Lets do some math. The average market return is 10%, so 10%/12months = 0.83% average return/month. Now lets do 0.83 * $500 = $4.17 average return for a month. The short term volatility of the stock market will probably have larger gains/losses, but would everyone be fine with all this hassle for $5 on average per person? If I were playing, I would suggest these rules:
- $500 or $1000 portfolios (depending on how much everyone can afford) that get reset on the first trading day of every 2 months instead of every month. Just a little more time to let your portfolios grow and swing
- Stocks only, no mutual funds/bond funds/etfs/reits/partnerships. This is to help keep the game interesting and avoid everyone picking the same market indexs
- Have a google spreadsheet or a shareable document so everyone can update the current balance of their portfolio. The group would decide if you do this weekly, biweekly, halfway through, or something.
- The winner gets gains minus 22% OR $10. Whichever is greater
- People who fall below the original $500 still have to pay the $10 minimum
- If everyone falls below the $500 starting point, no one gets the cash. (I view it as everyone was a loser that round)
- At the end of the round, everyone has to print out their transaction history to prove they played fair
- Cutoff for the round is the Friday before the first of the month. That way everyone has the weekend to take a snapshot of their portfolio
This last point is about how to start the next round. I'm not sure how stingy you want to be on this, but I can see people pointing fingers saying 'you started this round with $502 while I started with $498!'. So these are some guidelines on how to start a new round and avoid any excess trading costs. It's not perfect and I encourage you to tweak them to what fits your friends the best.
- At the start of the next round, you don't have to sell and start with 100% cash if you don't want to. You just have to sell any stocks/withdraw cash until your balance is at about $500.
- If the first day of the round is on a Saturday/Sunday/Monday, you need to have a portfolio of $500 by the end of the day.
- If the first day of the round is on Tuesday/Wednesday/Thursday/Friday, you need to have $500 at the beginning of the day.
- Any dollar amount above $500 gets subtracted from your 'total gains/loss' at the end of the round.
As I final note, I would only do this if you trust everyone with money/financial statements. You know all players are familiar with finances and basic algebra (in case there are any disputes). No one is in any credit card or gambling debt. You can all agree to end the game if it starts causing bad blood between friends.