Educational

Time value of money explained in simple terms

This text has the time value of money explained in simple terms. So, what exactly is time value of money? The value of money decreases with time. This is due to the increase in the value of rare items. Hence, petrol prices ten years earlier would be much less than today. The same dollar which fetched much a year earlier would not bring the same today. Thus, saving money is not enough to keep up with changing times. You need to add value by increasing the value by investing it. If you Save money in 2017, it will not have same value next year. Only keeping the money at home means the money will depreciate, and keeping it in a saving account means the rate of interest just covers the inflation. The way to keep up with inflation is to invest with care. You should start with investing half the money in government bonds, 305 in mutual funds and the rest 20% in shares and scripts. This is time value of money explained. Any questions on the same can be posted via comments.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s