“10 Things You Probably Never Considered Regarding The Parable of the Talents”
There aren’t very many Christians who haven’t heard this New Testament reading from Matthew 25: versus 14-30. (1)
Basically a wealthy man goes on a journey and entrusts a total of 8 talents of money to 3 servants. To one servant he gives 5 talents, to the other he gives 2 talents and to the last servant he gives 1 talent.
Eight talents is an absolute fortune in terms of money.
Common practice is to talk about talents as “skills” and “gifts” that we give back the Church, but in this case, the parable has to do with money.
When the Master returns, he finds the first servant with 5 talents made 5 more for a 100% rate of return on the assets. The Master finds the second servant with 2 talents made 2 more for a 100% rate of return. Finally he finds the third servant with 1 talent buried in the ground, which yielded nothing and was severely scolded.
10 Things You Probably Never Considered Regarding The Parable of the Talents are:
- Everyone should be impressed that 2 of the 3 servants earned a 100% return on their money.
- The Master said to the first 2 servants “Since you were faithful in small matters, I will give you great responsibilities.” By today’s numbers, 5 talents = $6.5 million dollars. The servant with 2 talents was asked to manage about $2.56 million and the last servant managed 1.28 million. Since when is managing over $6 million dollars a small matter?
- When the Master says “since you were faithful in small matters” , I had to laugh, imagine if your boss called you in his office on a “small matter” and handed you $6.4 million dollars to manage, how would you feel?
- We don’t know is how long the Master was gone, or the manner in which the 2 faithful servants made the profit. We just know that they traded it. We probably can assume that neither of the first 2 servants put the money in the bank.
- We can assume that one of the reasons the Master was so upset is that the 3rd servant didn’t protect the money from inflation. Even though the servant returned the 1 talent, but he actually lost 4% percent per year through inflation.
- The wicked servant accuses the Master of being “a demanding person, harvesting where you did not plant and gathering where you did not scatter”. He basically called his boss a thief. Yet, the Master thought highly enough of the servant to have him manage assets. The tension between capital and labor still exists!
- Do you think the other 2 profitable servants thought the Master was a demanding person? Of course they did, so you can possibly assume that the other 2 servants may have crossed over ethical investing to earn a profit.
- The Master said “should you not then have put my money in the bank so that I could have gotten it back with interest on my return?” In other words, could you not even have done the most basic, easiest thing and given it to the bank or moneychangers to earn interest? There WAS interest to earn, unlike today where checking and saving accounts pay almost nothing.
- What if the wicked servant died? Did he let anyone else know the location of where he buried the talent? If you buried $1.28 million dollars how many people would you tell?
- In 1994, 10–year US Treasury notes, were paying about 7.94% percent, compared to 2.3% today. If the servant went to the bank and received an 8% return, $1.28 million doubles in value in approximately 9 years. (2)
Conclusion: Regarding our finances we have to consider ourselves a servant of the Master and manage our money to the best of our ability or find someone who can help.
The first thing I do for people considering our portfolio management services is to review their mutual funds expenses and the costs associated with their investments. Then I determine how they’re performing against the benchmark.
A few things an individual investor should do before the end of the year:
- You have to take out a calculator and pencil & paper and see how you’re doing
- Don’t leave 401K s from previous job behind. One of my clients hasn’t looked at an previous 401(K) in 15 years!
- Getting your assets working again
- Business owners offering a 401(k) plan to their employees need to get a second opinion on what the annual expenses of the Retirement Plan are especially if they’re using an insurance company.
- Business owners have a fiduciary responsibility to review the data of their Plan. Talk to someone in your Human Resources department too.
@Pontifex @relevantradio
(1) USCCB: http://www.usccb.org/bible/readings/111614.cfm
(2) Rule of 72: http://en.wikipedia.org/wiki/Rule_of_72