Many thanks to my new blogging friend, Kohti, for pointing me to an interesting new online game purporting to teach me all about money …

…. but – with all the greatest respect to the game’s authors – if I had played this game 7 years ago, I think I would have been depressed.

You see, it encourages you to create a character (mine was a 20-something year old, single male earning around $24k p.a.), and make some buying decisions:

– some mandatory (accommodation; clothes; car; computer; etc.), and

– some optional … I didn’t choose any of these at all.

I also had to choose a Big Dream and a time-frame to aim for; for some weird technical reason I couldn’t put in what I really (would have) wanted back then, so I chose a $4million retirement goal, aiming to achieve that in 7 years.

Now, I tried to make reasonable decisions and spend/save money as I felt that i would have back then, so when I was given a choice like this one:

Picture 1

… well, I mostly chose the zero-cost option (in this case, “stay at home and ride the bike”). On the plus side, whenever I was asked to “pay my bills” … I simply chose the sensible option and paid them all, giving them scant attention:

Picture 2

…. anyhow, that’s one example of the benefit of a frugal lifestyle: choose a low-cost lifestyle and you can at least sleep comfortably that you can easily pay you meager bills as/when they fall due 🙂

BTW: Rather than choose some set amount to invest (that would have required more thought), I simply transferred money to my Investment Account whenever I had a couple of thousand dollars saved up … no doubt, I would have achieved a slightly better outcome (better compounding) if I had transferred the money weekly rather than 4 or 5 times a year, but I am sure the effect would not have been huge.

The only problem with this sort of ‘frugal living’ style of wealth management?

It doesn’t come close to helping you achieve any sort of Life’s Purpose that involves not working and/or travel; here’s how I did, with 9 months to go before I wanted to ‘retire’:

Picture 3

You see, the problem with this game – and, all the books/blogs/financial advisers peddling this sort of nonsense – is that they tell you how to maximize your savings, but not how to achieve the real goal: which is to reach your Number by your Date … and, for most people that seems to mean Getting Rich(er) Quick(er).

The funny thing is that this game encourages you to seek a mentor … see the guy pictured in the circle? He’s the Richest Guy In Town and he’s there to help you (according to the game’s instructions) …

… except that he conveniently forgets to tell you any of the real ‘secrets’ as to how HE became so rich! As playing the game makes patently obvious, he sure didn’t get there by saving / investing his meager salary 😉

What the game is missing is a ‘start a business’ button; nor does it have an ‘invest in real-estate’ button … so, we have to rely on a risky maximum compound growth rate for our investments of 12.5% (and, I even had to survive a market crash!) or ‘safer’ returns much lower than that.

In other words, this game proves that it’s impossible to make $7million in 7 years (or even ‘just’ $4 million in 7 years) by following ‘standard financial advice’. Don’t believe me?! Then check this out:

Picture 6

Go ahead and try the game … it could save you a great many years of otherwise lost ‘investing time’ by showing you what NOT to do 😉

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7 thoughts on “Moneytopia?

  1. I played for a couple of years in the office (it was a slow day). Waste of time. Even if you wish to hit your number off savings and investments it is a very poor simulation.

    Maybe the point is to demonstrate that a booring savings and investments is just that: a booring way to get poor slowly while having no fun.

  2. Great that you tried it 🙂 I played it too and actually reached the goal that I set.

    Yes. You are right. Starting a business has a great potential for reaching fortunes but as you know there is also bigger risk involved compared to other methods like investing.

    As it was SEC that sponsored this game it’s no wonder that getting involved into a business is not included in the game. But there are other nice games that try to mimic making business out there.

    If there’s a lesson to be found in the game I think it is: start investing early and stick with 🙂

  3. “Starting a business has a great potential for reaching fortunes but as you know there is also bigger risk involved compared to other methods like investing.”

    @ Kohti – Good point; but, I wonder, if your Number is something like the $4 million in 7 years that I tried in the game, isn’t the risk of failure by “investing” (presumably, buying the mutual funds that the game suggests) 100%?!

  4. Adrian,

    Say you were crazy frugal and lived on $12,000 and could invest $12,000/year to reach $4 in 7 years requires a CAGR of 110%!

    I have to agree that there is no way a mutual fund is ever going to do that.

    I guess it would be possible to day trade successfully to that level of gains… but the odds of doing so are insanely slim. I wonder if buying lottery tickets would be a more likely path!?!?

    If you could buy on margin maybe- but making $24K could you get a large enough loan? Also any significant drop in the market will likely bankrupt you. Seems like a slim chance of success here too.

    As for a business… well it’s certainly possible, but is it that likely? It still seems like a really steep slope… if you are funding it with $12K/year from your day job. If you get a significant business loan then the math changes completely. As long as you personally aren’t liable for the money it seems a reasonable risk. If the business succeeds you reach your goal if it fails you are at $0? I suspect that the chance of success would be at least 20%?

    -Rick Francis

  5. Yes Adrian, you are right. It’ impossible to reach this number in that timeframe using mutual funds. No matter how hard you try.

    But that’s also a one lesson. It really isn’t possible so people that would like to believe so hopefully finds it now out 😉

  6. This is very neat game, its cool I achieve my goal of 5.9 million dollars in 35 years in the game. In real life I would like to retire with 30 to 40 million in my retirement account.

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