Investing in Legos Vs Rolexes

Many people may disagree with me that these items are investments at all.  I categorize anything one owns as an investment, the value or return of which it brings can be dynamic.  I’ll just be talking financially here between the two. I’ve been hearing a lot lately regarding investments in Lego sets being a better investment than gold.  At the same time, I’ve been hearing about Rolex’s having better returns than the Dow.  When these kinds of statements come up, I find them to be potentially dangerous investment advice for certain people and I’ll explain why.  Precious metals like gold can go up in value during down economies historically speaking versus collectibles & luxury watches not so much or at all. The economic environment is usually good when articles and talks like this pop up.  Have you ever tried to sell collectibles and high-end pieces during a bad economic environment?  I have, and I can tell you that after the potentially lengthy amount of time it takes to liquidate the item to make the little return depending on your purchase price, you can potentially give up the profits from the listing or auction fees.  All that is associated with your so-called annual gains can diminish instantly when things hit the fan economically.

I do have a positive outlook on these brands for the future because they are beloved by so many including myself.  Holding for a longer term not caring about the monetary value is the mindset that investors of tangible items as something they love with hopes of it being a home run is the essential mindset for collectibles in general.  

As financial investment vehicles, I find them to be more of a gamble especially when the values thought of are based on new unopened pieces that you just have to sit on and keep pristine.  Legos like Rolex’s are tangible items so as tangible items go you would need to maintain them physically indoors in a dry temperature-controlled space.  The most important factor to me in profiting from these two consumer products is a low purchase price and exiting when there is still demand, best described as a flip. We must remember that collectibles and luxury items in general move along with economic markets that can quickly and easily shift. The possibilities of shifts in peoples’ interests can vary a great deal.  When people can’t make ends meet it is guaranteed that luxury items that the middle-class value will suffer in demand and a drop in demand most likely means a drop in price.  In the past appreciation like the current state of Rolex’s gray market has never existed prior to 2016 for the brand and that doesn’t mean that it will continue to exist, the future can be hard to predict.  During the last economic downturn, I observed luxury watches such as Rolex sports watches sitting on shelves waiting to be purchased during low economic times.  Also, with any brand, future production control and marketing efforts can affect the value of a product tremendously. (Example: Lego’s original Star Wars line lost value after the reproduction of the old pieces).  The fad of an era is only just that, moving forward if there is not much monetary value in material or if the style changes in what people like, then the price or liquidity of your item is lowered and can even get to nonexistent. Don’t get my message wrong here, all that can happen are only potentials, and depending on how wealthy you are, diversifying isn’t a bad idea, the Rolex brand has stood the test of time but the old pieces that have appreciated above inflation during low economic times are far and few. 

Most that invest are looking to make an ease of liquidity to cash, effort to gain, and profit to time all of which are gives and takes to what is best for you as an investor. Rolexes have much higher values and take up less space than Legos. To store and sell quite a bit of large Lego sets to get the value of 1 single Rolex is very appealing to invest in Rolex versus Legos just as it is to keep diamonds instead of bricks for value density.  However, without the right channels of sales, higher-end pieces can be much more difficult to liquidate for profit during down economic times, this factor makes Legos a tiny bit safer of a bet with more diversity and potentially faster liquidity than a single model of Rolex watch.  But in recent years the Rolex gray market has been fruitful enough that resellers are willing to purchase your watches immediately giving you a profit without any time or hassle.  There is also the variable fact that counterfeit fakes of Rolexs are becoming better quality due to technological advances.  But if you don’t have the space then… If you don’t have the money, then… Of course, future demand cannot be predicted and the pieces that do experience great appreciation are specific.  The potential windfall from collectibles could yield astronomical returns but the percentage of pieces that actually do yield those kinds of returns is very small.  Many times, when there is a hype or shortage, that is a good time to sell.  My choice would be on Rolexes being a better investment for me due to the amount that watch collectors are willing to spend for specific pieces and the fact that I’d rather keep a small piece that is worth 20k compared to a closet full of legos.  If you appreciate me giving it to you straight then check out some of my other articles “Real Estate ownership may not be for your right now!”, “Being Cheap can be costing you money!”, “5 Strategies to Selling and/or Donating your unwanted items!”.  

This post is for people who need to care about whether they put their money as investments into these items instead of people who have the luxury to collect as a hobby. In my opinion, investing in things that you have a passion for can be great especially if it is something that you know much about and anticipate a future interest amongst collectors and enthusiasts. The biggest value in collecting is that you get to enjoy, experience, and share these items that you cherish and value, and with this knowledge, many people turn their hobbies into businesses so don’t let me stop your “investing”. Just remember not to get too caught up in the hypes and fads that can go bust.