Bible’s take on entrepreneurship and Investing: the parable of the talents

It is probably uncommon to quote the Bible concerning entrepreneurship and Investments purposes, but I came fascinated by Mathew’s powerful Parable of the Talents. (Matthew 25:14-30)[1]

The Parable summary

Before leaving for a long trip, a master puts his servants in charge of his assets according to each man’s abilities. His assets are given in the form of “talents” (an ancient currency): 5 talents to the first servant, 2 to the second servant, and 1 to the third servant.

Upon his return, the master assesses the stewardship of his servants. He evaluates them according to how faithful they handled his stewardship, making or not wise investments out of it. The master clearly seeks positive returns from the servants’ oversight and is ready to rewards them accordingly.

The first and the second servants who put the talents to work were able to double the assets’ value; as such, the masters judges these two servants as “faithful” and gives them positive praise and reward.

The third servant, however, has merely buried the talents received in the ground out of fear. To such a wicked and lazy servant who did not take any action or risk, harsh words and punishment are given because he did not consider depositing the money with the bankers and collecting the interest for his master. The master takes the talents away from him and gives them to the first servant: “to everyone who has will more be given, and he will have an abundance”.

My comments

While the religious and personal development takeaway is fairly clear, in this space, I want to breakdown the striking financial and investment wisdom of Matthew’s parable:

  • The master shares his assets among all his servants. He designs a mixed portfolio; he diversifies the risk, knowing that not all his servants have the same abilities. He does not simply concentrate all his assets among the most skilled servant (he avoids a concentration of risk).
  • The master gives the talents to each servant according to their abilities. Again, there is a strong understanding of the importance of diversification and meritocracy (Asset allocation).
  • The master expects his servants to make the best out of talents received, take actions, even take reasonable risks with trading ventures (Sweat your Assets).
  • The master expects a return from the assets given to his servants based on their entrepreneurial spirit and hard work; (Entrepreneurship, ROI: Return of Investment).
  • The master even envisages the possibility of depositing money among bankers to receive interests (Passive Income).
  • The master re-allocates the lazy servant’s talents to the most performing servant to make the best out of the available resources (Efficient asset re-allocation).
  • The master won’t rely anymore on the non-performing servant paralyzed by fear, laziness, and entrepreneurship absence. (Importance of taking actions, overcoming procrastination or fear).

This parable of Jesus reported by Matthew is therefore particularly powerful and inspiring. It is striking to note how such financial aspects were used 2000 years ago as a day-to-day metaphor. For those interested in the full parable, you can find it at the bottom of the page.

In the meantime, Sweat your Assets, Sweat Your Talents!

[1] NOTE: A Parable with similar contents appears in Luke’s gospel and is known as the Parable of the Midas (Luke 19:11-27).

Matthew 25:14-30 English Standard Version (ESV)

The Parable of the Talents

14 “For it will be like a man going on a journey, who called his servants and entrusted to them his property.  To one, he gave five talents, to another two, to another one, to each according to his ability. Then he went away. He who had received the five talents went at once and traded with them, and he made five talents more.  So also he who had the two talents made two talents more. But he who had received the one talent went and dug in the ground and hid his master’s money. Now after a long time, the master of those servants came and settled accounts with them.  And he who had received the five talents came forward, bringing five talents more, saying, ‘Master, you delivered to me five talents; here, I have made five talents more.’  His master said to him, ‘Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master.’ And he also who had the two talents came forward, saying, ‘Master, you delivered to me two talents; here, I have made two talents more.’ His master said to him, ‘Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master.’ He also who had received the one talent came forward, saying, ‘Master, I knew you to be a hard man, reaping where you did not sow, and gathering where you scattered no seed, so I was afraid, and I went and hid your talent in the ground. Here, you have what is yours.’ But his master answered him, ‘You wicked and slothful servant! You knew that I reap where I have not sown and gather where I scattered no seed? Then you ought to have invested my money with the bankers, and at my coming, I should have received what was my own with interest.  So take the talent from him and give it to him, who has the ten talents. For to everyone who has will more be given, and he will have an abundance. But from the one who has not, even what he has will be taken away.  And cast the worthless servant into the outer darkness. In that place, there will be weeping and gnashing of teeth.’

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