Playing Monopoly in Real Life


I’ve played Monopoly a number of times with my children, rainy Sunday afternoons are ideal for this and my youngest still joyfully remembers bankrupting his older brother the first time we played.

We all know the aim of the game – accumulate enough assets and bankrupt the other players when they can’t pay their debts.

When my two boys were younger and asked what I did all day at work and I think my best analogy has been to Monopoly.

I see successful financial planning as a lot like Monopoly (minus bankrupting your family of course). It can be a slow start; it might take a while before anyone has a full-colour set of two or three properties and can buy houses and hotels.

Similarly, in life, the compound interest of getting your investments and pensions off the ground can be B-O-R-I-N-G as hell in the early years. Compound growth takes time and patience, not aspects we humans have evolved to cope well with. If you are looking for investments to provide excitement in your life, please look elsewhere.

Back on the Monopoly board, once people start landing on your houses and hotels you can start accumulating cash quickly and buying more property. And it compounds on again from there.

Let me get one thing straight, I do not mean you should only buy property in real life. The analogy of Monopoly property means that in real life (or IRL, as my aforementioned kids tell me it’s called), you should buy wealth-creating assets and that means the stock market as well as property.

You don’t win at Monopoly just accumulating cash and it’s the same in the real world; cash is not a wealth-creating asset.

The stock market is easier to enter as it has lower entry costs. And it tends to go up over time as we get better at making things and solving problems.

And by property investing, I do not mean the house you live in. You’re always going to need somewhere to live so I suggest you do not rely on your family home to fund your retirement.

Anyway, back to Monopoly. The way you lose at this game is by owing other people money. As it is with life – if you are in debt you can’t accrue many assets to start compounding. Credit cards and mortgages… they will be your financial death by a thousand cuts, your compound interest in reverse.

Here’s a powerful way to tell if you understand compound interest or not.  Are you ready? People that understand compound interest, earn it. People that don’t, pay it.

To conclude:

  • The name of the game in Monopoly: buy houses and hotels and avoid debts
  • IRL: buy wealth-creating assets and avoid debts

Simple. Not necessarily easy, but nonetheless simple.