Falconry & Financial Planning

RUSS THORNTON - October 18, 2017

Falcon and its' Trainer

I was recently quoted in this Business Insider article about whether to take a salary cut to get stock options at a “hot” startup company.

My comments in the article and on many financial planning and investing topics could more succinctly be described by the adage, “A bird in the hand is worth two in the bush.”

Whether it’s a decision to invest versus paying down your mortgage, it applies. Better, in my mind, to pay off debt and get a certain interest savings than pursue the “hope” of returns in the market that exceed your mortgage rate.

I decided to look up the origins of this proverb, and it appears to date back to the days of medieval falconry when a bird in the hand (hunting falcon) was literally worth the potential of two rabbits or other prey while hunting.

What if you sent your falcon after a sound you thought was a rabbit, but was in fact a wolf that injured or killed your bird which was valuable as it helped put food on your family’s table.

Centuries later, the same concept applies to your money.

In plain English, this is all about bypassing a certain outcome and instead pursuing a nonguaranteed “better” outcome.

I encounter this a lot when people get bored with a broadly diversified, low cost investment portfolio. As a result, they sometimes want to take some of their money and bet on an opportunity for a higher return.

Or, back in 2007 and 2008 at the height of the real estate market, many people were willing to borrow against their homes, their investments, or both, and buy more real estate as a “sure fire” investment.

And many people who’ve done a poor job of planning for their financial future will attempt to make up for lost time by taking high risks with their money into their 50s and 60s as they prepare for retirement.

All of these scenarios offer the hope of good outcomes, but hope isn’t a strategy.

And while I don’t pretend to have a crystal ball to see what will happen and when, I’ve seen enough of this behavior over my 23+ years as a financial advisor to recognize a pattern.

My advice will always be the same . . . a bird in the hand is worth two in the bush. And when it comes to your money – and your life in general – I believe this is sound advice that has aged well since medieval times.

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