Why ₹1 Today Is Worth More Than ₹1 Tomorrow

Time Value of Money

Why ₹1 Today Is Worth More Than ₹1 Tomorrow

In a world where everything is moving faster - work, life, expenses- it’s easy to overlook the quiet force that shapes our financial future: the Time Value of Money (TVM). At its core, TVM is a simple yet powerful idea, money available today is worth more than the same amount tomorrow, because it can be invested, earn returns, and grow over time.

Let’s explore this idea through the lens of three individuals, each in a different life stage, living in the dynamic buzz of a metro city.

1. In Your 20s: Starting Early is a Superpower

Meet Kaustab, 24, a software engineer in his first job. He’s tempted to spend freely but chooses to start a SIP of ₹10,000/month. His friends think it’s too early to “worry about investments.” But Kaustab understands that even modest investments made early grow significantly over time due to compounding.

By the time Kaustab is 45, assuming an 10% annual return, his monthly SIP could become over ₹80 lakhs. If he had waited till 35 to start, even a SIP of ₹30,000 per month would have grown to only ₹60 lakhs by age 45. That’s the time value of money at work, it rewards those who start early.

2. In Your 30s: Balancing Dreams and Discipline

Sneha, 33, is juggling a demanding career and her child’s school admission. She wants to plan for a foreign vacation and her child’s education. She starts investing in a mix of short-term deposits and equity mutual funds.

TVM teaches her an important lesson-delayed investments reduce your future options. By prioritizing regular investing now, Sneha ensures her future dreams aren’t left to luck or last-minute loans. TVM helps her value every rupee she invests today, knowing it has the power to multiply.

3. In Your 40s: Planning for Retirement, Not Just Today

Amit, 45, earns well and has some savings. But most are lying in his savings account earning minimal interest. Realising that inflation silently erodes purchasing power, he moves funds into higher-yield fixed income and hybrid funds.

Here, TVM shows another angle, not just about earning more, but preserving value. If inflation is 6%, your money must grow at least that much just to stand still in real terms.

Five Key Takeaways on Time Value of Money

Inflation is the silent thief – ₹100 today won’t buy the same things 10 years later.

Start investing early – Time is the biggest multiplier of wealth.

Compounding works best with time – The earlier you invest, the greater the impact.

Idle money loses value – Money in low-interest accounts often fails to beat inflation.

TVM works in borrowing too – Loans cost more over time; plan EMI decisions with this lens.

To sum up, understanding the Time Value of Money is like putting on financial glasses, you start seeing every rupee as a seed. The earlier you plant it, the more likely it is to grow into a strong tree. Whether you're just starting out or looking to secure your retirement, TVM is your invisible but sure shot financial ally.

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