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Is Investing Just a Game of Monopoly?

Photo by Erik Mclean on Unsplash

I recently picked up a book from the library called Investopoly: The 8 Golden Rules For Mastering the Game of Building Wealth by Stuart Wemyss, which got me thinking. Is investing just a game of monopoly? Am I better off if I know the rules? Can I control the direction of the game?

Winning a game of monopoly requires patience, skill, negotiation, cooperation, hard work and a handful of luck. You feel the elation of winning, the disappointment of being broke and the frustration of continuously paying rent and tax to someone else, all in one simple board game. Sometimes you move one step forward only to take two steps back, and it can feel like you’re running in circles.

Games are won by applying proven rules and strategies and making the most of your luck.

There are many similarities with playing monopoly and this game we call life. There are winners, there are losers and there are those who just manage to get by. Some people make their wealth through chance, others through strategy and skill and many just get there through making sound decisions over a long period of time.

However, there are proven paths that you can follow and rules that make the entire game that little bit more straightforward. The great thing is that with the availability of information nowadays, you can work out the rules of the game for yourself, and build wealth through investing.

In Investopoly Stuart highlights his 8 golden rules of building wealth, that he has formulated and refined over the last two decades working in the financial services industry.

The 8 Golden Rules

Golden Rule # 1 — Always think long term

Golden Rule # 2 — Set two important goals: how much income you need and by when

Golden Rule # 3 — Spend less than you earn and invest the difference regularly

Golden Rule # 4 — Grow your asset base first and then concentrate on income second

Golden Rule # 5 — Strategically set your asset allocation to reduce risk and maximise returns

Golden Rule # 6 — Invest in the share market using a low-cost, passive investment method

Golden Rule # 7 — Only invest in a property that is deemed ‘investment-grade’

Golden Rule # 8 — Protect your investment strategy from expected and unexpected risks

These golden rules are broad, however they form part of the commonly accepted foundations of personal finance. Spending less than you earn and investing the difference is a fundamental idea that I’ve come across in every personal finance book I’ve read.

Plus it goes back even further than that, The Richest Man in Babylon delves into 8,000-year-old parables from ancient Babylon which essentially reiterate the same message (e.g. pay yourself first, control your spending, increase your ability to earn).

When I interviewed behavioural psychologist Dr Daniel Crosby on the How To Money Podcast last month, he mentioned that you only need to read a couple of personal finance books to get the basic concepts (and he’s an author)!

It’s much more important to get started and have a go, rather than spending years trying to learn everything before eventually getting started.

There’s certainly luck and skill involved, but by practising a few timeless principles you’ll be way ahead of the game. I’d love to hear your thoughts on this, so please send them my way via email.

Cheers,

Kate

If you’re interested in learning more about money and personal finance, catch us on the How To Money podcast which you can find on iTunes, Spotify or via our online web-player.

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How To Money Australia

How To Money Australia

Our mission is to get young Australians talking about personal finance, and give them the resources to guide them in their financial education journey.