New Jersey man makes $500,000 by just investing in Lego — reveals how it's better than stocks and gold

Investment isn't child's play, but sometimes, things we enjoy as children can become rare collectibles. Financial advisors will tell you that there are many ways in which you can invest and grow your money, and the list will typically not include toys. But a man from New Jersey named Shane O’Farrell made a whopping $500,000 in just two years simply by investing in Lego kits.

Though O'Farrell lives in the US now, he spent his childhood in Ireland, where he often entertained himself with the Fort Legoredo Lego set. At the time he had no idea that the price of the kit would shoot up in the next two decades. But once he realized the true value of the Lego sets, he decided to jump in and make some money.

O'Farrell, who began buying and flipping popular Lego sets on the internet, told the New York Post that it was a lucrative opportunity that made total sense to him. "I started trying to invest in stocks and realized the 8 percent a year that I’m making in the stock market is not really going to work," he added. "I started trying to invest in stocks and realized the 8% a year that I’m making in the stock market is not really going to work. It’s not really to get me where I want to go," O'Farrell told the New York Post. "It would take decades," he added.

In the past two years alone, his toy trading netted him nearly $500,000. "The time it takes is very minimal, so I can do it on top of my full-time job and create a supplementary income," he said. According to a 2022 report, the resale value of Lego kits is 11 percent annually, outpacing stocks, bonds, and gold. One of many examples is the Lego Star Wars TIE Fighter Pilot helmet model, which was priced at $60 before being retired in 2021. O'Farrell bought the set, and within a year and a half of it being retired, he sold it for $350."You’re talking about a 400 percent return on investment in a year and a half’s time," he said. 

The study also revealed that some of these smaller Lego sets often yielded higher returns, which is similar to the small-firm effect’ in stock market investing where smaller companies can sometimes yield big gains. There are many reasons why Lego stands out in the crowded market of toys. The most important among these is the fact that the kids who played with Lego are in their 30s and 40s, and are looking to collect them out of sheer nostalgia. Demand for old and discontinued toys in the second-hand market has also risen in recent times. Another reason is the supply of the sets which has only been plummeting over time. Lego Group's policy is to release new sets constantly and rarely repeat the older collections. 

The high returns are also connected to the underpricing of the collectible sets in the primary market. this is because the company had a policy of magical cost pricing, and decided the cost price based on how much plastic has been used to produce it.