I get that the value of money depreciates over time hence why they tell you that the best time to invest is now. But i don’t get how exactly investing now helps you in the future if the cost of living increases with time too anyway. So like let’s say you invested $1000 today and then in the future that’s equivalent to $4250, but then the price of things have also increased so how much richer are you really if you have to spend a lot more in the future anyway?
In: 64
Other example. I’m currently investing in a business and have spent about $20k so far. A friend on mine wants to invest in the same business and would like 50% of the holdings. I told him fine, invest $20k at cost so that we would’ve invested a total of $40k in the business for 50% each.
He tells me he’s fine with investing $20k, but will only be able to give me the money in 12 months. To which I said « money today is worth more than money in the future ». Reason being that he could invest his $20k (assuming he had the full amount) in a rather conservative 401k or other relatively safe investment and have more than $20k in 12 months.
So while I would be investing my money to take care of critical business needs and forgoing the opportunity cost of using that money alone, he would essentially be enjoying the « privileges » of owning 50% at $0 down for 12 months whilst still investing his own money. Everything else being equal.
Latest Answers