When I first started learning about investing my money and this whole idea of not putting all my eggs in the same basket was when I got my first job in high school, so I didn’t have very much money. I downloaded an app called Acorns, which takes round-ups off of purchases and starts putting them in a very diversified portfolio. When I started this, I put about 100 dollars to start it and just watched it grow. I remember it took quite a while just to earn 20 dollars in my investments, but I also just kept adding money into it whenever I could because I essentially just see it as a savings account for the future. I now have 3,000 dollars give or take. It has taken quite a while to get there, but I took basically no risk because my money is so diversified.
My investment hasn’t changed since the day I started it in high school. I like the idea of low-risk low-reward because I know my money’s probably not going anywhere, and even though it’s hardly growing, it’s still something. Of course, if I started taking bigger risks by investing more money into one stock or something of the sort, then naturally I would expect earnings related to the level of risk, so higher-risk higher-rewards. The reason I don’t do this, however, is because I know myself well enough to know that I would just be worrying about losing my money and the stress related to it would not be worth it at all.
The reason the present value of a dollar is greater than its future value is because if you get that same amount of money now, you can save it and grow it through interests, which makes it a larger quantity of dollars in the future when the inflation rate is higher. If you accept that same dollar amount but at a later date, then during that time that you didn’t have it, you weren’t able to grow it, so it’s worth less.
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