The Time Traveler’s Guide to the Value of Money

 Some rights reserved by Alan StantonLet us pretend that you are planning a trip in a time machine and you need some money for the future. So, do you stockpile a bunch in your time machine with you? Or, do you invest it so that you will have earned interest on that investment and you can collect it when you actually get to the future? Hmm….

Well, taking it with you is akin to hiding it in the mattress. You know where it is, no one can swindle you out of it, and it is readily available. This tactic is appropriate for almost any disaster: storm, disease outbreak, zombie apocalypse, nuclear war, aliens, etc. It is not the best in case of fire though, so you might want to spread some of the money around in different places.

The idea of fire is probably enough to send some of you right to the bank. So, let us talk investing. You can invest in stocks and bonds or similar to earn money from the money you invested. You can study trends and case studies and pick the right mix of investments for your needs to make money. You could also buy some property or invest in a product or company. Then, there is a CD or savings account where you’ll earn interest. Your money is protected, in that it won’t burn up, but it is out of reach and could lessen in value if your investment goes bad.

So, this is the time traveler’s dilemma. How do I have enough money in the future? However, wait, isn’t that (or shouldn’t that) be on everyone’s mind? A more accepted way to think about it, rather than in terms of time travel, is in terms of present value and future value of money.

Present value of money is what it is worth right now. If you have $1, it is worth a $1. Tomorrow it is probably worth a $1 and even a few years after that. Those hiding money in their mattress are focused on the value of their money now. They don’t want it to lose its value and they want to keep an eye on it. One of the problems here is inflation, though. One way that inflation affects the value of your money is that as goods and services go up in price, the value of your $1 goes down–since it buys less over time. So, hiding your money in the mattress is not good in terms of inflation.

Then there are those who want their money to be worth the most that it can be. They are thinking about the future value of their money. They want to save their money too so they can always have it, just like the mattress folks, but they want to get even more for the same amount. They think about interest rates and returns on investment and any way they can to increase the future value of the dollar. Of course, some of those investments come with risk—so that they might end up with less than they bargained for. However, that might be ok, since it could also be worth a lot more. They also have inflation in mind. They want to be sure that their $1 will retain most of its value and hopefully multiply in value, even in the eye of inflation. They hope to beat inflation by making money on their investment.

So, what is the answer? Counting on the present value of your money and keeping it with you so, you won’t lose some? Or investing that money so that you will have more in the future, yet take a risk at losing some?  That is difficult question that would take more than a blog post…a question as old as time.

For your time traveling purposes, it really seems you should do a bit of both. Actually, that is a great philosophy for most situations. Spread your money around. Keep some ready cash on hand and keep some accessible in a bank account. Then diversify your investment portfolio with a mixture of “safe” and “risky” investments to make more money. This should help you maximize both the present and future value of your money and help with inflation. But don’t take our word for it. Talk with an unbiased financial planner.

Attorney Christopher D. Smith with SmithLaw in Sarasota, Florida thinks a financial planner could be the time traveler’s travel agent. Their expertise is strategizing to make your dollar worth the most it can be, while protecting your money for the future. It is a mattress/investment combo.

Image: Some rights reserved by Alan Stanton

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