Time value of money

The idea that money available now is worth more than the same amount later, because it can be invested in the meantime.

Example

Offered $1,000 today or $1,000 in five years, the $1,000 today is worth more because of what it could earn in those five years.

It is why a small amount invested early can outgrow a larger amount invested later - time itself has value.

Compounding — Earning returns on your past returns, not only on your original money.
Time horizon — How long before you plan to spend the money you are investing.

For most people, their future earnings are the largest asset they own — Human capital - the value of your ability to earn - is usually worth far more than a young person's savings. Education, skills and health are ways of investing in it, with real costs and uncertain returns. (9 min)
IRR: the measure that knows about time, and what it assumes — IRR is the rate at which every cash flow discounts back to zero. It is the right tool for irregular timings, and it systematically flatters anything held briefly. (14 min)
How compounding works — Compounding is earning returns on your returns, not just your original money - and time, more than the rate itself, is what makes it powerful. (12 min)
Discounted cash flow: the method that shows its assumptions — A discounted cash flow states every assumption out loud, which is its great virtue and the reason it is so easy to abuse. The output moves enormously on inputs that cannot be observed. (14 min)