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Just like a lot of people, I’ve spent a lot of time playing Animal Crossing: New Horizons during this lockdown. It’s a game for Nintendo Switch where (thanks BBC News) nothing happens. It’s a bit like a very clean version of The Sims but with animals?
Like many games, ACNH has its own monetary system, however, the bank of Tom Nook is more highly developed than most. Not only can you buy and sell goods and services with your “bells”: you earn interest in savings, you’re also offered mortgages and can make it ring by playing your luck in the stalk market. It’s truly impressive, and it actually made the front page of The Financial Times.
Yes, that’s correct. Animal Crossing has its own market economy, turnips you can buy once a week from a pig called “Sow Joan”. Honestly, the pun game in ACNH is unmatched. The ‘stalk’ market one is actually better in its native Japanese, believe it or not.
Despite being layered and realistic – Nintendo even dropped the interest rate you’ll get in your Nook Bank savings a few weeks ago, (and that happened to me in real life as well!) – the financial lessons you’ll learn playing Animal Crossing won’t serve you well when you’re dealing with actual money.
The first rule of Bronni’s Investing Club is that I’m not a financial adviser, the second rule of Bronni’s Investing Club is you can both lose AND gain money when you invest, there is risk involved.
1. You should invest A LOT all at once.
You can only buy turnips on a Sunday before 12pm, so people tend to go ALL IN and spend hundreds of thousands of bells right then and there. With actual investments that’s probably not a great idea.
In films investing is often shown as a “buy low, sell high” risky game of chance and getting your timing right, but it doesn’t have to be. It isn’t timing the market, it’s time in the market.
Even if you have a lump sum and your heart is set on investing it, you should cool your jets. Common investing wisdom is that you should slowly drip feed your money into investments. Using this method, investing little and often, you should be able to mitigate any sudden market drops.
Getting bogged down in the jargon? I’m sorry! I’ve written this investing terms glossary to help you out.
Say you were lucky and got a windfall of £5,000. Then you whacked it all into a fund at £100 a share. Unfortunately, there’s every chance the share price could drop. Say it dropped to £90 a share… you just lost £500, and it could be some time before you get it back. If you invested £400 a month for the next year and a bit, that freak price crash would have only cost you £40 instead of £500, and it’d be easier to recover from.
2. You can get a mortgage when you live in a tent
It took me five years of saving really hard to get my first mortgage. On Lola Bay (yep, that’s my island name, obviously) I think I’m on my fifth mortgage in a month and a half? It’s just not realistic.
As soon as you pay one of those babies off, Tom Nook is opening up another line of credit for you. It doesn’t matter what you have in the bank.
Getting yourself financially fit enough to qualify for even one mortgage is tough. It isn’t just savings, it’s your credit score, your salary, your outgoings, whether or not you’re buying alone or with someone else. I’ve written a lot about it, if that’s something you’re interested in.
3. You can predict what share prices you’ll get over the week
Just as clever as this game is, fans of the game are even cleverer. Somebody’s built an app called Turnip Prophet, where if you enter what you can sell your turnips for a few days, they’ll predict what your next price could be.
That’s not a thing on planet earth, unfortunately. Even investment bankers can be wrong, and they often are. Markets aren’t based on a repeating algorithm, but on real-life events. In 2019, there was no way you could have predicted that in just a few months’ time coronavirus was going to send your portfolio plummeting.
4. Nothing happens if you don’t pay your mortgage
That’s right. In Animal Crossing your mortgage is INTEREST FREE. The only incentive to paying it off is to get a bigger mortgage to get another room or storey to your house.
Want to join a community of other people trying to buy their first home? Join my free Facebook group First Time Buyer Wannabes.
In real life the interest you’ll pay over the lifetime of your mortgage is BIG. I used a mortgage calculator to work out that you’ll pay more than £86,000 in interest on a £250,000 mortgage at 2.5% interest over 25 years. That’s more than a THIRD of what you borrowed. That’s a lot more than the 2.5% interest rate makes it sound, right?
5. Your investments will go rotten
The annoying thing about investing in Animal Crossing is that if you buy turnips on a Sunday morning and don’t sell them by the following Sunday morning they will go rotten. While a rotten turnip isn’t totally worthless, it can be only sold for a tiny fraction of what you paid for it.
Want to talk about investments in a judgment-free zone? Join the Bronni’s Investing Club Facebook group.
In real life, it’s most likely a terrible idea to only keep an investment for less than a week. Yes, as I literally constantly say, your investments can drop in value. HOWEVER, even the most risky investment will probably never drop to just 1% of what you paid for it.
For once, real life is actually less harsh than the world of Tom Crook.
6. How much you can sell your investments for depends where you go
Investment prices are not universal in the Animal Crossing world. You can buy and sell turnips for different prices on your friends’ islands.
One morning last week my shop was buying turnips for 438 bells each. The original cost of a turnip is between 90-110 bells, so that’s a BIG profit for anyone who can sell at my shop. And obviously, I invited all my friends over to make some ca$$$h!
Sadly, you’re not going to get any more for your shares than they’re actually worth, it doesn’t matter whether you sell in London or Tokyo. Boo.
And just like that, I’m back in the money blogging game. Honestly, I don’t want to write about coronavirus like, at all. But I miss writing just for me, so I’m going to try and be a bit more active on here, hopefully with fun stuff like this.
So, are you playing Animal Crossing? Are you rinsing those turnips for some quick bells or just there to water your flowers and catch 1,000 sea bass?