CDAE 158 Lecture Notes - Lecture 2: Financial Plan, Interest Rate, Financial Planner
Document Summary
Can be influenced by the time frame in which you want to achieve your goals. Can be influenced by the type of financial need that drives your goals. Long-term (more than five years): should be planned in coordination with short term and intermediate goals. Realistic: utilizing your income and life situation. Calculate time value of money situations to analyze personal financial decisions. Personal opportunity cost every financial decision involves giving up something to obtain something else. Personal resources like financial resources require careful management. Time value of money increases in an amount of money as a result of interest earned. saving/investing today means more money tomorrow. Saving and spending decisions involve considering the trade-offs. Time period simple interest = savings amount x annual interest rate x time period = interest amount. Future value the amount to which current savings will increase based on a certain interest rate and a certain time period.