Question

In Jay-Z’s “The Story of O.J.,” he says that young people should invest in their future as he has: "Financial freedom my only hope/F**k living rich and dying broke/I bought some artwork for one million/Two years later, that s**t worth two million/Few years later, that s**t worth eight million." But only after he spent millions on his car collection and since cars are a depreciating asset and the value drops ~20% the moment it’s drive off the lot of off a flatbed: I bought every V12 engine/ Wish I could take it back to the beginnin’/ I coulda bought a place in DUMBO before it was DUMBO/ For like 2 million/ That same building today worth 25 million/ Guess how I’m feelin’? Dumbo. Explain how the time value of money concept goes beyond cash and what it means for portfolio investing.

Answer 1

The time value of money is the concept thath money you have is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that provided money can earn interest, any amount of money is worth more the sooner it is received.

A portfolio investing means investing into different categories of asset i.e.ownership of a stock, bond, or other financial asset with the expectation that it will earn a return or grow in value over time, or both.