It takes money to make money, they say. Given a pile of cash to throw at the markets, many people dream that they would soon make enough to quit the rat race. Now there is a way for anyone with web access to channel their inner Warren Buffett or Gordon Gekko.
Fantasy investing gives you the chance to see how well you could do without risking real money. It is also useful practice for actual investing. Sam Rickett created BullBearings, the investment simulator, in 2000 when he was a computer science student at the University of York. He says: “I was thinking of going into finance and wanted experience of investing but didn’t have any money. Other students were in the same position, so there was a clear need for a simulator.”
His solution was so popular that he launched it as a free website after he graduated. Users can trade in shares, currencies and contracts for difference and also try spread-betting and fixed-odds betting, without risking a penny. Trading is based on real market prices and all trades include virtual fees, such as commission and stamp duty, which gives users a realistic experience. It is free to register and you are credited with £100,000 of virtual cash in each category. You automatically compete in worldwide leagues but can also play against friends, colleagues or other groups. You can reset your portfolio at any point.
The community of about 100,000 active users includes beginners, students and prospective City workers, seasoned investors who want to test complex strategies and people who simply play for kicks. They range in age from schoolchildren to pensioners, and about 80 per cent are male.
Like real broker websites, BullBearings is packed with information, including historic price data, market reports, news stories, share tips and guides to strategies, such as value investing.
The company makes its money by providing trading simulators for other firms. BullBearings has also been used as a tool by financial companies, including Goldman Sachs and Standard Life.
Mr Rickett says: “We get lots of feedback from people who say it has helped them in their real-life investing. Generally, they say it has made them more cautious and less gung-ho — they’ll be taking more notice of research and things like directors’ dealings.”
Many people prefer the site to practice versions on brokers’ websites, which let you manage a virtual portfolio, because it isn’t “selling” a platform.
Nevertheless, brokers’ practice sites give you the chance to try different platforms and get comfortable with the one you like before you commit.
Stockbrokers that offer demo accounts include The Share Centre. Simulators can be harnessed for more than training and fun, however. The best performers in Marketocracy, an American game, are invited to help run the company’s real investment fund.
This has underperformed the S&P 500 index over five years but has still done better than many managed funds, delivering a return of 50 per cent.
Besides permanent virtual trading sites, watch out for time-limited trading games with cash prizes. For example, Hargreaves Lansdown is running a free game that lets users invest £100,000 of virtual cash in shares and funds. The Big Deal has prizes of £10,000 for individuals and teams with the biggest profits when the game ends on May 30.