What Monopoly Can Teach You About Investing

At some point in your childhood, you would have played Monopoly with friends or family. This classic board game has been around for over a century and the real-life financial and investing lessons from it are still just as relevant today. So if you want to introduce financial literacy to your children, playing Monopoly is a good beginner-friendly way to start.

Here are the top lessons investing lessons you can learn from Monopoly:

Cash is king

In Monopoly, the player with the most amount of cash at the end of the game wins. If you run out of cash during the course of the game and can’t afford to pay the rent after landing on someone else’s property (even after selling of your properties or assets), you’ll be declared bankrupt and out of the game.

Real-life money lesson: Always keep some cash on hand for a rainy day. Even if you want to leverage, make sure you have prudent strategies and sufficient deep pockets that will enable you to pay back the interest and amount borrowed when things go bad.

Be prudent, patient and strategic in building your property portfolio

In Monopoly, the aim is to have accumulate properties for rent so that you can receive rental income. To win, you need to be patient. You’ll need to be strategic about buying the right type of properties based on what you can afford.

You’ll first need to build up some cash (by “Passing Go” a couple of times) so that you can afford to snap up your first few properties. After that, it’s like a snowball effect. As you generate more rental income (passive income), you’ll have more cash to build up a solid property portfolio.

There’s another lesson to be learn here: do not put all your eggs in one basket. For example, the snapping up those little green houses on the two most expensive pieces of land may not necessarily be the best strategy. They’re costly to maintain. Plus, the chances of securing rent is lower because they only form two places out of the entire board.

You may want to consider purchasing multiple properties on all sides of the board to increase your chances of collecting rent.

Passive income can help to attain financial freedom

An important lesson in Monopoly is that the more properties you buy, the more rent you can collect and this is a form of passive income that can help you to build up your nest egg.

Whenever someone rolls the dice and lands on your piece of property, you’d be able to charge rent. Similarly, in the real world, once you get on the property investing ladder, you’d be able to generate passive income even while you sleep.

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