Investing in LEGO has surged in popularity due to its unique blend of nostalgia, collectability, and enduring value. With sets often appreciating greatly in worth over time, coupled with a vibrant community and diverse themes, LEGO offers both enjoyment and potential for solid returns, making it a sought-after investment avenue. As with almost every form of investment, there are multiple strategies that can be employed in LEGO investment and it is very rare that a “one size fits all” approach should be employed. So, what are the choices available and how should you choose between them?

For us the easiest way to differentiate the types of LEGO investment is to do so by length of time you look to hold the LEGO investment for before realising your profit and have split these into 3 categories:

Long term investing

For us, in LEGO® investing we classify any LEGO set we look to buy and hold for more than 3 years as a long-term LEGO investment.

In conventional investing terms this would be seen as a buy and hold strategy where we are looking to buy LEGO investments which we think will steadily increase in value over a number of years and continue to do so in quite a linear fashion, increasing in value by approximately the same amount each year.

For this the set needs to continue to be in demand for a long period of time. You only need to look at some of the LEGO sets and their values today to see how successful this strategy can be, where many sets have become very scarce in terms of supply and thus highly valuable.

Medium term investing

We consider anything that we look to hold onto for between 1 year and 3 years between selling as a medium-term LEGO® investment.

This is still in the main a buy and hold strategy but across a shorter timescale where we are looking to buy LEGO investments that will have a surge in value in the first few years after retirement from retail sale.

We look to capitalise on the post-retirement uplift in value which for many LEGO sets is their highest rate of growth before selling and recycling our funds into more sets to do the same again. Finding sets that will have a strong demand for a few years after retirement is crucial here.

Short term investing

Any LEGO® set that we look to hold onto for a maximum of 1 year before selling we consider as a short-term LEGO investment.

This is invariably a quick flip scenario where we are buying a LEGO set with a clear plan as to why it will go up in value in the short term and immediately capitalising on that opportunity to sell and lock in our profits.

There are many reasons for this approach, it may be that we have identified a short-term supply issue is likely and that we can sell at an increased price during this period, an external event may lead to a short-term spike in prices, we may want to break the set up to capitalise on its piece per part, we may want to buy just for the included LEGO minifigures and then sell the rest of the set.

The big advantage of this strategy is that we are able to recycle our funds into more sets faster looking to compound and growth figures quicker leading to potentially greater profits in the long term.

Whilst we should always have a clear plan as to what type of LEGO investment we are making when we buy a LEGO set, we also need to remain flexible and be prepared to change our plan if a better opportunity arises. It is very possible that we could buy a set as a long-term LEGO investment but then a short term lack of supply could create a surge in prices and enables us to convert it to a short term investment before re-investing our funds into an alternative set or sets.

Likewise, we may buy a set planning to sell it after 6 to 12 months, but it becomes clear that post-retirement demand is still very strong and that prices are likely to continue to increase for a longer period of time at which point we can change our plan to it becoming a medium or even long term LEGO investment.

In future articles we look further into how to decide which category a LEGO set is likely to fit into and how to determine when the best time to sell a LEGO investment is.