This is Entrepreneurs of Faith, a Sunday episode of Monetization Nation. I’m Nathan Gwilliam, your host. In today’s episode, we’re going to discuss the parable of the talents and four investment lessons we can learn from it.
The Parable of the Talents
In Matthew 25:14-30, Jesus Christ shared a parable with his disciples. In the story, a man was traveling to a faraway country, so he called his servants before he left and gave them talents, which was a form of money at the time. To the first one, he gave five talents. To the second, he gave two talents, and finally, to the third man, he gave one talent. Then the man went on his way.
The first servant with five talents went and traded his talents so he gained five more, doubling his initial capital. The second servant traded until he gained two talents, also doubling his initial capital. Finally, the third servant went and buried his talent into the earth so he wouldn’t lose it.
After a long time, the servants’ master returned. When he did, the first servant brought his five extra talents with him and the second servant brought his two extra talents. The Lord responded to them both by saying, “Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord.” (KJV Matthew 25:20)
Then, the third servant came and told his master that he was afraid and so he hid his talent in the earth and didn’t do anything good with it. When his master learned this, he said, “Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury.” (KJV Matthew 25:26-27) The master then took the servant’s one talent and gave it to his first servant with 10 talents.
From this parable, we can learn two lessons: one about money and the other about our talents and gifts from God. We can apply both lessons to our businesses.
A talent in the time of Christ was a unit of money. In the parable, the servants who invested and traded their talents both doubled the amount they had originally. The one who hoarded his money gained nothing. As entrepreneurs, we can learn the principle of investment. God wants us to be smart about our money management and learn how to invest.
We can also interpret the parable as if the master was giving his servants talents in the way we define the word today. God gives each individual unique gifts and talents and he expects us to use them to do good. As entrepreneurs, we can use our skills and abilities to bless the lives of others. As we share our talents, we will be blessed with more.
In the parable, the servants who invested their money doubled what they had originally been given while the one who hid his money or rather “deposited it into a safe deposit box” gained nothing. As entrepreneurs, we can learn that God rewards those who take what they have to accomplish good things. This even includes gaining more wealth.
In our ventures, one way we can increase our monetary value is by taking a capital risk. In the parable, the master’s investment strategy is similar to many business owners today.
There are four principles of good investing we can apply from the parable of the talents.
1. Invest in a Company We Know and Like
We should only invest in a company we know and like.
The Institute of Faith, Work, and Economics explained that in the parable, the master demonstrates trust in his servants. He must have been familiar with his servants’ track records and trusted them accordingly. He selected three servants and weighed them according to their abilities, so he gave 62.5% of his money to the lead manager, 25% to the second, and 12.5% to the third (Source: Institute of Faith, Work, and Economics). We need to make sure we are making smart investments.
Being smart about our investment requires us to do research. We should never invest in a company we know nothing about. Peter Lynch, an American investor and philanthropist said, “An important key to investing is to remember stocks are not lottery tickets.” I think this is a powerful statement. Investing is not about luck. It is not about throwing our money into a company and hoping for the best. Investing requires research.
Benjamin Graham is one of the most famous investors. He is universally recognized as the father of two fundamental investment disciplines—security analysis and value investing. Whenever he invested in a company, he searched for those with strong balance sheets, those with little debt, above-average profit margins, and large cash flow (Source: Investopedia).
Just as the master in the parable and Benjamin Graham, we need to become familiar with the track records of the companies we invest in. If we do this, we minimize the risk we need to take to invest.
2. Diversify Our Investments
We should diversify our investments. The master in the parable did not invest all of his money in one servant, he split it up between the three servants.
Successful entrepreneurs should take time and consideration into choosing how to invest their money. And they should invest their money in different places. One example of a great investor is Gary Vaynerchuk, an entrepreneur, author, speaker, and internet personality with a net worth of about $160 million. Vaynerchuk was an early investor in Twitter, Tumblr, Uber, and Snap, and his VaynerRSE investment portfolio currently lists about 80 companies (Source: CNBC).
