Saturday School: How the ‘Time Value of Money’ Impacts Your Wealth

Time and money
Photo by Jeanette Teare / Shutterstock.com

Imagine the Money Fairy walks up to you today and offers you one of three different piles of money. Of the following, which would you choose?

  • $100 right now, with a guaranteed 10 percent return annually
  • $109 a year from now
  • $120 two years from now

Watching the following Khan Academy video will give you the answer. It will also teach you about a critical concept: the “time value of money.” It centers around the idea of when you get money — and not just the total amount of money you receive.

Understanding the time value of money can help you to compare the value of money you get today with amounts of money promised to you at a future date. The video will also teach you about “present value” and “future value,” and how they impact your savings goals.

Are you on track to meet your financial dreams? If so, share your tips with fellow readers by commenting below or on our Facebook page.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
12 Things Everyone Should Stop Buying This Year
12 Things Everyone Should Stop Buying This Year

These convenient household products come with hidden costs that you might not have considered.

7 Reasons You Should Not Claim Social Security Early
7 Reasons You Should Not Claim Social Security Early

The sooner you claim your Social Security retirement benefits, the more you — and perhaps also your spouse — stand to lose. Here are the stakes.

12 Products to Keep Your Car Clean and Organized
12 Products to Keep Your Car Clean and Organized

These items will help put your vehicular mess to rest — and each is available for less than $20 on Amazon.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Comments

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.

Trending Stories