A Dollar Today Or A Dollar Tomorrow: Leveraging The Time Value of Money
A dollar today isn't the same as a dollar tomorrow, that's the time value of money. Risk and return are expecting a dollar risked to earn more than a dollar.
The time value of money and risk and return are two core concepts in personal finance. Luckily, each boils down to a pretty simple statement.
The core principle of the time value of money means your dollar today is worth more than your dollar tomorrow.
Risk and return say that if you are to risk a dollar, you expect gains of more than just your dollar back. For each unit of risk you take on, you expect a slightly more significant unit of return.
Even though these money concepts are easy to simplify, I want to dig a bit deeper into each of them.
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