Foundations of Money

Time Value of Money

Time Value of Money is the foundational idea behind every calculation in personal finance — a rupee today is worth more than a rupee in the future, due to opportunity cost, inflation, and uncertainty. This guide explains Future Value (what today’s money becomes) and Present Value (what future money is worth today, via “discounting” — the same mechanism behind DCF valuation covered in tackl.finance’s fundamental analysis note), then contrasts Simple Interest (linear growth, calculated only on the original principal) with Compound Interest (interest earning interest, producing dramatically larger results over long periods — the mathematical reason “start early” is such powerful advice). We close with two practical shortcuts: the Rule of 72 for quickly estimating doubling time, and CAGR — the standardised way of expressing growth over multi-year periods for comparison.