Nouns

(n)fantasy, phantasyimagination unrestricted by reality“a schoolgirl fantasy”
(n)fantasy, phantasyfiction with a large amount of imagination in it“she made a lot of money writing romantic fantasies”
(n)illusion, fantasy, phantasy, fancysomething many people believe that is false“they have the illusion that I am very wealthy”, “He fancies himself to be a local celebrity.”

Verbs

(v)fantasy, fantasize, fantasiseindulge in fantasies“he is fantasizing when he says he plans to start his own company”