The world’s leading expert on Monopoly says there are many tricks to winning the game, that are just as useful for building long-term wealth.
Having judged Monopoly tournaments for more than 30 years, Philip Orbanes, added that there are a lot of parts to the game’s strategy that can help people in real life, according to news.com.au.
“Most of us really don’t get good financial training during our schooling, we have to learn as we go and that means we make financial mistakes, especially in investing,” said Mr Orbanes, who worked at Parker Brothers, the company that makes Monopoly, and has just released a book entitled Monopoly, Money and You.
Monopoly teaches people the importance of having diversified assets according to Mr Orbanes. While you start with cash and no other assets, you cannot win Monopoly if you stay in cash, he says. Having income producing assets, like three or four train stations, provide the income you need to build your investment up. Owning stocks that pay dividends like Telstra Corporation (ASX: TLS), allows investors to reinvest those funds into other assets, maybe stocks that provide more growth, such as CSL Limited (ASX: CSL).
Avoid fashionable assets
According to Mr Orbanes, one of the great fallacies in Monopoly is that Park Lane and Mayfair are the best properties because they are the most expensive. In reality, he says, the best ones to own are the three oranges. They lie an ideal distance from jail, and players go to jail frequently. The lesson for investments is that you need to think about location, value for money and how it will perform over the long-term. Oil and gas explorers may be exciting, but they could end up as an expensive lesson, without providing any return. Going for boring, staid stocks like Woolworths Limited (ASX: WOW) could make a big difference to your returns.
Don’t get complacent
Mr Orbanes relates a tale of the 2009 World Championship in which a Norwegian player traded a light blue property for a red property in what appeared to be one of the worst trades possible. What he had noticed was that all players were coming up on the light blues, and he built up his houses sucking the other players’ cash so they couldn’t develop their properties. It turned out to be the winning move. If you are in a good financial position, you still have to watch out for conditions around you. As Mr Orbanes says, “Complacency is dangerous, that’s usually when something unexpected hits you.” Ask investors who bought shares in Newcrest Mining (ASX: NCM) for over $30 after its acquisition of Lihir Gold.
If you don’t want to end up passing Go, missing out on $200 and ending up in jail and losing the game, Monopoly has some important lessons for investors.
The dramatic run-up in the ASX 50 means many of our Aussie “blue chips” are trading for truly eye-popping prices. That’s why savvy investors are now seeking opportunity in smaller companies. Discover two fantastic small-cap opportunities now, in The Motley Fool’s brand-new research report, Two Small Cap Superstars — including names, codes, and all the details. Simply click here to download your FREE copy.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Telstra, CSL and Woolworths.