Three Little Pigs: The Children’s Version
I remember acting out the Three Little Pigs fairy tale when I was a little kid. My dad played the wolf and my sisters and I played the pigs. We all had fun. The story goes something like this:
Three little pigs set off in the world.
The lazy pig frolics all day only leaving time to gather straw to build his house. One day, a wolf knocks on his door demanding entry. When the lazy pig refuses, the wolf blows the house in and eats the lazy pig.
The careless pig pays no attention to the wolves howling at night and builds a house of sticks. One night, a wolf knocks on his door demanding entry. When the careless pig refuses, the wolf blows the house in and eats the careless pig.
The industrious pig knows he must protect himself and builds a house of bricks. One day, a wolf knocks on his door demanding entry. When the industrious pig refuses, the wolf tries and tries to blow the house in but fails. Instead, the wolf climbs down the chimney. The industrious pig catches the wolf in a boiling cauldron and eats him.
The moral of the story?
Pigs need brick houses.
Three Little Pigs: The Investor’s Version
After each deciding to save a $100,000 inheritance for their retirement 20 years hence, three little pigs took some time to think about how to invest.
The lazy pig never gets around to investing, leaving the $100,000 in his bank chequing account. When he retires 20 years later the lazy pig still has his $100,000 but, because everything costs twice as much, he can’t afford half the lifestyle he had counted on.
The careless pig doesn’t bother to learn investment basics and blindly trusts his banker’s investment recommendations. The careless pig’s underlying investments perform well, producing an average annual return of 6% but 2% is deducted every year in fees resulting in a T-Rex Score of 51%. When he retires after 20 years the careless pig’s total portfolio has grown to $219,112 but, because everything costs twice as much, he can’t live the lifestyle he had counted on.
The industrious pig learns investment basics and invests in low cost index funds. The industrious pig’s underlying investments perform well, producing an average annual return of 6% but 0.25% is deducted every year in fees resulting in a T-Rex Score of 93%. When he retires after 20 years the industrious pig’s total portfolio has grown to $305,920 so, even though everything costs twice as much, he can live the lifestyle he had counted on.
The moral of the story?
4 thoughts on “Three Little Pigs”
Hi Larry. I thought the straw pig ran to the stick pig, and then both ran to the brick pig – so none were eaten… and the brick pig ended up subsidizing the other 2, and had an equal share of the wolf. I think that’s an important gloss, reflecting our progressive tax system…
I like your site Larry. Congratulations on the launch. This reflects great insight, and a stunning amount of hard work. Terrific!
Steve
Thanks Steve! There are different versions of the Three Little Pigs fable. I kept it simple!
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