Time Value of Money

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4 Oct 2022
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Time Value of Money is a concept used to estimate the value of money.
Money is widely used and understanding the concepts of money is vital, for better money management. Time value of money is money spent or received in various amounts and at different times.


This simply means that the money received today is worth more than the same amount of money received in the future.
Money can grow only through investing so a delayed investment is a lost opportunity.
For instance, if you hide $2000 in your saving box for 2 years, without investing. It will lose the additional money it could have earned over that 2years it was kept in a saving box. Your $2000 still become your $2000.


Money tends to decline in value due to factors such as inflation, the purchasing power of money decreases. So basically inflation has negative impact on time value of money because buying power of money decreases as prices of products rises.









References

[1] BULB, 'Write to Earn. Read to Earn' (online, 2022) <https://www.bulbapp.io/>

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