It Takes Time, Value, and Money.
The year was 1995. All was well in The Hawkeye State. That’s when I received an important lesson, which came in the form of a Post-it Note:
If compound investment yield is an investor’s best friend, time is a close second. But we can’t forget about money.
It’s expected that money when invested over time will increase in value, which ultimately stems from the true investment yield.
The true investment yield when considered with time, (1 + i)^N or what I like to call the Flux Capacitor of Finance, is the value activator since time alone doesn’t bring about more value for money.
What variables in the building block Future Value equation represent Time, Value, and Money? (Hint: left to right isn’t the only way to read variables.)
Brent Pritchard is an author and college finance lecturer with over two decades of industry experience and cofounder of Boxholm Press, LLC, a family-owned-and-operated publishing company providing educational content, products, and services. He pioneers an innovative and approachable new way of learning and teaching the Time Value of Money as well as thought leadership in other business topics. His most recent book is Would Your Boomerang Return? You can contact him on his website here.