The Future Value Of Money


Now I'll explain this in a really simple way, so if you want to get more advanced on this topic please search for this term separately.

We are now always buying products, paying for services that we don't really need, and just spending our money everywhere knowing that this is the money we suffered to collect.

You'll feel worse about it when you become familiar with a term called "The future value of money" so what is this?

Let's say that you are paying (2008 dollars) each year at coffee shops, so if you make your coffee at home would it add the same (2008 dollars) to you? It will add more.

These 2008 dollars, if you put it in an investment that pays compound interest at a 10% rate that is compounded annually, over 70 years, oddly enough those (2008 dollars) will be (17,421,842 dollars) waiting for you at your account, can you imagine this???

So the future value of money is the present value, added to the interest rate over the period of time you're investing it, and no wonder that compound interest had made many people filthy rich, and others desperately poor.

That is why Charlie Munger said:
“The first rule of compounding: Never interrupt it unnecessarily.”

Also Warren Buffet said:
"My life has been a product of compound interest."

So next time you're buying something unnecessary, remember two things:

1) The future value of this money if you invested it with a compound interest
2) Warren Buffet when he said: "If you buy things you don't need, soon you'll sell things you need"

And that is all for today, hope this was helpful, and I wish you a great successful life, thanks for your precious time :)

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