitably rise.” It’s important to note that opened sets aren’t worthless at this point (like an opened bottle of wine might be, which is what they compare it to), but this study did only look at untouched sets. For funsies I looked up one of the most expensive sets mentioned in the study: the Ultimate Collector’s Millennium Falcon, which I’m proud to say I have played with and it was dope. The online LEGO price guide BrickEconomy.com says that while it sold new for $500 in 2007, a sealed set now sells for about $3,000. An open set sells for about half of that at $1,388.60. Still a profit but overall, used sets might not be able to compete with other investments. So, sorry, but if you want to take this seriously (AND YOU SHOULD, THIS IS MONEY WE’RE TALKING ABOUT), you cannot play with your toys.
Second of all, not all sets made money. The range went from -50% profit to 600% per year, so you might pick a dud. Looking at you, Belville Rosita’s Wonderful Stable 5833. I was going to say “Mr. Bunny,” because look at it, but BrickEconomy shows that this monster actually has an annual return of 5.2%.
That brings me to my final point: how do you pick a winner? Mr. Bunny is a great example: yes, it is absolutely hideous. It looks like a buck-toothed nightmare straight out of Matt Groening’s Life is Hell that wants nothing more than to be rid of its own cursed existence. And yet, it’s an investing win! Why? Well, it ticks at least two of the boxes on the list of desirable traits the researchers found: it’s seasonal (Easter, apparently) and it’s very small, meaning it may contain unique pieces not easily found elsewhere, like its horrific face.
Medium sized sets tended to be losers, so if you’re looking to make that green, go for the small sets or the huge sets that are greater than 1,000 pieces. Other winners are seasonal, architectural and movie-based themes, which means that the Home Alone house is basically my golden ticket. I hope you’ve all enjoyed my videos thus far because in about three years (the minimum amount of time the researchers suggest investors wait) I’m tossing this baby on eBay and moving to Maui.
I mean, maybe after I play with it just a few more times. I swear I’m going to try my best to not spill cola and cheese pizza all over it. Well. Maybe I’ll just throw another $100 into my IRA. Just in case. Also, if you haven’t yet, please head over to my Patreon at Patreon.com/rebecca! Patrons get weekly newsletters, monthly Q&A livestreams, and annual holiday cards that are going out to physical mailboxes in the next few weeks! Please. Please, I need to up my toy budget and I’m not sure I can keep things in the boxes. Thank you. Patron-only unboxing videos in 2022? Maybe!
