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Karunakar

1% Better • 7m

Time Value of Money Motivational Quote of the Day: “Do not wait; the time will never be ‘just right.’ Start where you stand and work with whatever tools you have at your command.” — Napoleon Hill Story: Karunakar, a young entrepreneur, had two options for a payment deal with a client. Take ₹50,000 today. Take ₹55,000 after one year. At first glance, ₹55,000 seemed like the better deal. However, Karunakar remembered a principle he read about: Money today is worth more than money in the future. This is because you can invest the money today, earn interest or returns, and make it grow. So, he did the math. If he invested ₹50,000 today at an annual return of 10%, it would grow to: ₹50,000 × (1 + 10%) = ₹55,000 in one year. This meant both options were equally valuable. But if Karunakar could earn more than 10% return, the ₹50,000 today would clearly be the better choice. This simple concept of comparing the value of money across time is Time Value of Money. Key Takeaways from the Story: Why Money Loses Value Over Time: Inflation and lost investment opportunities make future money less valuable than today’s money. Core Formula: Future Value (FV) = Present Value (PV) × (1 + rate of return)^number of years Practical Use: Use TVM to decide if you should invest, save, or spend money now versus later.

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