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Understanding the Time Value of Money

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Created November 21, 2025

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Unlock the secret behind money's true worth! Learn the Time Value of Money and why $100 today beats $100 next year. Essential finance insights for smarter de...

https://www.revid.ai/view/understanding-the-time-value-of-money-np7HsjBLRb7gLPRxQg5L

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Here’s why a hundred dollars today is worth more than a hundred dollars next year.

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It’s called the Time Value of Money, and it’s one of the simplest ideas in finance.

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First, money today can grow. If you invest a hundred dollars

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at five percent, next year it becomes a hundred and five dollars. That’s called future

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value — your money literally turns into more money over time. But it also works

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the other way. If you need a hundred and five dollars next year, and the rate is

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five percent, that’s only worth a hundred bucks today. That’s the present

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value — we discount future money because it’s not as valuable now. And inflation makes

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