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Who said Finance could not be Fun?

Filed in: All posts, Finance

Now you may be wondering how on earth can Finance of all things be fun? You might have found yourself getting bored and frustrated over topics such as compound interest, budgeting, accounting or any other financial topic.

Most of us experience this because these topics can often be quite dense and difficult to understand, especially if you’ve never had exposure to them before. With this in mind, we have started to devise strategies to make financial education more engaging, and dare we say it, so much fun! Through technology and games, learning about finance can be more fun than you could ever have imagined.

So, let’s have some fun with the game, Monopoly.

Play monopoly with your kids or loved ones. This will teach them 5 Basic lessons.

Remember the game of Monopoly is a relatively simple game to describe. All players start off with some money, and the end goal is to be the last player standing with money. The easiest way to win in Monopoly is by collecting rents on the property or having very good cash flow.

1-Keep Cash on Hand for when opportunities present themselves 

We are reminded of the Monopoly effect that took place in 2008, those without cash on hand, had to “sell-off” what they owned at steep discounts. Unable to make mortgage payments, people were forced to sell their houses for significantly less than what they paid for them. In some cases, the lender foreclosed on the property. Any equity was wiped out. 

On the other side, the people who had cash were given an opportunity to buy assets – stocks, real estate, bonds – for fractions of what they were worth.

2. Have Patience 

Don’t just buy without discipline when investing, you will be placing your outcome on the hope that the market behaves favourable towards you.

Successful investors don’t invest based on hope, they invest with a disciplined approach. Patience and not being emotionally persuaded to the investment is a very integral part of that approach.

3. Learn the basics of good Cash Flow

Shh, very few people know this, but the most valuable properties on the Monopoly board, with the best cash flow, are the four railroads. You might ask yourself but why? 

Cheat tip: If you own all four, each railroad costing $200, by owning all four you collect $200 in rent or a 25% return. This may be a very strange way to look at a game, but this is precisely why Monopoly offers some valuable financial and investing lessons.

Over a good length of time, assets increase in value based on the cash flows they produce. Even something as simple as your saving account or savings bond becomes more valuable if it is earning more cash through a higher compounded interest rate.

4. The Most Expensive Assets are not Always the Best choice

Most monopoly players want to own the most expensive places just because these have the biggest pay-outs. These however also are the most expensive pieces to maintain.

Most people who lose at Monopoly do so as they own the most expensive pieces and don’t pay attention to cost, only cash flow. Focusing solely on the cash flow without considering the cost paid to attain those cash flows is to play the game with a blindfold on.

On the other hand, those who win at Monopoly, and invest in the long run, instead tend to focus on the value gained for the price paid. 

The key in property investing is buying low and selling high. When you focus on the most expensive assets, odds are you are overpaying and setting yourself up for losses.

5. Don’t Put All Your Chickens in One Coup

Like with any investments, diversification will allow you to bounce back if some investments don’t perform as expected.

Remember the winner in Monopoly is someone who usually spreads out his or her properties throughout the board and has multiple chances at capturing rents.

Just keep in mind, Monopoly shouldn’t be taken as a thorough education in finance and investing, as it certainly has its flaws. 

But it does have some valuable lessons to teach. Spread yourself out across the board intelligently, keep cash on hand, focus on cash flows, be patient, and pay attention to the price.

So, use these five lessons as a basic guide to more intelligent and successful investment decisions in your life today.

Join us in catapulting your cashflow with our tailored CFO services from M&J.