Imagine for a moment, that you are sitting behind a desk with a large sum of money with which to invest. And imagine that two fellows come into your office and request your financial support for their ventures.

One is a film producer called Peter, who intends to make a movie about a hobbit burgling gold from a dragon.

The other is a hobbit from the Shire, who intends to go to a Lonely Mountain and steal from a fire-breathing lizard.

Who should you invest in?

That depends on how much you have.

The production costs of The Hobbit are estimated to be around $500 million. We are going to assume that eventually The Hobbit will make as much money as The Lord of the Rings did at the box office; the opening weekend of The Hobbit made more than The Fellowship of the Ring, even adjusting for inflation, so this seems reasonable.

With this in mind, The Hobbit will eventually make $2.92 billion. Bearing in mind the $500 million investment, this is a profit of $2.42 billion, and a return on investment of 484% if you choose the movie option.

Then we have the small furry footed chap. His numbers are more difficult to estimate, as very few people these days go on quests for months into foreign places, running into trouble with the residents and hiding from the authorities of that place. (Well, apart from gap year backpackers of course).

Back in the 11th century however, this sort of thing was much more common in the context of the crusades. We got in touch with Andrew Jotischky, Professor of Medieval History at Lancaster University and author of ‘Crusading and the Crusader States’. We asked him how much he thought it would cost to go on a crusade. He said that, based on his reading, the figure of four or five times a knight’s annual income seems right.

With this rather helpful figure in mind, this means that Bilbo’s quest would cost (in modern money) about 5 times the average income of $50,000, or $250,000.

Rather conveniently, Forbes have also published the wealth of Smaug, at the value of $8.6 billion.

Bilbo in his contract is entitled to up to and not exceeding 1/14 of this, or $614,300,000. Which gives a profit of $614,050,000 at a return on investment of 2456%.

So if these two were standing in front of you, who do you give your money to? Well that depends on how much you wish to invest. If you have the capital to spare, then Peter Jackson’s movie will make you a richer man, but for a larger investment. If however you wish to only venture a small amount, then Bilbo offers a greater return on lower up-front costs.

It’s also worth mentioning that Jackson is probably a safer bet than Bilbo. Unlike those who steal from Smaug, your investment in Peter is unlikely to go up in smoke. Or get eaten. Or literally disappear.

And The Hobbit, the novel by J R R Tolkien? The late author is currently earning $12 million per year. Which may be less profit than Bilbo or Peter, but his start up costs would have been minimal.

Or, for the investor with vision, there’s always Sauron.

Enjoyed this? Check out our estimate of the cost of sending your kid to Hogwarts, or a look at the Wall That Protects the Seven Kingdoms. You can find this and other articles in our Editorials although for a selection of the best check out our Greatest Hits. And be sure to stay in touch: