Question

What is the importance of time to the discipline of finance?

Answer 1

Time is very important while determination of the financial aspect of a company and individual because timing of investments will be determined the overall rate of return of an individual.

Time will also determine the overall maximisation of rate of return because when we will be investing early into the investment cycle, we will be having a higher amount of compounding interest and we will be able to compound that money to a higher extent.

When the stock market are correcting or the stock market are falling and then if we can time the market and enter into the appropriate levels in the market, we will be having a very good risk to reward ratio and we will be able to make a higher rate of return easily and the market will be going up and we should also be timing when we have to exit the stock market, so timing will be very important when we will be determining the financial aspect of an individual because it will help an individual to get financially independent and make a higher rate of return.