NZ Centre for Political Research

Frank has donated 100 games to the New Zealand Centre for Political Research to help with fundraising. All proceeds from the sale of those 100 games will go towards supporting the NZCPR. Any newsletter reader who purchases a NZ Investment Game as part of this promotion will also receive a complimentary subscription to the NZCPR.

I have asked Frank to explain the background to the game in his column this week.

I do hope you will consider purchasing a copy of this excellent game!

Muriel


Financial Independence
30 August 2009

Financial independence is a dream shared by many New Zealanders. To have the freedom to decide what you want to do with your life is a goal worth striving for.

During my years in the investment business I found that many people struggled with even the basics of investment education. Unfortunately New Zealand’s education system has not served us well in this area. That’s why over the last 20 years I have written various investment education books, but had always felt there was a need for a more interactive and dynamic approach. This germ of an idea has become the NZ INVESTMENT GAME.

The NZ INVESTMENT GAME has been described as a “new generation” board game (by sharechat.co.nz which rated it 5 out of 5). That’s a fair description because it combines the traditional board game elements of a playing board and dice, with the sophistication of computer programming that takes care of the record-keeping and generates the investment scenarios. It’s because of this that the game is a simulation that replicates real-time investing. We have put in a huge amount of time and energy making sure the game is exactly like real time investing and having played thousands of times I still feel the sensation that I really am investing in the markets when I play.

The advantage the game has over real time investing is that everything is much quicker – years become minutes. Play a few times and you would have gained a life-time of investment experience – and had a lot of fun in the process - and learn the wisdom of investment legends like Warren Buffett, Donald Trump and George Soros. There is not much the game does not do. Invest in property, shares, derivatives, bank deposits, or build a career. And when a player needs assistance on what to buy or sell, they can ask me for ‘virtual’ advice by clicking on the Ask Frank icon!

Being computer based also means we can provide regular updates so the game remains relevant to today’s investment environment. At the start of each game the software searches for and installs updates, although you do not need to be online when the game is played. That means it’s as portable as your lap-top which makes it easy to play with family and friends. One of the country’s largest real estate firms is using it as a staff motivation/training exercise for their sales staff and a number of Property Investor associations are now holding games evenings for members.

It’s also been used in the education sector. We had a hugely successful session at the Massey University Business Week when 80 students played the game simultaneously (with 20 tables running at the same time). We hope to expand this into regional competitions for secondary schools in 2010.

We have been fortunate that a number of organisations share our vision and have made a commitment to improving investment education by supporting the game through sponsorship. These include: RaboPlus, ING, Findata, realestate.co.nz, Good Returns, Landlords.co.nz, the NZ Property Investors Federation, Massey University, Trademe Jobs, CMC Markets, and the Independent. The project only happened because they supported the concept.

ShareChat says this about the game: “During the game, players can invest in shares, property or hold their savings in an interest bearing account. You get to decide which strategies to utilise in different market conditions. Personally, I found the interaction between the three main markets; property market, share market and money market a great learning curve. The game encourages you to remove the blinkers and assess the conditions across the three; rather than having a narrow focus on just accumulating one asset class, such as property for example.

“I found this game to be lots of fun and although it is quite detailed, it is easy to follow. A handy rule book is also provided, although there is a comprehensive on screen help centre to assist you at any stage.

“This is a positive way to learn about investing through experiencing real-life economic scenarios. The game empowers you to gain the confidence to make investment judgements and then take effective decisions regarding the use and management of your money.”

The NZ INVESTMENT GAME really is at the forefront of a new way of investment education. I am excited by the positive reaction that I have had to the game and know it will fast-track players on their journey to financial independence.

To learn more see http://www.investmentgame.co.nz.

In Property We Trust

I must admit reading the daily newspaper is becoming depressing. Only last weekend a major weekender led with headlines that the property market, at least according to one expert, is going to go down the toilet. Inside, the lead to their business section revealed how little trust we, the investing public, have in our money handlers.

The Sunday Star story about trust was a good piece of financial reporting. Rather than recite yet another doomsday opinion, it reported the findings of a survey that should be taken seriously. It surveyed 1200 people and asked them to rate the level of trust they have in sharebrokers, financial advisers, fund managers, mortgage brokers, insurance advisers, and banks. Sadly none came out smelling like a French perfume parlour.

On a scale of 1 to 5 (with 1 being no trust at all and 5 being a high level of trust), only banks scored in positive territory; scoring 2.9 out of 5. All other groups recorded negative trust with fund managers performing the worst at 1.9. Next was financial advisers at 2, insurance advisers 2.1, sharebrokers 2.2 and mortgage brokers at 2.4.

These are appalling statistics. The funds management industry in particular should be concerned. In my view the relationship of trust with a fund manager should be as strong as we should expect from our family doctor. Unfortunately the industry has a very long way to achieve anywhere near that standard, and it will only do so when fund managers start putting the interest of their clients ahead of their own self-interest. To be fair, there are some good fund managers, but there are also those whose activities are heavily tainted by self-interest bordering on fraudulent. Unfortunately the activities of the rouges over-shadow the good work of those who deserve praise.

All of this is important because it is relevant for property investors - it explains why property is the most preferred investment of New Zealanders. I must admit to a little bit of a giggle from time to time when bankers and academics scold us for “over-investing” in property. What do they want us to do with our life savings? Invest in the sharemarket which is still tainted by images of crashes and dodgy directors and requires a fair bit of skill? Or should we leave our nest egg in the hands of money managers for whom we have little trust? Or do they want us to invest in finance companies that operate at the high risk end of money lending?

The reality is people will invest in things they do trust. In New Zealand do-it-yourself property investment and bank deposits top the list. That’s the way it is, and will remain until the fund managers as a collective do something tangible to show potential clients they can be trusted. I don’t expect that to happen any time soon so property and bank deposits are likely to remain the preferred investment types.

Unfortunately, not only is the level of trust in our money managers very low, so too is the public’s knowledge of investment matters. It is for this reason that I created the NEW ZEALAND INVESTMENT GAME.

Although it is played as a game, the software that comes with the board is a sophisticated simulation of the investment markets: shares, property, interest rates, kiwisaver, and even derivatives. Playing the game is just like real life investing, but obviously much faster. Two hours of game play equates to five years of real time investing. Players receive strategy tips throughout the game and they can even ask me for buy and sell investment advice while they are playing!

The software along has taken us nearly two years to develop and countless hours have gone into making sure the game plays well. The way the market data is generated means no two games are the same and regular updates mean you will always be relevant to current market conditions and have the very latest playing features.

To learn more see http://www.investmentgame.co.nz