Focus on the Bird in Hand

The old saying, “a bird in the hand is worth two in the bush” may seem quaint and cliché, but there is truth in its simplicity when it comes to financial decisions. In today’s financial world, we are bombarded with choices. From armies of financial advisors to the latest hot stocks, the myriad of options available to us can create a sense of confusion and anxiety. In order to alleviate that stress, one must limit their choices and pick a direction.
While limiting our options and deciding on a single path may sound easy on paper, we as human usually find it difficult to put into practice. Most of us don’t like the feeling of limited choices and instead prefer to keep our options open in the hope that something better will come along. This innately human trait is the reason why people trying to sell their home continue to waste money on their mortgage waiting on a better offer or corporate executives fail to exercise their stock options while they still have time left.
Although challenging, focusing on what you have in the present and making a choice based on the now is often a wise financial decision in terms of both preserving wealth and simplifying your life. Some time ago I met with a corporate executive who was about to exercise her stock options and only had six months to decide what to do with more than $200,000 worth of gain. I watched as she grew increasingly stressed over what to do with the money. She wrestled with whether or not to go ahead and cash out or hold on for additional gains at the risk of a decline in the stock’s price. I found her searching for an answer.
Simply put, there is no right answer because the future is unpredictable. She may have given up on a large future gain by taking the money in hand or she could have avoided a large decline. There was simply no way of knowing. With that said, I prompted her to focus on a tangible goal for the money. After giving it some thought, she realized that by taking the money in hand she could complete a renovation on her home with cash. Since she and her husband had been putting off the project for some time, she decided that this was the perfect use for her newfound gain.
Often, when confronted with the choice of whether to take the bird in the hand or wait for more in the bush, we can be tempted to hold out for future gains. When it comes to preserving and managing wealth, I ask my clients to focus on a real goal that the money in hand could be put towards today rather than some point in the unknowable future. Life is too unpredictable and short for wealth in hand to be put on hold for the proverbial birds in the bush. Focus on what you have to accomplish in the present and let the future play out as it may.