Stock Market Investing and the Monopoly Game
Stock Market Investing and the Monopoly Game
Some of the features seen in Monopoly include a Boardwalk, Marvin Gardens, Utilities, Railroads, and more. Similar to the game of Monopoly, the stock market allows you to own a variety of different kinds of assets, or stocks. A boardwalk may represent General Electric, a train could be CSX Corp., and a utility could be Duke Energy. One may draw parallels between the rent a monopoly player earns and the dividends a stock market shareholder receives. If you own a piece of property with multiple houses on it, you can expect to collect a different amount of rent in Monopoly. This would indicate which firm is owned and the number of shares owned in the stock market game.
If you want to win in Monopoly, you need to collect three identical properties. Then you may start constructing residences and, eventually, a hotel, so you can live comfortably and relax with the money you will earn. (Even if you sell your homes to your opponent for twice the price you paid, you still will not win the game.) Constructing dwellings on one's owned properties and collecting rent without concern is the goal of the game.
By adopting this strategy in the stock market game, one would not achieve success by selling their existing shares but rather by increasing their holdings such that each "rent" (dividend) received would be more than the one before it. To achieve this goal, one should hold on to their current shareholdings and have their quarterly dividends reinvested into further shares from each company they own. (In Monopoly, this is like constructing homes on the properties you own.)
In the stock market game Monopoly, three identical properties might stand in for three separate businesses that pay dividends at the beginning of the year, mid-February, and late-March. This would provide the stock market gamer with a payout on a monthly basis throughout the year. Possessing a track record of annually increasing their "rent" (dividend) would help ensure worry-free "rent" collection from owned enterprises. In the "game" of the stock market, one hundred shares of stock would be equivalent to owning one house on a piece of property in Monopoly. The equivalent of one hotel would be five hundred shares in a stock exchange.
Just like in Monopoly, there are other players in the stock market game. Remember those annoying fees you had to pay from those Community Chest cards? They were your opponents in Monopoly. Anything that took money away from you was an opponent. Anything that deducts funds from your account, such as taxes, credit card payments, commission fees, fast vehicles, alcohol, etc., might be seen as an opponent in the stock market game.
An investor can increase their dividend "rents" by acquiring more shares if they can eliminate any of these competitors in the stock market game. A tax hurdle has been removed from the stock market game: dividends on eligible dividend-paying equities are now 85 percent tax free. Are you aware that you have an additional adversary in the form of the annoying stock commission fees charged by stockbrokers? You can buy any stock you want, whenever you want, without paying a dime to a stockbroker.
In a stock market investing game similar to Monopoly, how much capital is required to start the game?
If you want to start collecting those growing cash dividends from a corporation, all it takes is $100 invested commission-free.
Visit http://www.thestockopolyplan.com for more excerpts from the book 'The Stockopoly Plan-Investing for Retirement.'
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