2987: If More People Did Money Like They Play Monopoly, They’d Be A Lot Better Off by Barney of The Escape Artist

[00:00:00] [SPEAKER_00]: This is Optimal Finance Daily. If More People Did Money Like They Play Monopoly, Theyd Be A Lot Better Off by Barney of TheEscapeArtist.me.

[00:00:12] [SPEAKER_00]: Quote,

[00:00:13] [SPEAKER_00]: Imagine playing Monopoly and never buying assets or investments that generate income. Imagine you just went around collecting $200, giving your money to the rich, and trying to stay out of jail. This is how most people live their life.

[00:00:29] [SPEAKER_00]: David Henning

[00:00:31] [SPEAKER_00]: Nobody ever went to Monopoly business school, and yet on some level, everyone knows how to win at Monopoly. For those who'd like a quick reminder, here's how you win at Monopoly.

[00:00:43] [SPEAKER_00]: Firstly, you have to decide to play, and to play to win. As soon as the game starts, you buy all the assets you can afford, and keep adding. Once you've bought an asset, you aim to hold it forever.

[00:00:58] [SPEAKER_00]: You stay out of jail. You try not to stay at hotels that you can't afford. You hope for good luck, it helps. You avoid distractions, and you stay in the game.

[00:01:10] [SPEAKER_00]: Similarly, we could say that everyone knows, on some level, what they should do to get richer. It's just that only a certain percentage of people are willing or able to consistently follow through and do it.

[00:03:23] [SPEAKER_00]: FX options, Nasdaq stocks, coins, etc. from home. No experience required. So now when Frankie lands

[00:03:32] [SPEAKER_00]: on Park Lane, he buys the property and then flips it on to another player five minutes later

[00:03:37] [SPEAKER_00]: for a quick 3% profit. Can you see why Monopoly is easier than real life investing?

[00:03:43] [SPEAKER_00]: There are fewer distractions. In the game of Monopoly, you don't live in a world of temptations.

[00:03:49] [SPEAKER_00]: These temptations encourage people to spend their investment money on consumer trinkets or

[00:03:56] [SPEAKER_00]: get-rich-quick schemes. The prison camp system makes it harder for you to escape the three C's,

[00:04:04] [SPEAKER_00]: conformity, convenience, and consumerism. It's hard to hold down a high-paying job or run a business,

[00:04:10] [SPEAKER_00]: but it's simple to manage your own portfolio and create a system that works for you.

[00:04:15] [SPEAKER_00]: You're smart and already knew how to win at Monopoly. You do not need me to tell you this.

[00:04:21] [SPEAKER_00]: But you only really know it if you do it. Or to be precise, you only really know it if you have

[00:04:28] [SPEAKER_00]: already done it. Carl Richards wrote The Behavior Gap, a good book about the gap between, one,

[00:04:35] [SPEAKER_00]: what we know that we should do as investors, and two, what we actually do. In a world where

[00:04:42] [SPEAKER_00]: equities returned 8-10% per year, the average investor only achieved 2.9% per year. Why the gap?

[00:04:51] [SPEAKER_00]: Because investors churned their portfolio, more trading incurs more fees. They FOMO'd in and

[00:04:59] [SPEAKER_00]: bought at the highs and then capulated and sold at the lows. This is why it makes sense for most people

[00:05:05] [SPEAKER_00]: to dollar cost average in each month. It's emotionally easier, and that's generally how we

[00:05:11] [SPEAKER_00]: save and invest for the future. That gap between asset class returns and the returns achieved by

[00:05:17] [SPEAKER_00]: the average investors is a shame. But the even bigger loss is failing to get started in the first place.

[00:05:24] [SPEAKER_00]: The biggest loss is failing to buy assets that will provide you with a growing stream of passive

[00:05:30] [SPEAKER_00]: income over time, if you get your compounding machines set up correctly. People are still

[00:05:35] [SPEAKER_00]: adjusting to the shock of higher interest rates and increasing cost of living. The housing market

[00:05:41] [SPEAKER_00]: is on the floor right now. But make no mistake, a new bull market for all risk assets is on the way,

[00:05:47] [SPEAKER_00]: and the next one is going to be a biggie. Do you already have your earnings, saving, and investing

[00:05:53] [SPEAKER_00]: system up and running on autopilot? Would your portfolio run along happily, even if you slipped into a coma

[00:05:59] [SPEAKER_00]: for the next three months? Are you using your tax shelters? What is your target asset allocation?

[00:06:06] [SPEAKER_00]: How do you track your net worth? Do you have a one-page financial plan? Get rich slowly, but get started

[00:06:13] [SPEAKER_00]: quickly. You just listened to the post titled, If More People Did Money Like They Play Monopoly,

[00:06:23] [SPEAKER_00]: They'd Be A Lot Better Off by Barney of theescapeartist.me.

[00:06:27] [SPEAKER_00]: I stand firm in my belief that investing should be the easiest part of managing your money.

[00:06:35] [SPEAKER_00]: If you invest early and often in low-fee total market index funds, compound interest is going to

[00:06:41] [SPEAKER_00]: magically carry you across the finish line of your financial goals. But the financial services industry

[00:06:47] [SPEAKER_00]: tends to overcomplicate this. They convince us that we need to try and beat the market, or time the

[00:06:54] [SPEAKER_00]: market, or pick the right stocks, or some other flavor of overcomplicating the incredibly easy

[00:07:01] [SPEAKER_00]: and efficient process of growing our money. Investing can be simple and easy, but our emotions

[00:07:09] [SPEAKER_00]: around investing, namely fear and greed, tend to get in the way of what makes logical sense.

[00:07:15] [SPEAKER_00]: We're afraid to make a mistake, or that we don't know enough about investing to get started.

[00:07:20] [SPEAKER_00]: Or we let our greed guide us to the get-rich-quick scheme that sorely disappoints us in the end.

[00:07:27] [SPEAKER_00]: You likely know how to play Monopoly because you read the rules and you had some practice.

[00:07:33] [SPEAKER_00]: The same is true when it comes to financial literacy. Just read the rules and practice them.

[00:07:40] [SPEAKER_00]: Experiment with tracking your spending, budgeting, living below your means,

[00:07:44] [SPEAKER_00]: and saving and investing each month. Over time, the game of money is easily won.

[00:07:51] [SPEAKER_00]: But that'll do it for another edition of Optimal Finance Daily.

[00:07:55] [SPEAKER_00]: Thank you for listening, and I'll be here again with you tomorrow.

[00:07:58] [SPEAKER_00]: So I'll see you there, where your optimal life awaits.