Five basic principles of finance that you must know
This principle suggests that the value of a dollar you receive today is greater than the value of a dollar you will receive in the future due to the capacity to earn profit or return on investment. The time value of money is the foundation of many financial decisions, including investment strategies and loan repayment plans.
For example, if an investor buys a bitcoin unit in 2017 by paying $10,000 and keeps it until 2021, the value of his property has reached $50,000, which shows a 400% return on the initial capital. This shows the time value of money because the investor has managed to earn a significant return by holding onto the asset over time.
Another example of the time value of money in the cryptocurrency market is the concept of equity. Some cryptocurrencies like Cardano and Ethereum allow users to earn profits by staking their assets. In this method, you will be rewarded based on the amount of staked cryptocurrency. This solution also shows the time value of money because shareholders can make a profit by holding and using their cryptocurrencies over time.
Diversification in the investment portfolio