Retired Set Investing: A Worthwhile Strategy

Most often than not, we see people asking in the forums whether a particular currently available set is a worthwhile investment or not. Usually, that question is either preceded or just after the asking whether the set will be EOL soon or not.

That is the strategy most of us follow in this site. Grab currently available sets at good discounts and hold them until retirement to start enjoying some growth in value. However, I think that we are underestimating the power of investing in already retired sets that continue to present some high growth even years after they have been retired. In this article, I will try to give you some examples about how doing this may benefit you in a shorter period of time and in some instances make this type of investment preferable to the traditional strategy followed by most of us.

There are several things that we need to take into account when we invest in currently available sets; some of them include checking out for good discounts, long term storage, expected EOL wait, uncertainty about future performance and a bunch of other different things. The great thing about investing in already retired sets is that you remove several of these variables from the equation. There is no need to speculate about EOL dates as it has been retired already, you will be needing storage for a shorter period of time and in most cases you will be able to at least gauge how the set has been performing in the secondary market without having to "guess"

Let's now look at an example of what I described above:

I know a lot of people always kick themselves for not getting into LEGO investing in what some considering the good old days (Cafe Corner, MF, etc.), but in reality there are still ways to profit from sets released on those years. Let's say I decided to invest in the modular Green Grocer in 2012, when the set had already been retired for a couple of years:

So, I was able to make a return very close to 29% on a $500 set that originally retailed for only $ 150, that's pretty good in my book especially considering that the moment I bought it the set started generating a return for me without the long wait that usually precedes selling currently available sets.

As with the Green Grocer, there are just dozens of examples that present the same kind of short term benefit for investors willing to take a higher risk. One of those would be the 10189 Taj Mahal:

Impressive. Investors who shelled out the almost 4 times retail price for this set in May 2012 would be able to sell it now for almost $1,600, a ROI of almost 45% in a 12 month period. You will be hard pressed to find a traditional investment out there that will present the same amount of reward for a level of risk similar to what LEGO traditionally carries.

These past two examples are about sets that have been retired for at least two years already, and if you are willing to give this strategy a try I would suggest you do so in the first year of a set going EOL. Sets don't rise forever, and even if as you see above buying these sets in the second year after they had been retired nets you some very nice profits, the idea of an strategy like this is to capitalize on the fact that the set will start growing as soon as you purchase it. If you purchase this set within the first year of it being retired, then your profits will be even better while still capturing the growth as soon as you get them. Just as a reference, this is the ROI you would have gotten by purchasing these sets in 2011 (A year or so after retirement for both sets)

• Green Grocer May 2011-May 2013 ROI = 104.22%

• Taj Mahal May 2011-May 2013 ROI = 143.79 %

Pretty cool. Now, you may be thinking that these two sets are just too expensive or that it have been retired for so long that it no longer makes sense to put money in them (I'll let you decide if that's the case), but there are several examples of sets that have been retired in the past year or so that still make sense to get at current market prices. I will give you just one example: 10212 Imperial Shuttle.

This set has been retired for just a few months now and it has already soared in value, something that being a UCS set was not unexpected. But what about if you missed you chance to get one of these while it was still priced at retail at your local store? No worries, you can still benefit from the long term growth this set will be presenting in the coming years even if you invest at current market prices.

For the sake of argument, let's assume you got into LEGO investing in the month of February when the market value for a new one of these was about $ 300, so $40 over retail. Had you invested your money in the set at that price, this would have been your results:

17.7% ROI in around 4 months. Not bad at all.

You can see that even paying a lot over retail, something that is discouraged in this forums a lot, can result is some very substantial returns and keep you from waiting years or several months to start seeing some growth in the sets you own. Having said that, I am not encouraging that this is the only strategy you put to use, as I believe that mixing this up with the more traditional "buy at discount and hold" can help you diversify some of the risk and produce some great returns in the longer term than by using one of them in isolation.

Thanks for reading.

*Special thanks to Grolim for mentioning this topic time and time again in his comments*