Rescue Capital Blog Your Money, Your Way

4Jun/13Off

The value of money in your hands today

There are a bunch of reason why someone would want to have cash in their hands now instead of some future date.  Most people  know that $100 today does not equal $100 years from now.  If it being invested somehow and collecting interest then it may turn into much more years later. In some cases though, your money can more valuable today than it will be in the future. This very  important to understand if you own an annuity or structured settlement today.

Rescue Capital can help you get cash nowWhat your money is worth today is known as the present value. In order to have an equal amount of money in future years as you have today, you have to consider interest rates and inflation rates. These rates or yields change with time. These rates will impact the value of your money either today or in the future as well as what is known as the purchasing power of your money. Purchasing power of a dollar is the amount of goods and services that can be purchased with one dollar. Think about how much value you used to be able to get with one dollar versus what you can get today. Many of us remember when gas was $1.50  a gallon. Over time you need more money to get the same goods. This is an example of why one would need more money in the future to have the same purchasing power today.

By having the cash of  your future payments in your hands  today, you  may lose possible future value but you have an opportunity to use it now where it may be  helpful for your well being.  The result is you will have a lump sum of cash at its present value. One advantage of having a lump sum of present value cash is the purchasing power it holds today. Among many other advantages of having a lump sum of cash, it can be invested differently to earn higher returns than being locked into an annuity for example. You could invest in a business that gets a higher return on your investment than the level it would get in an investment. You may buy a home where, instead of paying rent every month, the money you spend living there builds equity overtime and  the value of the home will increase over that time. You may purchase a car where now you can get a better job, make much more money over time than you would if you had to take the bus or  the subway.

The equivalent value of money for either present values or future values is simply determined by a mathematical equation. The equation takes into consideration interest rates over time and the time period between present and future. Call us today at 866-688-3532 and we can discuss what options are available for you. If you prefer, you can just fill out an online quote request here and we can get back to you when you have more time.




Posted by Rescue Capital