When CNBC asked him what his secret was, he explained we need to not only know and like the company we invest in, but we also should invest in multiple companies. He said, “You may pick the wrong company, and this is why you want to diversify.” (Source: CNBC)
3. Take Risks
The parable of the talents also recognizes that making an investment requires some risk. The third servant who buried his one talent because he was afraid of losing it gained nothing. Without any risk, there will be no return.
Benjamin Graham said, “Successful investing is about managing risk, not avoiding it.” We have to understand that we can’t be successful investors without the courage to take a leap and trust in a company enough to invest in them. However, with that, there are ways to reduce risk. This includes doing our research, knowing the company, and diversifying our investments as I said above. Risk comes from not knowing what we are doing, but if we do the right research, we can minimize our risk and feel confident in our investment decisions.
4. Be Patient
At the end of the day, good investing comes down to being patient. We won’t make a lot of money short-term. Investing is all about long-term success.
In the parable, it says the master who gave his talents was traveling to a “far country.” It also says he returned “after a long time.” We shouldn’t expect to gain an immediate return on investment (ROI). We need to wait and know that investing requires patience.
However, this doesn’t just mean investing in a company and then leaving it there for years without checking on it. We need to make sure we review our investments after certain periods of time. Just as the master in the parable came back to see how his servants were doing, we should check in on our investments to make sure we are making the most of them.
“Investment is an asset or an item that is purchased with the hope that it will generate income or appreciate in the future.” (Source: Investment Brothers)
Use Our Talents
The second lesson we can take from the parable of the talents is to take the gifts God has given us and use them for good. God has given each of us our own unique talents we can use to serve others. Once we discover what our gifts are, we can use them to help our customers and team members.
While God may not give everyone equal gifts, He doesn’t compare us to others. He compares us to ourselves. In the parable, the master rewarded both the first and second servants equally. While the first servant made more money or developed more talents than the second servant, they both did the same with what they were given. They each doubled what they had, and both were made rulers over many things and entered into the joy of the Lord.
In Matthew 25:15 it says, “And unto one he gave five talents, to another two, and to another one; to every man according to his several abilities. . .” The master gave talents according to each servant’s ability. He never expected the servant with one talent to come back with more than the servant who had been given five. God knows our different abilities. He knows our strengths and weaknesses. We will be rewarded according to what we do with what we have, not according to how we do compare to others.
However, if we hide our talents, and don’t share them with others, God will take them away. In Matthew, it says, “For unto every one that hath shall be given, and he shall have abundance: but from him, that hath not shall be taken away even that which he hath.”
Milton Hershey is a great example of using our unique talents to serve others. Hershey was an American chocolatier and businessman. He pioneered the manufacture of caramel with fresh milk. He also developed a unique recipe for chocolate with his apprenticeships and started a caramel company that sold for $1 million in 1900 (Source: Business Collective). He then moved on to found the chocolate company Hershey, a company that now has a net worth of about $35 billion (Source: MacroTrends). With each of the abilities God gives us, we can use it to find success in our businesses. As we share our talents with others, we will be blessed.
God expects us to work hard at improving what we have been given. On our entrepreneurial journey, we need to work hard and use our God-given gifts wisely. As we do this and help others to the best of our ability, God will bless us.
Here are some of my key takeaways from this episode:
1. We learn that we should only invest in a company we know and like.
2. We should diversify our investments.
3. Successful investing is about managing risk, not avoiding it.
4. At the end of the day, good investing comes down to being patient and setting our expectations for long-term success.
5. God has given each of us our own unique talents we can use to serve others. As we use our talents to help others, we will be rewarded with additional gifts.
6. If we hide our talents away, God will take them away from us.
7. God knows our different abilities. He knows our strengths and weaknesses. We will be rewarded according to what we do with what we have been given, not according to how we compare to others.
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