| |
| |
|
|
Stocks and Mutual Funds |
|
Investing in Stocks and The Game of Monopoly
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
MORE RESOURCES:
Stocks-Mutual-Funds - Google News |
|
|
|
RELATED ARTICLES
Fools Gold The stock market has been in an up trend for more than a year. Almost everyone is feeling good and many believe we are back in the old bull market with the previous high of the Dow Jones Industrial Average just about to be broken. Good News? As the man said, "I've got some good news and I've got some bad news. What do you want to hear first?" It was replied, "Tell me the good news first". The Right Mutual Funds For Baby Boomers If you are a baby boomer, time is not on your side. Many baby boomers see retirement age fast approaching with little to nothing in the way of retirement assets that will allow them to actually retire and live a comfortable lifestyle. Intervention Intervention. Now don't let that big word scare you. Frog In The Pot You remember the story about the frog that was put into a pot of cold water on the stove. He was not concerned. The Bottom? Every day I hear someone on CNBC proclaim that "this is the bottom" and you should get in there and buy all those "bargains". "The valuations of the DOW stocks are a steal. Finding A Good Stock One of the things people are always asking me is how can I find a good stock. The answer I give does not please them. Long-Term Investment In Todays Market? The stock market is very unstable at this time going up and down while interest rates are so low you want to be a borrower and not a lender. Would you like some suggestions on how can you get the most out of low interest rates while being assured your principal will not disappear while you are trying to make some money? Of course, there is always the danger of borrowing the money and then spending it just because it is there. Mutual Fund Ball and Chain The broker told me not to sell because the mutual fund I owned had a 2% redemption fee and they would penalize me if I did.I got to thinking about it and did some simple math to see what that would cost me if I sold. Is Active Trading The Answer? One of the main reasons many of us get into investing is to become financially independent. Who isn't trying to amass a portfolio with enough income to ensure that we don't have to work when we should be playing golf or traveling the world. Stops Make Money During the day I watch CNBC-TV, the stock market channel. Fortunately, I keep the sound muted or I would be hollering at the dumb "experts" being interviewed. Trade Stocks for Real I read a comment by a forum member on another site earlier today that suggested that every investor should back test their system for at least twenty years. I disagree and will now tell you why. The Cub; II We keep hearing about this bear market and that the bottom is "in" or "very close" so we should be invested in these bargain basement prices to take advantage of the next bull so we won't lose out on the expected huge profits.This is not a big bear market - yet. Parachute Investing Ever jumped out of an airplane? It's OK if you have on a parachute. Pretty dumb if you don't. What Are You Waiting For? Do you own any mutual funds? In an IRA or 401K or wherever. Privately or at work. Stocks & Oil, Sat Jun 18th, 2005 Both the stock market and oil prices rallied recently, which seems to be a paradox, because high oil prices are negative for earnings (i.e. Market Timing? The recent criminal fiasco in the mutual fund industry is being used by Wall Street to persuade investors that market timing is a bad thing. The late trading by Janus, Bank America and several other well known mutual funds is falsely being called market timing. Economists In today's volatile and confusing stock markets everyone is searching for a guru who knows which way the market is going and when. Ask any economist and he will have an answer. Forecasting the Stock Market Every day I see in the financial section of newspapers how to forecast what the market will do in 6 months, 12 months, several years. "Ten stocks that will double in the next 6 months. The Holy Grail (of Investment) Every year I go to the Money Show in Orlando, Florida. Thousands attend.
|
||||||||||||||