Four investment truths this board game can teach you
I loved Monopoly. While other kids played tumbang preso and hop scotch, I sat for hours rolling the dice, playing the banker, and amassing properties. It was the closest a seven-year-old could ever get to holding thousands of dollars, or owning real estate, or earning from rent.
I would win some games and be king of the board, holding in my palm this thick wad of title deed cards. Other times—even the games where I played against myself—I would go bankrupt and lose it all with a single bad turn or a bad barter.
It was child’s play, yes, but it imparted more valuable lessons on finance and investing than any motivational speaker could have ever done. At seven, I may not know about stock market, or bonds, or mutual funds, but I learned from Monopoly financial fundamentals and life truths that have helped me with my finances and investment decisions.
1. Don’t save. Spend.
Yes. You read that right. But before you run amok in Lazada or Amazon, let me qualify. Spend on real estate, stocks, mutual funds, insurance. Heck, buy artworks and antiques, anything that will earn you money. In Monopoly, you cannot NOT buy the property you land on because the next time you do, you’ll pay anyway—for the rent. And sometimes, even if you don’t have the money, taking out a loan to buy that property can become the best decision of your (game) life.
It taught me, oh so subtly, that though having cash is important, hogging them with a fist tighter than a constrictor knot will not make you rich or in this case, win the game. Sometimes, spending is good if you see an ROI. As they say, you spend money to earn money. The same goes for loans. Credit is not bad when you expect returns from it. How do you think businesses are able to expand? It only becomes bad when you take out a loan for something that will earn you nothing.
2. The current value isn’t always the actual value
If you’ve played the game, you’d know that owning all four railroads or getting the two utilities increase each of their values 10-fold. Or that holding the title deeds of all same-colored blocks of properties allow you to collect higher rent. It’s considered quite a coup to be able to do this and often, players will resort to begging, hoodwinking, or plain old bartering to complete a property set. Boardwalk for both Baltic and Mediterranean. One utility for two railroads.
And there’s the cash transaction and mind you, children can be brutal with their asking price. Even then, you’ll know that the listed price is not always the actual value. Properties, stocks, funds, insurance are currently valued based on so many factors—current demand, market state, economy. Few, however, realize that actual values are based on something else—company stability, people running the business, quality of the product. So before you buy or sell or barter, you need to know what that actual value is! Research. Do your homework. Go beyond the surface value. The actual value—not the current value—will determine how much it will be in the future.
'Bad things happen to good players. Tough. But that’s all in the game. A single bad turn can end your dice-rolling or send you rolling in with money.'
While it is a considered a gold mine in Monopoly to singularly own same-colored blocks of property, it is absolute suicide NOT to own some property on each of the four sides of the board. Why? Because you would rarely miss landing on each row and having no property would increase your chances of paying huge, huge rent with every turn.
So don’t just focus on getting all the similar-colored sets. When wheeling and dealing, don’t forget to gain a foothold on each row, too. Diversifying your interests and investments will make you more secure. While it is great to focus on industries or investment options that give consistent returns, spread your money and buy other kinds, too. So when all goes to shit in one row, you still have other rows to tide you over.
4. Lady luck can be a bitch or a bud.
You land on Boardwalk and pay the exorbitant lease. You land on Chance and pay for repairs for all your houses and hotels. Bad things happen to good players. Tough. But that’s all in the game. A single bad turn can end your dice-rolling or send you rolling in with money. Real life can be as harsh but unlike in Monopoly where your luck is tied to the roll of the dice, you can single-handedly prepare for tougher times. Buy insurance. Invest in retirement funds. Build your financial portfolio as early as you can, while you still can and beat the bad luck before it even thinks to strike.