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Investment Strategies from the Monopoly Board Game

By Edited Nov 13, 2013 0 0

Pass Go Collect 200 Dollars!!! If only it were that easy. However the board game does actually teach us a few invaluable financial lessons.

Buy Utilities, well stock in utilities. Utilitie companies like electric companies are limited to how much profit they can make. Unless they are making huge investments in their infrustruture the only other option to bring their cash flow to the appropriate level is by paying dividends. Most utility stocks pay higher that average dividends. Many utility companies pay betwenn 4-6 percent annual dividend yeild. Even if the stock price flutuates a bit if you keep reinvesting your dividends n more stock it is likely your inestment will grow.

When you purchase a property and another player lands on that space they pay you rent. The lesson here is simply that all real estate is a liability unless it is creating income. Also once you get four houses you can trade them in for a hotel . If you invest in real estate you can eventually pull equity out of your properties to purchase more lucrative rental properties.

Always be prepared for the unexpected. Having an emergency fund is like keeping that get out of jail free card handy. You might get a 200 dollar bonus from the community chest or pay a luxury tax right after you pass go. Keeping some money in a money market or traditional savings account in case of a rainy day is never a bad idea.

Until recently buying railroads might not have been a sound investment. However with fuel prices where they are and with plans to build high speed rails across the country people are seeing the investment potential in rail road companies. The famed profit of Omaha, Warren Buffet, recently took a large stake in a rail road company and predict that railroads will experience expansive growth. Aside from the addition of high speed rails in the future there is the fact that railroad companies own the majority of the tracks their trains travel on or lease the use of tracks from other companies. Since the companies own their own tracks and make money from transporting goods and people the tracks end up being in better shape than most interstate highways. As our highway systems continue to fall in to disrepair due to the state of our national economy railroads continue to repair and expand their existing routes.

So next time you're playing a board game pay attention to the rules. Sometimes you'll find that they are good ones to play by in real life.


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