Time Value of Money

In this blog I am just pointing to another blog which talks about the time value of money. Many people not knowing the value of keeping money without any proper investment, today’s money value is not equal to the tomorrow’s money value.  This blog post explains it nicely with equation. As the blog states :

Unfortunately much of financial planning is based on mathematics. But fortunately the mathematics is not really complicated. You probably learned the basic principles in School.

It is practically all based on the idea that principal multiplied by interest rate over time equals interest earned. Interest = Principal × Interest Rate × Time. Also, Readers know about my personal finance equation, which was:

Income(t) – Expenses(t) = Savings(t) + Investments(t) where time t signifies moving money, or purchasing power, backward and forward in time. So let’s talk about the time value of money.

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