To begin, you might look at playing the stock market as though you were playing a game of Monopoly. That's right; for playing the stock market 'game' is not unlike playing a game of Monopoly. There are definite comparisons and parallels.
In Monopoly there are a Boardwalk, a Marvin Gardens, Utilities, Railroads, etc. In the stock market you have the same type of properties (stocks), as in the game of Monopoly. For example, a Boardwalk may be a GE; a railroad, a CSX Corp.; Duke Energy, a utility. The rent a player collects in Monopoly could be compared to the dividends collected by a shareholder in the stock market. How much rent collected in Monopoly would depend on the property owned and how many houses are owned on the property. In the stock market game this would translate into which company is owned and how many shares of each company is owned.
To win the game of Monopoly a player will need to own properties (three of the same color) before building houses and, eventually, a hotel to attain that comfortable, worry-free income that the player knows will come. (The game is not won by selling the properties you own to your opponent, even at twice the price paid.) The game is won by building houses on the properties owned and collecting that worry-free rent.
Taking this approach in the stock market game, you would not win in the stock market by selling your shares owned, but by adding to those shares owned, so every "rent" (dividend collected) would be higher than the previous "rent" collected. This would be accomplished by holding on to those shares owned, and by having the dividends of each company owned rolled back into more shares each quarter. (This would be compared to building houses on the properties you own in the game of Monopoly.)
In Monopoly three properties of the same color could translate in the stock market game as having three properties (owning three different companies) that pay their dividends, one in January, the 2nd in February, and the 3rd in March. This would give the player in the stock market game a dividend every month of the year. To aid in the worry-free "rent" collected, the companies owned would have a history of raising their "rent" (dividend) every year. Owning one house on a property in the game of Monopoly could be compared to owning one hundred shares of stock in the stock market 'game'. A hotel would translate into 500 shares of a company's stock.
There are opponents in the stock market game, just as there are in the game of Monopoly. An opponent in the game of Monopoly is anything that takes money away from you (remember those fees you sometimes had to pay from those pesky Community Chest cards?). In the stock market game the opponents are also anything that takes money away from you ? taxes, credit card payments, commission-fees, fast cars, booze, etc.
To eliminate any of these opponents in the stock market game will aid the investor in accumulating more shares for even higher dividend collecting "rents". All dividends on qualifying dividend-paying stocks are now 85% tax free, eliminating one tax opponent in the stock market game. And, did you know you could eliminate another opponent ? those pesky stock commission fees to stockbrokers? All stocks purchased can be purchased commission-free, without the need of a stockbroker.
How much money do you need to begin a stock market investment game, played like the game of Monopoly?
As little as 100 dollars can be invested commission-free into a company to start collecting those ever-increasing cash dividends.
You have permission to this article either electronically or in print as long as the author bylines are included, with a live link, and the article is not changed in any way (typos excluded). Please provide a courtesy e-mail to charles@thestockopolyplan.com telling where the article was published. (Word Count 679)
For more excerpts from the book 'The Stockopoly Plan- Investing for Retirement' visit: http://www.thestockopolyplan.com
Charles M. O'Melia is an individual investor with almost 40 years of experience and passion for the stock market. The author of the book 'The Stockopoly Plan'; published by American-Book Publishing. The book can be purchased at http://www.pdbookstore.com/comfiles/pages/charlesmomelia.shtml
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