If the concepts of finance were to be listed down in order of their importance, the concept of ‘Present Value’ will be at the top of that list.
In simple words, present value describes the process of determining what a cash flow to be received in the future is worth in today’s rupees.
In simpler words, it is the value today of an amount of money in the future.
“I’m still not getting it!” you might say.
“How do you calculate present value?”
“What’s the relevance of present value in investing?”
Well, if these are some questions that crop up in your mind as soon as I use the term present value, and before you junk it as some ‘difficult to understand’ concept that you must not worry about, just check out this small video.
I prepared this video a few minutes back after receiving an email from a subscriber of the ‘Value Investing for Smart People’ course where I’ve tried to explain this concept in very simple terms.
But then, everything in this world can be made even simpler, and that is what I’ve tried to do with present value through this video.
Sometimes I wish I had access to such easy ways of learning when I was taking my first steps in the world of investing and finance nine years back.
Anyways, you must not miss out on what I did.
So here’s present value explained in a very simple way…the Safal Niveshak way.
I hope you will learn this important concept through this video, and would also share it with your friends and colleagues who might be interested in the subject.
Let’s get started.
If you can’t view the video here, click here to view. And, by the way, don’t forget to turn on your speakers.