Monopoly: The Board Game That Teaches You About Money

The board game Monopoly hasn’t aged. Since its introduction in 1904 — then known as Landlord’s Game — families and friends have enjoyed hours of fun buying properties and pretending to be tycoons.

The goal of the game is to pocket the most amount of cash and assets — the properties you buy and build — and avoid bankruptcy.

But it’s not just all play. Monopoly can also be an engaging way to teach people about money.

Investing that $200

Every time you pass ‘GO’ in Monopoly, you get $200.

If you can get $200 without doing anything every round, why risk the money and buy a property that may not get any returns?

When a player lands on a property owned by another player, they pay the owner rent.

It seems wise to save that $200 to avoid going bankrupt, but in Monopoly, that $200 does not grow in your bank. Meanwhile, you have to pay rent whenever you land on another player’s property.

The smarter way would be to use some of that money to buy properties and accumulate wealth whenever another player lands on your spot.

Similarly, in real life, inflation eats into our savings. As prices climb yearly, you pay more for the same items.

Instead of keeping cash in a bank account with a low interest rate, you should invest it in financial products and physical assets that offer returns higher than the annual inflation rate.

For example, you can start with low-risk index funds and investment-linked insurance policies. Once you have enough money, you could look into properties.

Read more: How Does Inflation Affect Your Bank Balance?

Investing is risky because you never know if your bets will generate returns. But while your losses are capped at 100% of the money invested, your returns could be exponentially higher.

With the cost of living in Singapore increasing significantly every year, the biggest risk today is taking no risks at all.

Be responsible

That said, do not throw caution into the wind.

In Monopoly, a player goes bankrupt when they do not have enough money to pay another player or the bank.

What happened? The player probably bought too many properties and had little cash left on hand.

To save his hand, the player could either:

• Promise to pay the other player at a later date, but with interest
• Liquidate his or her properties to fund the debt

It’s not the end of the game but the other player has the upper hand.

How do you apply this in your life?

Have the habit of keeping an emergency fund and avoid investing beyond what you can lose. Make sure a good chunk of your investments are in assets you can liquidate quickly.

Not all investments are the same

According to one Monopoly fansite, players land on red and orange properties the most, and brown properties the least.

So don’t just buy any property you land on.

Outside of Monopoly, good and bad investments exist. Even if they’re in the same asset class, there are still differences.

For example, not all stocks are the same. An investor has to look at their cash flow, profits and losses, management team, debt, external risks, and long-term outlook.

Remember to diversify your portfolio beyond one asset class. Besides stocks, bonds, insurance policies, and properties, you could look at classic cars, luxury goods, and even comic books.

Find your best strategy

You could gun only for the red and orange properties. Or you could buy as many properties as you can at the start and use it as barter later in the game.

Some players only buy railroads. Others sell some of their properties to build hotels on their properties.

There is no fixed formula to winning. But to win, you have to strategise early, think long-term, and observe how the other players think so you know how best to negotiate with them.

This is also how you should plan your investments and talk to parties you transact with in life.

Read more: Working Adults: 5 Effective Ways to Negotiate Your Salary

Monopoly is proof that learning doesn’t have to be boring.

Even better, you learn while you have fun. It’s a game where even if you lose, you walk away with an important life lesson.

Originally published at https://plannerbee.co on February 7, 2022.