Fantasy Investing or Virtual Investing

Allows the beginning investor to build confidence?

Fantasy investing involves using an online stock market simulator that acts as a virtual stock exchange. Thousands of pretend dollars can be invested to gain practice with online investing.

The question is however, does it encourage value investing which has longer term requirements?

A variety of products can be traded with virtual investing including stocks, options, futures and foreign currencies.

Many brokerage houses offer virtual investing programs with the aim that clients may go on to invest real money. It is claimed that virtual investing programs may be particularly suitable for teen investing.


OptionsXpress is a website that can be used to place pretend trades. While great for teen investing or for other novice investors, it may also be useful for more experienced investors who wish to try out new strategies.

The UpDown, another virtual investing site, enables its members to trade stocks and provides each member with a $1 million dollar virtual portfolio. They can then invest without the risk of putting up any of their own money.

The UpDown was envisioned as a way to harness the 'wisdom of crowds' to create a powerful investing tool. In addition to investing, The UpDown members provide analyses and tips on stocks, and can rank and provide feedback on the stock analyses of other members.

Benefits and Cautions

Because of the social aspects of some of these sites, they are claimed to be very popular with women users.

Women who are starting out in investing are able to increase their confidence in the stock market and their tolerance to risk in a friendly, collaborative environment where failure is not an option.

While it is not possible to lose money with a free stock market game, a possible concern is that it may give the beginner, investing fake money, a false sense of confidence, particularly if they make large sums.

A further concern is that these site may encourage short-term trading rather than longer-term value investing. How many participants in fantasy investing are likely to wait for five years or more to see whether their stock pick is a good investment?

To Conclude

Fantasy investing, or virtual investing, provides the opportunity for beginning investors to gain practice and confidence in stock trading using free stock investing.

It could be an excellent learning online investing option, particularly for teen investing, while saving for sufficient 'real' funds to invest.

A potential concern is that while free online investing is without risk, it may encourage a culture of excessive risk taking and short-termism that may carry through to the real world of investing.

For these reasons, it may not be a good introduction to value investing.

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