Why A Bird In Hand Is Worth More Than Two In The Bush -Mental Model 021

Time Value of Money

Money is worth more now than in the future because you can earn interest or invest it.

 

Time Value of Money Example:

Given the choice between accepting $100,000 today, or $102,000 in one year, we are better accepting the money today. This is because by investing the $100,000 for one year, on average, we will have $107,000 by the end of the year.

 

Wisdom:

“Every time you borrow money, you’re robbing your future self.” — Nathan W. Morris

 

Read more:

> Time value of money on Wikipedia.