Alvin Koo's Blog

“Moving money through time” was the catch line that I received from the lecture on finance with Murray Carlson. In application to the real world, households are similarly moving money through time whenever they purchase a new home. However I am quite aware that a house would go down in value every year, and thus people would be losing money in real estate. The actual reason that people can make money off buying homes is the land/property that they are buying.

For instance, in a game of Monopoly the property deeds are always more valuable yet expensive than the houses you build on the land. When players trade land for money the price called would always be inflated based on the expected revenue (rent) that that property can earn for the investor. This expected value is what investors are willing to pay, and for the seller is the money that could be earned in the future but brought to the present through this trade. From applications of finance and trade in a board game like Monopoly I have realized the importance that financial strategies can make in deciding investment behavior.