Oh the core principle of Finance is that
money today is more valuable than money tomorrow the rationale behind it is that
money that we receive today has a potential earning capacity this is why
every person prefer to receive money sooner rather than later and hence
timing is one of the most important topics when we talk about money let’s
imagine that we will be paid one thousand dollars and we are offered to
choose whether we receive it today or after one year if we choose to receive
the money today we can go to the nearest bank and deposit it for a year
given that the bank wants to attract such deposits it is willing to pay
interest on our money let’s imagine that the bank would pay us 3% if we leave our
money there for a year in one year we will collect our initial 1,000 dollars
and on top of it we will be paid 3% of $1,000 we will have one thousand and
thirty dollars in total on the other hand had we received $1000 after year we
would have missed the opportunity to earn the interest of $30.00 the truth is
the money today offers more opportunities than money tomorrow