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What do you think the business is doing with your money when you buy stocks and bonds? They spend it to accomplish a goal. The ability to accomplish that goal
by liontwist 2y ago
What do you think the business is doing with your money when you buy stocks and bonds?
They spend it to accomplish a goal. The ability to accomplish that goal now is more valuable than the cash.
- scarface_74 2y agoAnd? The value of the money to you or the business is worth more now than 10 years from now. Meaning just like I said, it makes more sense for you as an individual to have made $300K and live off $100K and invest it in 2010 than to wallow in obscurity at failing startups and then start saving at 35. This is the textbook definition of the time value of money - as quoted from Investopedia.
- liontwist 2y agoI have one other way to describe this line of reasoning: - money is more valuable now because you can start earning interest - but why are others willing to pay interest? - because the money is more valuable to them now
- hardwaresofton 2y agoJust want to note I appreciate how patient and civil you've been in this discourse. The culture of HN is certainly still alive Also a note, it seems wikipedia agrees with investopedia here —- and the equations of TVM include interest rates and compounding. You have a point on the WHY, but I think TVM may just take that as an assumption.