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The time value of money is the idea that money available now is worth more than the same amount later, because it can earn returns in the meantime. It underpins nearly every financial calculation, from comparing loan offers to deciding whether to take a lump sum or payments. It is the reason starting to invest early is so powerful.
Receiving $1,000 today beats $1,000 in five years, because today's $1,000 can grow in the meantime.
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