Knowing how investing works and how to deploy your money to profitable investments is a skill we should all attain to acquire early in life. But of course, not everyone can be Warren Buffett, who started building his fortune from an early age.
For most parents who may have missed the financial independence train, they have taken up the responsibility of teaching their kids about finance and money management in hopes they do not make the same mistakes as they did.
Fortunately, there are ways to make money management both fun and interesting for kids. This is where online stock picking games can come in handy.
The popularity of stock picking games soared during the pandemic when retail interest in the stock market exploded. Many people - parents and teachers - see stock-picking games as a way of teaching their kids about investing and possibly giving them a head start towards financial independence.
However, do stock picking games teach kids about the tenets of investing, or are they another portal to gamifying the stock market? Let's read on.
Stock picking games are hypothetical games in which participants trade stocks, futures, or currencies in a simulated or virtual market setting.
It's an online simulation of global capital markets that introduces young people to economics, investment, and personal finance with the goal of teaching them about investing and financial markets, as well as preparing them for a financially independent future.
These online simulators are straightforward, user-friendly tools that mimic the stock market's real-world operations. The majority of simulators start with $100,000 in virtual money. The players then choose equities to buy, the majority of which are listed on the New York Stock Exchange (NYSE) or Nasdaq.
Most stock selection games attempt to replicate real-life situations as closely as possible. As a result, several simulators give users the option of buying, selling, shorting, or trading options.
Some simulators charge brokerage fees, which may have a big impact on an investor's bottom line, therefore integrating them in simulated trading helps users learn to account for trading expenses when making purchases.
Stock picking games are frequently utilized in the classroom settings. They can determine which student or group of students can make the largest gains in their account by trading stocks and options.
Students learn how to budget money, work as part of a team, think critically, and make rapid judgments throughout the competition.
Students will learn about these things and more through these simulations:
Along the process, children who play stock choosing games will learn about the fundamentals of finance, including basic investment concepts like commissions, shorts, and P/E ratios.
The simulation also makes it easy to see how the overall economy and business-related headlines impact markets and create stock price swings.
Stock picking games do not teach kids the core of investing. There are no lessons on understanding their behavior and risk appetite, and how to time their entry and exit from the market.
These games focus on making the most money over several months, rather than building the character and traits that are necessary to become successful investors in the future. As such, the most important lessons are overlooked.
The instruction should involve the principles of John Bogle, the founder of Vanguard Group, such as the willingness to roll up your sleeves and do the dirty work. In this context, it means the willingness to build an investment capital through savings and having the patience to see it through the ups and downs of the market.
Every competent teacher understands that making learning enjoyable results in better students. Teachers may turn investing classes into an actual classroom event by utilizing online stock simulators.
Adults can learn to invest in a realistic setting, learning important skills that can be transferred to a real trading account.
However, as parents and teachers, we should also be wary that our kids do not imbibe a get-rich-quick attitude, which stock picking games may infer.
Individual stock picking is not the key to a secure financial future except for a lucky and very knowledgeable few. Rather, you can teach kids the nitty-gritty. Show them how to conduct fundamental analysis, control their emotions, and have the patience to know when to enter and exit the markets.
In other words, rather than focusing on the gains, it is essential you build their character.
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