Are collectibles worth the rate of return?



My husband recently sent me a link to an eBay auction for a “Vintage Lego Classic Train Set #118“. (A new-in-box toy from 1968.)

When the auction ended, the set had sold for $1725. $1725! Which got me thinking…

Are collectibles worth the rate of return? What was the rate of return for that particular item? (And how do I calculate the rate of return to begin with?)

Wikipedia pointed me to a whole bunch of different formulas for figuring rate of return, but I took the easy way out and used a calculator that I thought would work.

Unfortunately the auction didn’t include the original price of the train from back in 1968, so I guessed and used $12.95.

If you had bought that toy in 1968 for $12.95, held on to it for 41 years, and then sold it for $1725, you’d have made an annualized return of 12.67%.

So, not too bad.

But how often does that happen? I know the toys that I’ve held onto for 41 years aren’t new in box or in excellent condition. Nor are most of them collectible, except maybe by dint of being old toys. (Although I don’t think anyone but me wants my little ripped up, colored on beanbag whale.)

In this case, the seller wasn’t the original owner of the toy. They’d bought it 5 years ago from someone else, so who knows how much they paid. Maybe they got an even better rate of return. Or maybe they didn’t do so well.

And that’s the thing about collectibles. You just never know. I can sum it up in two words: Beanie Babies.

For me, collectibles are things that I enjoy for the sake of collecting. Even as a kid, the things I liked to collect were things that I knew would not decrease in value: coins and mint stamps. (After all, you could always spend them or mail them.)

I don’t view collectibles as an investment. If I did, I’d be very careful about the things I added to my collection, buying only with the end in mind of selling at a higher price. I think that unless you really, really know what you are doing, there’s too great an element of luck involved with making money on collectibles.

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Posted in Savings & investments on Apr 17, 2009

3 Responses to “ Are collectibles worth the rate of return? ”

  1. # 1 MoneyBeagle Says:
    April 17th, 2009 at 8:51 am

    I’ve been collecting Department 56 Christmas villages for close to 20 years now. I haven’t sold anything except for a few pieces that I bought multiples on with the pure intent of flipping them. The collectible market for this type of item has slowed tremendously. Before, you’d have pieces go up double in value on the day that they were announced as retired. Now, I’ve found retired pieces for under cost at some stores.

    The bottom line is that I am pretty sure my collection is worth more than what I paid, but either way, I don’t really care because it’s something I enjoy. If I had bought it with the intent of selling it someday, I’d probably track it a little closer. But, as it stands, I plan on keeping it indefinitely.

  2. # 2 Rags Says:
    April 17th, 2009 at 2:28 pm

    Too bad the calculator you provided didn’t account for inflation. That would probably decrease the return by quite a bit.

    Trading cards are fairly easy to collect, and once they go out of print, are almost certain to go up in value several years down the line. Take for instance some of the alpha and beta versions of Magic the Gathering cards. The majority of those cards go for $100+ a piece, some of them are worth more than $1,000 (like the Power Nine, wiki it if you wanna find out more).

  3. # 3 Michelle Says:
    April 17th, 2009 at 11:32 pm

    Assuming the sticker in the picture that says “99.95″ is the 1968 price in Deutschmarks, the original price was about $25 1968 USD, or perhaps $150 to $200 in today’s dollars. Just for fun.

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