Use Pretend Money To Learn How To Invest

Investment games like the stock simulator offered by Investopedia and other sites can help you learn the basics of stock market investing and what works best for you - without the risk.

As RJ Safra writes on MintLife, investment games can teach you about your own investment style and possible red flags:

I dumped a few other stocks I had collected along the way. I realised that I was holding them waiting for them to go back up. And it occurred to me that this had become my favourite excuse: "That one is long-term," I always tell myself when it goes down. Then I hold the rotten stock even if my rationale for buying it proves flawed.

Knowing yourself means you become your own worst critic when it comes to your money. Be brutal. Once that stock is sunk money let it sink.

A practice run can help you learn not to go all out on buying stocks or warn you against buying the wrong kinds of investments just because they're available to you. Use an investment simulator to develop the patience and prudence you might not get from trading with your own hard-earned money.

Morningstar's investment portfolio tracking tools can also help you get started or progress further as an investor. Do you have other investing learning tools or tips? Let's hear them in the comments.

4 Things I Learned About Myself Trading Fake Money [MintBlog]


    The ASX offers sharemarket games for both schoolchildren and the public, and there are prizes!

    When your fake $100k drops $20k on day 1 of your investment - your reaction will be a lot different than when your REAL $100k drops $20k on day 1 of your investment.

    Using pretend money just gets you into bad habits and doesn't teach you anything about your investment behaviour.

    You need it to hurt ($) to learn.

    Stockwatch also offers a sharemarket simulator for the Australian Stock Exchange. And the best part is you don't have to wait for the next round to start trading, unlike the ASX game.

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