Jerrold Johnson
Contributor

Understanding the 'Time Value of Money' is one of the concepts which should be grasped in the bid to develop and maintain a successful financial strategy in these volatile times. One dollar today is worth more than one dollar tomorrow.

This, as the dollar you have today can be invested and has the potential to gain interest or even appreciate in value.

To reap benefits from the advantage of 'Time' you must know exactly what you wish to achieve and quantify those goals in dollar terms. For example, if you want to own a house, you must ask the questions: When do I want to purchase the house? In which community do I want to buy? What is the value of houses in that area? How much cash will I need to outlay?

The answers to these questions and others will form the basis for charting a road map for achieving your goal. You can't ask directions if you don't know where you are going!

If you were to take advantage of the 'Time Value of Money' and invest US$250 every month for 30 years and receive an average annual interest rate of 13%, you would have accumulated US$1,105,161.72.

As daunting as these periods of economic uncertainty may initially appear, young investors still have the advantage of time, as they plan how they will accomplish their financial goals, by exercising discipline in consistently and systematically investing.

Here in Jamaica we are no strangers to the harsh realities of currency depreciation. We are equally familiar, however, with hope and a solution based approach to any challenge.

With some planning and good budgeting you could rise above the challenges that will perplex many who do not take advantage of time and the time value of money.

Jerrold Johnson is a Financial Advisor at JN Fund managers Limited. He may be contacted at Jerrold@jnbs.com