5 basic principles of finance you should know
Discover the five basic principles of finance to improve your financial literacy, including, time value of money, risk management, compounding and more. Learning the principles of finance is essential for managing personal and business finances, making informed investment decisions and understanding the economy. Here are five basic principles of finance that you should know. Time value of money This principle suggests that a dollar received today is worth more than a dollar received in the future due to the potential to earn interest or investment returns. It is the foundation of many financial decisions, including investment strategies and loan repayment plans. For example, if an investor bought 1 Bitcoin (BTC) for $10,000 in 2017 and held onto it until 2021, when its value reached $50,000, the investor would have earned a return of 400% on their initial investment. This demonstrates the time value of money, as the investor was able to earn a significant return by holding onto their...