So, I had an idea for a magic item based on something I read in a book a number of years ago.

The item is a weapon. The type of weapon is less important. What the item does is reduces the damage output of the weapon by a small amount, likely only a -1 to damage rolls. BUT, the weapon then takes this damage reduction and stores the damage as charges for a later attack. I was thinking of limiting the number of charges that can be stored, maybe around 5, giving it a maximum of +5 to damage, but only after taking five -1s first.

Thoughts?

Seems like it could work. would the -1 happen every time, or would the wielder get to choose when? Ditto with when they could apply the bonus. Could be frustrating if you're stuck in the -1 cycle when you're fighting a tougher enemy, only to be forced to unload the extra damage on a mook. I might let the player choose when to use it, so it becomes a tactical choice. And let them choose to take the bonus before it hits 5. And say that at the end of a long rest, it re-sets to 0. Either way, the bookkeeping might get annoying, but otherwise I wouldn't see a problem with it. If you stick to damage, a couple points here and there won't really have much potential for game-breaking impact, and something like this could be fun. Just don't mess with to-hit bonuses, that's where you need to be more careful with balancing.

Another way you could approach this is to let the dice dictate when the charges build up -- rather than voluntarily taking a penalty to damage, the weapon could gain a charge every time the player rolls a 1 on the weapon's damage die. 

I really like that idea. It's like getting a consolation prize for rolling poor damage.