Are LEGO Bricks a Better Investment Than Stocks?

[HandyHand]

4 hours ago, ED-209 said:

@Haay, I would also keep some money on the bank. If all one's money is in Lego and the unexpected happens, then it might be fire sale time.

By way of illustration, here in Aus on the Facebook Lego sales page I've seen two mass liquidations advertised in one week. One guy was asking 20K for all of his hoarded stock. Another person had many boxed sets and polybags, plus absolutely every UCS and large SW set ever produced in used condition. His price = 50K AUD.

When Time gets a Lego investing cover, we'll all be screwed. My shoe shine boy, however isn't giving me Lego set tips yet lol.

Don't worry, ED-209.  I am only using my personal savings (or pocket-money) to 'play' with Lego both as investment and to buy & build sets for my own fun. I wouldn't dare using the household savings for that. My wife would kill me.  

I fully agree with you that it's a dangerous game to speculate on Lego using borrowed money. Then not only do your Lego profits have to counter the positive interest your money would have gotten on a savings-account, you also have to make up for the negative interest you have to pay back on the loans. I was taught by my parents to only have a loan for a house while for everything else to first save the money and only buy it when you have the money for it.

[Sprocket77]

2 hours ago, Haay said:

I fully agree with you that it's a dangerous game to speculate on Lego using borrowed money. Then not only do your Lego profits have to counter the positive interest your money would have gotten on a savings-account, you also have to make up for the negative interest you have to pay back on the loans. I was taught by my parents to only have a loan for a house while for everything else to first save the money and only buy it when you have the money for it.

Positive interest on savings, you're so funny 

[Val-E]

I wonder how long it will be for RBS and the likes start advising people that things like Playmobil and Lego are safe investments.Some enterprising person will surely soon offer to manage people´s investments by providing storage space with insurance, packaging, shipping and even advising what sets to buy and sell and when.

[Sprocket77]

14 minutes ago, valenciaeric said:

Some enterprising person will surely soon offer to manage people´s investments by providing storage space with insurance, packaging, shipping and even advising what sets to buy and sell and when.

Sounds almost like Amazon FBA.

[HandyHand]

27 minutes ago, Sprocket77 said:

Positive interest on savings, you're so funny 

We're not there yet where we have to actually pay interest to have our savings stored on a bank, but the market is clearly moving towards that.

Currently I'm only getting 0.9% interest on my savings-account now, while I'm still paying 4.2% interest on my mortgage. So save from having a buffer for unforeseen set-backs, it's more prudent to put extra savings into decreasing my mortgage.  

[Val-E]

Without the crushed boxes! The added value will be in the broker part of advising what to buy and sell and even negotiating bulk purchases for your customer portfolio. Imagine if you set up and bought  80 000 Ecto 1´s at half price from Lego to cater for your customers.

[Sprocket77]

7 minutes ago, Haay said:

Currently I'm only getting 0.9% interest on my savings-account now, while I'm still paying 4.2% interest on my mortgage. So save from having a buffer for unforeseen set-backs, it's more prudent to put extra savings into decreasing my mortgage.  

I don't necessarily agree with that approach. Even if you are paying more interest on your mortgage, I'd still be saving more rather than paying off the mortgage, unless the overpayments mean you can take payment holidays should you need them for some unforeseen circumstances.

As you said yourself, always goof to have that savings buffer for when life decides to kick you in the gonads.

[Val-E]

7 minutes ago, Haay said:

We're not there yet where we have to actually pay interest to have our savings stored on a bank, but the market is clearly moving towards that.

Currently I'm only getting 0.9% interest on my savings-account now, while I'm still paying 4.2% interest on my mortgage. So save from having a buffer for unforeseen set-backs, it's more prudent to put extra savings into decreasing my mortgage.  

Wow! Who did you buy the mortgage from? Toys R Us?

[Sprocket77]

11 minutes ago, valenciaeric said:

Without the crushed boxes! The added value will be in the broker part of advising what to buy and sell and even negotiating bulk purchases for your customer portfolio. Imagine if you set up and bought  80 000 Ecto 1´s at half price from Lego to cater for your customers.

Oh yeah, Lego would really love you. 

[Val-E]

6 minutes ago, Sprocket77 said:

I don't necessarily agree with that approach. Even if you are paying more interest on your mortgage, I'd still be saving more rather than paying off the mortgage, unless the overpayments mean you can take payment holidays should you need them for some unforeseen circumstances.

As you said yourself, always goof to have that savings buffer for when life decides to kick you in the gonads.

I agree with Hay - pay off the mortgage first if there is such a big diference as you also get tax relief from amortising it, so long as you have enough savings for an emergency.

Mortgages also bring extra costs like bank commissions, insurance so the sooner you finish the sooner you can cancel them too. Also, in present times we have seen that money in the bank is no safer than under the mattress - just look at what happened in Greece, Cyprus or with Northern Rock.

[Val-E]

7 minutes ago, Sprocket77 said:

Oh yeah, Lego would really love you. 

Why wouldn´t they? You would save them a lot of hassle making smaller shipments and they could achieve production savings. It´s what they do with TRU exclusives, after all.

[Sprocket77]

8 minutes ago, valenciaeric said:

Why wouldn´t they? You would save them a lot of hassle making smaller shipments and they could achieve production savings. It´s what they do with TRU exclusives, after all.

