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Finance Dictionary and Glossary of Investment Terms
time value of money
Definition 1.
The idea that a dollar now is worth more than dollar in the future, even after adjusting for inflation, because a dollar now can earn interest or other appreciation until the time the dollar in the future would be received.
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Definition 2.
The idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received.
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Definition 3.
The basic principle that money can earn interest. Therefore, something that is worth $1 today will be worth more in the future if invested. This is also referred to as future value.
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