I first published this post in 2009 (just on 4 years ago); it’s one of my favorites because I believe that it’s an important new twist on an old story …
… but, you will see from the comments that not everybody agrees with – or, even understands – my deeper point about setting yourself up properly for the day when you can’t – or, no longer want to – work.
I’m republishing this because I’d like to hear your thoughts?
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“I write to you the story of a fisherman in a Mexican Village who goes out every day on his boat to catch a fish. The fisherman goes out for three or four hours, catching a small load of fish and returning home. Every day he does this, without fail. One week, an investment banker from New York is vacationing in this Mexican village. Every day he sees this young fisherman go out, catch fish, come back, go out, catch fish, and come back. So after a few days, the investment banker approaches the fisherman. He asks the fisherman if he catches fish like that all the time.
“I do,” says the young Mexican, who is about thirty years old.
“How long have you been fishing?” asks the investment banker.
“All my life,” says the Mexican. “Since I was a boy.”
“And you catch fish like that every time?” He looks at the sizable fish in the catch.
“Yes,” says the Mexican. “There are always fish.”
“But you only go out a few hours a day. If you catch fish like that, why don’t you go out longer—catch more fish?”
The young Mexican thinks a minute and looks down at his feet. He looks back up at the investment banker. “Well, I like to spend time with my family and play cards with my friends.”
The investment banker nods, he steps closer to the Mexican. “Look,” he says, “if you double the amount of time you fish, you’ll make double the amount of money you make now.”
“Why would I want to do that?” asks the Mexican.
“Because then you can buy another boat and hire more fishermen.”
“Why would I want to do that?” asks the Mexican again.
“Because then you’ll quadruple your earnings and pretty soon you can have your own fleet.”
“And why would I want to do that?”
“Well, once you have your own fleet, you’ll have enough fish to cut out the middle men and go directly to the distributor. You do well enough with him, you can buy his company. Then, we do an IPO, take the whole operation public. You’ll cash in. You’ll be rich.”
“And then what?”
“Then,” says the investment banker, “you can spend time with your family, and play cards with your friends …”
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That’s a nice story. It’s usually used to show how ridiculous the Investment Banker’s position is, and how we should focus more on what’s important than money … which, of course, is true.
It’s just that money is a part of – or at least an enabler of – what is important …
For example, what happens when the fisherman gets sick, or too old to fish?
We can cover ‘sick’ with Fisherman’s Insurance (a couple of fish set aside from his daily catch should cover that) …
… but, how do we cover ‘old’?
I think, only by meeting the investment banker part way …
IF the fisherman’s ideal retirement is simply to spend some time with his family every day (and, eat a few fish), and have a little spare time to play cards, it shouldn’t be a very big number …
… no IPO’s necessary!
But, it will take some investing in cold-storage to build up enough fish to last as long as the fisherman does!
Perhaps it’s time to think about how many fish you need?
I’ve never seen any man – fisherman or not – too old to fish! And if the fish are always there…well then!
I get your point that there is more to the story than the simplified version above (preparing for the proverbial rainy day, for instance). It would have been good to have additional information about those other things to consider, perhaps suggesting other blogs to follow to flesh those out?
That’s true Diane, one is never too old to fish … I guess that’s the reason that I’m writing this instead of, well, fishing!
But, what happens when the fish are NOT there … or when you lose the passion or the ability TO fish? That’s the moral of this story … and the point of this blog is to fill in those ‘blanks’ … if you keep reading and, more importantly, contributing. AJC
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I beleive the banker will die rich & the mexican happier.
money or happiness?…& that questions starts a new “what if”…..
there is no answer to what ifs just another question.
I know the story is about happiness and the need for money in your life, but did no one else immediately just think sustainable fishing and the environmental impacts? Maybe it’s the “John Butler Trio” in me that went straight to big corporations extorting our planet for money.
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I wonder about this a lot myself – especially with the hours I am putting in right now? Why work 70 hours a week with my “day job”?
Still, with two seemingly viable businesses kicking off this year, I may be able to trainsition to work on what I enjoy more (and still have the income streams).
Neil
@ Neil – that’s one part of it; the other is to put some ‘fish’ (i.e. passive investments) aside so that you can afford to stop work when you want to … or HAVE to 😉
@Adrian, welcome back.
I don’t mind working hard, just want to work on projects that fit my passions more.
Both businesses ideas won’t be fully passive (I don’t think anything else except CDs that can’t even match inflation) but will be *more* passive.
@ Neil – the businesses may be after hours, part time, etc. but it’s highly unlikely that you will be able to consider them “passive investments”.
BUT, you should be able to do a lot of stock/RE/CD investing with the income that they may spin off.
My son has one of these kinds of businesses: has got his business to #3 in Google rankings for his niche, employs a part-time support agent in Manila, and clears a good couple of $k p.m. in his spare time (literally 30 mins a day), yet he would not consider the business to be an investment because he knows that nothing lasts forever. Instead he is saving as much of his net income as possible for his first car and a down-payment on an investment property. If you ask him which one he would buy if he could only afford one, he would say the property (because – he correctly states – the car will depreciate).
I’m becoming more and more convinced that one of the best approaches to life is to “retire” as quickly as possible after you start working. With “retire” I mean having enough money invested in medium risk/return instruments, that you can cover your expenses, and continue to save up to ensure that you never have to use the capital.
I did a “replay” of my life, without running any business, just living frugally from the day I started working, and saving hard. I calculated that I could have fully retired by age 36.
If my mission was to retire, I would have probably made an effort to build extra income during that time – and either made the date earlier, or “retired” at a higher lifestyle.
The point is this: Once you are retired, you can do anything you like, without having to worry about whether it will produce an income.
Creativity and passion are at their highest when one is not under pressure to produce. That is why most people make their biggest impact after retirement.
So you probably will continue making an income … which you won’t need … which means that you will have entered a positive wealth building cycle without pressure.
By investing in a single rental property right now, and pouring all the rent money into it’s mortgage (sticking with my day job), I should be able to pay it off in about 10 years. Then, I can leverage it to buy three more, and do the same. By the time my daughter finishes college, I can own $1million in rent producing property and be getting $10,000/month (today’s dollars). Tie that with putting $500/month into an EIUL and I can fetch another $80,000 tax free every year. Just retarget the rest of my 401k into a Roth IRA and buy a few stocks that have paid increasing dividends for the past 50 years, and it should bode for a nice, wealthy retirement based on passive income. There is only so long you can sell your labor. Passive income is the key to true wealth, and an EIUL is a nice protection from the taxman plus better yielding than mutual funds.
@ Greg – Sounds like a plan! But, why pay off one loan just to take out another one?
Perhaps when the first one is cashflow positive (perhaps with some buffer for emergencies) you could buy the next … and so on?
After having lived in Baja California for several years now I can tell you that the bankers are everywhere… Usually from the USA.
Yet, the Mexicans have the sense to not stress about building it all up.
They also have a higher percentage of their income as disposable. (Too bad they spend most of it on bigger trucks with louder speakers…but this too is changing)
The world view is just different: “You are what you owe” vs “You are what you own”. -Luis