They seem to have a thing against resellers though, don't know why, we're a lovely bunch 

Well most of us anyway.

[Val-E]

Yes but to them you would be a distributor/wholesaler with non exclusivity. Probably what you would do as a broker is look at the sets that are not appreciating well after EOL, sell them off for the best money you can get and replace them in your customers´ portfolios with other products - just like an investment fund does.

In fact, your customers could actually just buy a participation in the fund and not the actual Legos and you are the one responsible for selling them.

Edited January 14, 2016 by valenciaeric

[jaisonline]

1 hour ago, valenciaeric said:

I wonder how long it will be for RBS and the likes start advising people that things like Playmobil and Lego are safe investments.Some enterprising person will surely soon offer to manage people´s investments by providing storage space with insurance, packaging, shipping and even advising what sets to buy and sell and when.

 

Like a commodity-based mutual fund but with Lego? 

[Val-E]

Yeah, it´s only a matter of time before the next Madoff creates a monster. I can imagine the tagline now - invest in Lego without the inconvenience of stocking, purchasing, insuring, transactions or knowing the product and with simplified accounting and fiscality. Invest a minimum of 3000 euros in the scheme with a 10% management fee annually or any time you wish to modify or end your participation.

Edited January 14, 2016 by valenciaeric

[BP]

Well now you're just bringing people to ideas. 

[Crustybeaver]

1 hour ago, valenciaeric said:

Yes but to them you would be a distributor/wholesaler with non exclusivity. Probably what you would do as a broker is look at the sets that are not appreciating well after EOL, sell them off for the best money you can get and replace them in your customers´ portfolios with other products - just like an investment fund does.

In fact, your customers could actually just buy a participation in the fund and not the actual Legos and you are the one responsible for selling them.

They'd expect you to purchase large quantities of Nexo Knights, Friends, Super Heroes, Chima and other themes before they'd consider you seriously. 

[Val-E]

And you would want to buy those as well because they would be sold at RRP to generate short term liquidity and pay off the debts and fixed costs.

[fossilrock]

32 minutes ago, valenciaeric said:

Yeah, it´s only a matter of time before the next Madoff creates a monster. I can imagine the tagline now - invest in Lego without the inconvenience of stocking, purchasing, insuring, transactions or knowing the product and with simplified accounting and fiscality. Invest a minimum of 3000 euros in the scheme with a 10% management fee annually or any time you wish to modify or end your participation.

I bet we start to see crapola like that over the next year. 

It's getting weird.  Even my old honey holes that were easy pickings are now being swarmed by competition.  I went to a TRU the other day, and it was filled with two other "investors" that were picking and chatting and had no problem filling carts up with what I would deem "too early junk".  That was a bit of a spooky experience, because I DO my research quite a bit on stuff, and they seemed to have done none.  I wouldn't have done what this one 20 something was doing loading up on new star wars items, some superhero sets, speed racers, etc all at TRU inflated retail costs .  Then I went to my local BAM which had at one point 6 UN Architecture buildings two weeks ago.  I was considering buying a couple, but passed, then I went back this week, and they were all gone.  I'm starting to even think the architecture line, which has a small but fanatical fanbase, is now becoming swarmed by resellers.  2 years ago, most sets like Sungnyemun, Robie House, Burj, Guggenheim, etc were hardly hoarded like most of the sets are now and I attribute the rise in costs to many of those older architecture sets to the fact that not many people were buying them to hold. 

Don't get me wrong, this christmas selling season was great.  I just sold another Farnsworth house at 120 a day ago which gave me about a 96% return on investment from my buy-in, and the prices on Fallingwaters, Sydney Opera Houses, etc are definitely at a spot, where doubling your money, even after fees if you bought in at discounts are a given.  But, do I think this will continue like this next year on the six sets that just retired?  I'm not so sure...  I actually have some doubts on many of them. 

Add in all the extreme rookies that have flooded this site over the last couple weeks that don't even seem to have much knowledge about lego, and it's left me thinking that it's time to be a lot more selective this year, but scale down on my buying by 60% compared to last year, with the goal of buying things I would open, but then just hold them in the box for a year or two.  If things go south, then they become birthday and christmas presents and i'm not out on a huge loss.

[Val-E]

When people inforrm about getting in, it´s time to plan getting out. When people actively advise getting in, it´s time to actively get out.

[Seal Cutter]

There's a lot of worrying going on here! I'm sure it'll all be fine

[Seal Cutter]

What happens if all the guys who bought rubbish decide to part it out onto BL, because nobody wants it as sets? That could be trouble too, undercutting etc

[Val-E]

14 minutes ago, Seal Cutter said:

There's a lot of worrying going on here! I'm sure it'll all be fine

Did you invest in gold or oil?

[Crustybeaver]

1 hour ago, valenciaeric said:

And you would want to buy those as well because they would be sold at RRP to generate short term liquidity and pay off the debts and fixed costs.

Or be stuck with huge quantities of unsold sets because no one wants them at retail price. Competing in a market against huge reputable retailers who can afford to undercut smaller sellers and offer free shipping doesn't make for an easy venture.

[Val-E]

You and I know that but what about the scheme investors who are just looking for easy profit? I mean, if someone invests in a fund its because they trust the organiser knows more about the subject than they do - otherwise they would just create their own share portfolio.