When the 2 birds in the bush are better than the 1 in hand

Posted by Resource Center 12/06/2019 0 Comment(s) Investing, Finance & Economics,Life,Career Development,

When the 2 birds in the bush are better than the 1 in hand

 

 

The oldest investment primer was written 2600 years ago (600 BC) by the great Greek fables writer Aesop & it reads:

 

"1 bird in hand is worth 2 in the bush"

 

Aesop was clearly a brilliant person, though what he forgot to tell us were the following 2 things:

  1. At what rate was the bird in hand interesting at &
  2. How long the 2 in the bush take to emerge

Now if we work with the below figures:

  • Bird in hand interest rate = 5% pa
  • Time it takes for the 2 birds in bush to emerge = 5 years

In this case we see that the 2 birds in the bush are a better deal than the bird in hand, as given the same amount of time it takes the 2 in the bush to emerge, one with the bird in hand would have accumulated an extra 25% only, forgoing a better deal of 2 full birds.

 

Author,

CEO

Ian M. Mugoya

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