fun | Squirrelers

Pac-Man for Free – How About the Real Thing?

Every now and again, there are some things that come across the web that are quite interesting. As an adult male, and father of two, I like to think that most of what I find “cool” is in the realm of topics such as finance, health, world affairs, sports, travel, and things of the like. Much of that is true – I do enjoy those topics, though personal finance has been getting my online time of late with my blog.

That said, I just very recently came across something cool – the Pac-Man game on Google. For free! As a squirreler, you know that I think free is good – as long as it’s not taking advantage of anyone or resulting in a loss of self-respect. And this neither – it’s actually pretty neat.

I gave it a shot for a few minutes today, and found it to be a nice little diversion. I just used my keyboard arrows to navigate the Pac-Man, and it played like a mini version of the old game that many of us played as kids. I made it through the first screen, as my Pac-Man devoured all the dots, including the larger power dots that allow Pac-Man to turn the tables on the monsters. Yes, my guy ate a few of the scurrying blue monsters!

That got me thinking….wouldn’t it be cool to have the real thing? You know, a full-size Pac-Man game? Ok, maybe you wouldn’t find it so cool. I haven’t thought about this either, at least not since being a child. But now that I got another taste of Pac-Man in this free Google game, I had that same childhood wish come back to me.

It’s funny how some of those things don’t really leave you. Maybe it’s a case of wanting something because you know you could never have it as a kid, and what you can’t have you want even more. Very common psychological phenomenon, indeed. I know of one person who always wanted a horse, as she loved horses as a kid, but never got one. I’m guessing she still wants a horse. I talked to a friend recently who always wanted to go to see the Super Bowl in person, but as a kid always watched it on TV – and as a young adult couldn’t afford it. This past Super Bowl, he splurged for tickets and went to the game in person with his wife. He always wanted to do it as a kid, and it was out of his reach then – but not now, so he made that dream happen.

I tend to be more focused on practical financial goals these days, and am not really going to go buy a Pac-Man game. That said, it’s fun thinking about what would be cool to have that we have always wanted.

Is there anything from your childhood that you couldn’t have then, but could probably afford now? Something that isn’t practical, but would satisfy a long-term want?

This post was included in Carnival of Money Stories #56 at Personal Finance Analyst

Remember Rule #1 – Don’t Lose Money

By Squirrelers 2 Comments

Sure, none of us want to lose money. That’s no fun! Making money and growing our investments is what we look to do. When you look at the math, its more important than we might think.

The world reknowned super investor Warren Buffet has even been paraphrased as indicating: Rule #1: Never Lose Money. Rule #2: Don’t forget Rule #1.

Sure, we have to take risks at times. It is a part of being an investor, and there is a risk/reward dimension that frames many of our choices with our finances. It even frames choices in our life too. But as a personal investor, its important to manage your portfolio with some simple math in mind.

And it really is quite simple, conceptually.

Here is a classic example:

Scenario 1: You have $100, but lose 10% in year one and gain 10% in year two. This means that after year one you have $90, and after year two you have $99.

Scenario 2: You have $100, but lose 20% in year one and gain 20% in year two. This means that after year one you have $80, and after year two you have $96.

Think about it.

When you look at both Scenario 1 and Scenario 2, its clear that once you lose money from a certain base amount, gaining the same percentage back on the new base won’t get you back to where you originally started. This is where losses in your portfolio – be it equity or real estate – can really wreak havoc with your overall financial situation. It might not be evident a the time, but it puts us behind the 8 ball, so to speak, when we lose money.

To further illustrate this, lets focus again on Scenario 2. With a 20% decline from $100, you’re then at $80. To get back to $100, you need to have a 25% increase in the following year. Again, showing that once you lose a certain percentage of money, you need to increase it at a higher percentage to get back to where you started. This can be a challenge; a 5 percentage point difference is fairly significant, all things considered.

An additional point to consider when looking at Scenario 1 and Scenario 2: look at where you end up in Scenario 2 vs. the first Scenario. In Scenario 2, since the percentages were higher, you end up at a lower amount after year 2. Thus, the bigger the loss, the harder it is to recover.

The takeaway from this as it applies to our investments is to carefully manage risks. Losing money puts you on a slippery slope when it comes to getting back to your starting point.

A further takeaway from this concept, taking it further, is that money can be hard to come by. Keep your earning power by having marketable skills, and live within your means by embracing sensible frugality. This puts you in a position to recover in other ways if your portfolio takes a hit.