Pros and Cons of Gamifying Investments

By Alec Lindenauer, Chief Allowance Officer

Just a few months after COR’s official launch in Spring 2022, I listened to a great podcast. I was knee deep in the world of content creation, when this pearl from The Journal popped up on my Apple Podcast feed: Are Stock Market Games Turning Teens Into Risky Investors?

The title poses a great question, and the subtitle didn’t disappoint either: “Every year, more than a million U.S. high-school students learn about investing through stock-picking games. But what do these games really teach?” A great follow-up question.

Here’s the gist of the WSJ’s report: 

Stock market games in school are there to excite kids into learning about the investment world. That’s all well and good, but the games are set up as a competition, and as with all competitions, the goal is to win. And to win quickly.

But making fast money isn’t what investing is about. Investing is about compounding interest over time … money building on top of money. That takes time. 

Making a quick buck? That’s what gambling is about. And if stock market games are helping kids practice gambling, isn’t that completely missing the point?

As explained in the podcast, when high schoolers in a New Jersey classroom were given real money to invest, rather than fake game money, the kids completely altered their investment choices, conversation, and research. In short, they went from behaving like gamblers to acting like investors. 

And what about the myriad of investing apps that seek to gamify investing for kids and adults alike? Are they any different?

On one hand, they make investing fun. And when it’s fun and easy, perhaps more people will participate. All of that is fantastic!

On the other hand, with gamification comes the desire to be in motion … the desire to take action, and then be rewarded for that action. 

In contrast, there aren’t many games where you win by doing very little for long periods of time. Waiting isn't a winning strategy for most game apps. But investing isn’t meant to be a game. It’s more like an activity ... One that’s similar to planting and watering a tree.

Imagine for a moment that you knew nothing of plants or biology. If I handed you an oak tree seed, and promised it would grow to be 40-feet tall and 30-feet wide, simply by watering it once per day, you’d think I was totally insane. 

And if you did take me up on that offer, not only would you bore yourself by checking on its progress five times per day, you’d also be hurting the tree’s growth prospects by tinkering with it too much. 

That’s investing. It’s a tree-growing activity, not a dopamine fueled app or game. So if investing is all about patience, why aren’t schools and apps focused on teaching with it? 

Schools simply don’t have the time. Investing is a multi-year process, and our kids change teachers every year. And on top of that, schools aren’t situated to allow kids to use their own money … A key driver in developing responsible investor behavior. 

And apps? Too often their motivation isn’t to create great investors, but rather to drive engagement. That goal can run quite contrary to the goals of a budding investor looking to learn the ropes.

But I know one person in the perfect position to allow your child ownership over investments, who can also guide them in a practical way. Coincidentally, it’s the same person who watches over your child consistently for many years. Granted, that person might need a bit of help, but that person is most definitely … 

You.