Monopoly Offers Lessons On Investing And Financial Planning

According to Philip Orbanes, Monopoly championship judge and author of Monopoly, Money and You: How to Profit from the Game’s Secret of Success the game of Monopoly is more than mere child’s play. If you play the game to win and to learn you can gain knowledge about investing and financial planning. U.S. News and World Report published an interview with Orbanes and observed that besides keeping you entertained, the game “may also have taught you valuable lessons on risk assessment, timing and diversification—all useful tools for investing in the real world.”

Negotiation: Children playing monopoly get practice in financial negotiations and Orbanes saw that people who won monopoly championships were able to replicate that success in the real world.

Diversification: After playing Monopoly multiple times, players see that it is best to invest money in different places (utilities and railroads, for example). And in real life it helps to invest in different stocks rather than invest heavily in one industry or business.

Debt: Orbanes describes what happens when you mortgage a lot of property in Monopoly: you owe the bank a lot of money and you have no money coming in. You can do the same in real life or strategize to avoid this.

Financial Planning: Orbanes discusses how in Monopoly just as in life, some things are beyond your control. The key is sound management of the things you can control. He says players start the game with $1,500–”the average family income in 1935 when [Monopoly] launched…The symbolism there is if you make wise financial decisions in Monopoly, your initial nest egg multiples by four or five times…”

While it is true that losing money in real life may hurt a lot more than it does in Monopoly, you do not have to make real-life investment decisions all on your own. You can work with a Fee-Only financial advisor who can help you manage your money.

About the author

Claire Emory, MBA, CFA, CFP®

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