Traditional Investing & Portfolio Theory

What is the time value of money?

The time value of money is the principle that a rupee today is worth more than the same rupee in the future, because money available now can be put to work and earn over time. A simple example: ₹100 invested at 8% becomes ₹108 in a year, so ₹108 received a year from now is equivalent to ₹100 today. This idea underpins discounting, compounding, and how investors compare cash flows arriving at different times. It is the reason idle capital carries an opportunity cost, even when its nominal amount stays unchanged.