Fishing, Time, and Money

There's a parable out there of the Mexican fisherman where the point of the story is that the Mexican fisherman only catches enough fish for his day by fishing (working) for a little while each day. Once he's done he then enjoys the rest of his day doing the things that he loves. All the while an Investment banker tries to convince him to forgo those things he loves in order to fish more each day and earn more profits, which can eventually give him "financial freedom" in about 15 years time.


The punchline is that when the Mexican fisherman asks what he would do after he achieves "financial freedom" the Investment banker describes all the things that the Mexican fisherman already does when he stops fishing for the day.


It's a good parable but this article isn't about that story. However it will still use the concept of fishing to explain how one can better invest their time and build a better life.



Fishing


In this story there are two people who catch fish for a living, one named John and the other Jane. They live on a remote island with extremely primitive means of doing things, hence they still catch fish with their bare hands.


Their day is split into three 8 hour slots, one slot for sleeping, one slot for catching fish, and one slot for eating. It takes the full 8 hours in each of those slots to do each of those things to maximum effect. Thus, in the 8 hours of fishing both John and Jane are able to catch just enough fish to feed themselves for that day.


To John, this way of spending his time seems perfectly fine. He gets enough sleep, he catches enough fish to each, and has enough time to prepare his meals. He is able to sustain himself day to day by following this pattern and sees no need to change things.


Jane on the other hand is somewhat wiser and wonders if she can improve her results. One day she decides to only spend 6 hours fishing with her hands and uses the remaining 2 hours to begin working on some sort of net.


This means Jane is still catching some fish to eat for the day albeit not quite enough to fill her up. She persists and keeps using the same schedule of 6 hours fishing and 2 hours making a net for a week.


After a week she finishes making her net and starts to use it to catch fish. As the net is more effective than simply using her hands she is able to catch enough fish to feed herself for the day in just 6 hours. This means she now only needs to spend 6 hours a day fishing without going hungry over time.


She continues to spend her spare 2 hours on making something that will further improve her results, such as a fishing rod.


After making the fishing rod she is able to catch enough fish to feed herself for the day in just 4 hours, leaving her 4 hours in her day to spend how she sees fit. And so this pattern continues for Jane where she spends less and less time each day fishing in order to feed herself for the day, freeing up that time for her to spend on other things.


All the while John simply keeps fishing with his hands and must use all 8 hours of his fishing time in order to catch enough fish to feed himself for the day.


Time


The above story is a great example of investing because it doesn't involve money.


It's a remote and primitive island where the only purpose of the inhabitants is to survive by catching enough fish to eat. Gold, currency, or Bitcoin is useless to John and Jane in the same way that all the money in the world would be useless to you if you were stranded on an island with no food.


John is someone who doesn't spend his time in a way that can one day get him better results on a consistent basis. Even if he has a "windfall day" where he catches more fish than usual, that bounty will soon be consumed.


It's more likely that John could have "bad days" where he can't quite catch enough fish to eat and must make a choice of sacrificing time in his other activities to keep fishing, or making do without the normal amount of fish and therefore finishing the day a little hungry.


This might not be a problem if the bad days are infrequent, but in a situation where the population of the fish decreases for whatever reason, John would no longer be able to catch enough fish in the normal 8 hours and may need to change his schedule to fish for 12 hours each day in order to catch enough fish to eat.


This of course means he only has 12 hours remaining in his day to split between his two other activities, sleeping and cooking to eat, both of which need a full 8 hours in order to be done properly and yield maximum benefits.


Jane on the other hand is someone who has invested her time.


She took a risk and decided to make do with less (fish) for a short while in order to "fund" that investment (2 hours each day). But as a result she was able to get a return on her investment (the net) which enabled her to generate the same result using less input (time).


The return on her investment was permanent which made it possible for her to reinvest her freed up time and eventually get further results (compounding).


Jane's initial investment could have gone wrong (investment risk). The 2 hours each day she spent may have resulted in a faulty net that didn't catch fish any faster than she could with her hands. But if that were the case she could have simply gone back to what she knew, recovered, and tried again in future (risk management).


Money


Ok, that's probably enough about fish so let's translate all of this to money. John and Jane have the same job at a company and earn the same amount of money. They work the same amount of time and, obviously, have the same amount of time each day.


When John finishes his shift he simply goes home and spends his time on leisurely things, such as binge watching television shows and drinking down the pub. All of his spare money (left over after his living costs) is spent on these unproductive things.


Over time his lifestyle and skillset remains static while the world around him slowly progresses. Eventually he finds that his spare money isn't able to afford him as many pints of beer or things as before, due to steady inflation.


Sooner or later John finds himself in a situation where the money he earns from his job isn't enough to support his life, and he is faced with trying to find a higher paying job. But since he hasn't been doing anything to progress his skills, he must resort to finding a second job on top of his first job.


The money he earns from both jobs is just enough to support his living costs, and he finds that he no longer has as much time remaining in his day to enjoy the things he once did in life.


Jane is more intentional with her life and wants to make progress in order to live better. As mentioned she works the same amount of hours as John and earns the same amount of money, and her living costs are also similar.


However Jane doesn't spend her money on drinking down the pub or other things like John. Instead she saves up and spends that money on evening classes to expand her knowledge and qualifications.


The evening classes go on for about a year and Jane's life is seen as "boring" compared to John's.


But eventually Jane gets her qualification and uses her expanded skillset to get a raise and even a promotion. She decides to invest a portion of this into index funds while continuing to work hard on advancing her career.


Eventually Jane develops a way to automate many of the tasks she used to perform, and becomes the technical expert who manages this automated system. This new job earns her four times the amount of salary compared to when she started as her automated system does the work of 8 people.


The increased income allows Jane to afford a far better lifestyle than John ever could while still being able to continue investing a portion of her money on a regular basis.


Jane works the same amount of time as she always has but one day the returns on her investments means she can step back from a full time job while still having the means to live her current lifestyle.


The essence of investment and financial independence


So I basically just told the same story twice, but using two different settings.


In both stories John does nothing to gradually improve his current circumstances, being content with how things are on a day to day basis. However as time passes he remains stuck with the same capabilities, while the world around him moves on.


Jane on the other hand invests. In the first story there is no "money" so to speak, but Jane still has a commodity to spend in the form of time. In the second story she also invests her time by spending it wisely and productively. As a result, Jane's life improves bit by bit and ultimately gives her a far better life than she had towards the start of each story.


If there's one thing you take from this article it is this: If you feel you don't have the money needed to invest, you should start with investing your time instead.


For some people it's going to be more difficult than for others - I recognise that. But if you're not willing to do what Jane did and start "making a net", you're going to be like John who ends up needing to spend more and more time in order to get the same or inferior results.


The ability to achieve financial independence is rooted in your ability to first invest your time.

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Don't wait for some magical number before you start "living". Life is full of surprises and you'll never be able to plan it perfectly. If you're doing sensible things with your money you'll eventually reach your goal. So start living now. The longer you wait, the less time you'll have. Money can be made, but time cannot. You are the barrier to the life you want to live, not a 4% safe withdrawal rate.

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