I recently heard this analogy about investing which I thought was really cool…
Analogies are pretty powerful because they compare something we currently know and can relate with to a concept that we wish to evolve our understanding of.
Let’s imagine you are playing a game of monopoly – as we know the rules of monopoly are such that every time one passes “GO” they collect £200 as a source of income. This is a mechanism via which we can consistently generate some money within the rules of the game.
Now, the primary goal of monopoly is to reinvest that wealth into assets which will give you greater returns. As one advances around the board one uses this wealth to purchase assets. They must reinvest this wealth to achieve success within the boardgame. Without purchasing assets one is missing out on opportunities.
No one would ever do as well as they could in a game of monopoly unless they reinvested SOME of that wealth..
However in life not utilizing the consistent income we are generating is actually the default position for many of us in which it is so easy to remain. As in monopoly this can mean we are missing out on HUGE opportunities (opportunity cost).
Just like we must learn the rules of monopoly to succeed, learning the rules of investing is so important to achieve our goals in real life. Success in life is more abstract as it is a game with infinite rules and an undefined time horizon. However, for a lot of people the option to choose what they want to do on their own terms is deemed success within life.
An education on investing is one of the most straightforward ways to allow ourselves to have the freedom to do whatever we want.
Its not about having a tonne of money for the sake of it. Money is literally the tool one can use to purchase back our time. Thats the real reason it is helpful to grow/nvest it. The pure and singular objective of this is to allow us to become more HAPPY.
I hope you found some value in my words. Happy Christmas to each and every one of you and your families.
Credit to Anne O’Donnell for this brilliant analogy!
*NOT FINANCIAL ADVICE