5 10 pts Based on the time value of money why should you inv

5. (10 pts.) Based on the time value of money, why should you invest money sooner rather than later, if at all possible? c h

Solution

According to time value of money, today\'s Dollar worth more than tomorrow\'s because of variables such as inflation, compound interest rate etc. Inflation increases the price level, which means currency will depreciate over time and will buy less goods in future than it can now. Also, interest rate changes with inflation rate. Depending on the rate, it could keep up with inflation. Also, stock Market beats out inflation over time. So, if you put the money in a savings account or, in an investment account or, in an asset that appreciates in value over time, the value of money invested would be far more than the same amount of money which is not invested.