Time Is Money

November 27, 2008 by Tyrone
Filed under: Finance Concepts, Investments

We all have been hearing this famous saying that “Time is Gold”. Yes, Time is Money. In the office, when you were late, you will be deducted a portion of your salary. Time is Money. In business, especially if you have perishable inventories such as foods that can easily rot, you have to sell it quick or otherwise it will be a loss. Time is Money. In real estate investment, you need to wait for time for your investment to appreciate its value. Again, time is money.

But in finance, time is really money and therefore, time in itself has value like money. This can be explained more in one of the most basic concepts in finance called ‘Time Value of Money.’ It simply says that the cost of money increases as time passes by. Or the value of money decreases over time.

How can this be? First of all, what do you do with money? You need it to buy commodities, be it food, clothing, house, cars, etc. Just anything you need and want. But there is a powerful force that decreases the value of your money and that is INFLATION.

Inflation is simply the upward trend of prices of goods and services. It is one of obstacles in achieving financial freedom. As time passes by, prices of goods and services increases. Your 5-centavo coin can buy a softdrink in the late 1970’s but now it can’t even afford you to buy a candy. Your 1,000 bill in the 1980’s can buy a lot more than it can do today. Did you see the difference? That’s how powerful inflation is. It eats the value of our money. It depreciates its purchasing power.

Now you know that indeed Time is Money. The best thing that we can do to fight this problem of inflation is to learn to invest. Invest in such a way that the return is more than the inflation rate. How? Then we need to understand several types of investments and I will write an article about this.

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