Inflation– Steady rise in the general level of prices (reduces purchasing power)
Deflation –Falling prices.
… Important Personal Finance Terms Savings Vs Investment Education, Marriage, Wealth creation, Large down-payments, Retirement Festivities, Gifts, Small down-payments, Religious purpose Purpose Long Term Short Term Term Cash Flow and Capital Appreciation Cash Flow only (if any) Types of Returns Higher, Variable, Risky Low, Fixed, Less Risky Returns Investment Savings Comparision
Opportunity Costs and Trade-offs in Decision Making
Opportunity Cost – Value of the next best alternative that must be foregone.
Opportunity cost reflects the best alternative of what one could have done instead of choosing to spend, save, or invest money. Examples?
Trade-offs occur when you give up one thing for another.
The Time Value of Money in Financial Decision Making
The Time Value of Money compares:
value in the future of a Rupee received today (FV)
value today of a Rupee amount to be received in the future (PV)