A number of investors have a hard time understanding what is the future value. They would like to know how much their investment will be worth at some point in the future, but they don’t really understand what future value means. Future Value is defined as the current value of an asset, less any amount that could be invested to obtain the same amount of wealth at some point in the future. You might hear investors talk about future value being discounted to the present day.
What is the future value and why is it important to you? Well, the future value is one of the most important considerations in making or accepting an investment. Investors must be careful not to fall into the trap of investing based purely on the present moment view of what is the future value. They must have a firm understanding of what are the future value and how to obtain it.
When most people hear the term future value, they automatically think of the price. That is, they think in terms of dollars. However, there is much more to future value than simply dollars. The price you pay for a product today, no matter what it’s made out of, is still going to be worth something in the future.
If you take a pair of jeans today, they are going to cost you less than two pairs of new jeans that were made out of the exact same material two years ago. In the long run, the price you pay for jeans today, especially if they last you just as long as those two pairs, isn’t so far off from the price you’d pay for them two years ago. What does this have to do with future pricing? In fact, it’s even more important since it can be a very large part of your decision making process when it comes to investments.
So what is the future value then? Future value is what you get back from an investment today. In other words, what will happen to the price of the investment when all is said and done? This is a very important concept to understand when it comes to investments and forex trading, so I’m going to give you a quick lesson on how to calculate future value before I go on.
To calculate the future value, you need to know what the value of a future investment will be in the future. For example, let’s say that a particular investment is worth ten percent now, but it is predicted to go up by fifty percent in the next year. That would mean that you’re going to make about one hundred dollars from this one investment. Now, if the investment doesn’t go up by fifty percent but only goes up by twenty percent, your profit from the investment is going to be about thirty dollars. The difference is what is called future value.
Using this simple example to explain what is the future value, you should now have a good idea of how future prices are calculated. Future prices are determined using the future price to predict what the price will be in the future. The problem is that many traders do not pay enough attention to the future price. When they think that it’s going up, they go into trade with the hope that it will continue to go up, but when they actually make their transactions, they sell before the price increases. This means that instead of getting a profit, they lose money.
The lesson that I want to share with you in this article is that future values and future prices are two completely different things. You cannot depend on the past price to predict what is going to happen in the future. It’s always best to leave your future price predictions to professionals. They can make you more money by simply using technical analysis, which is a proven way to analyze the past market price data to predict what is going to happen in the future based on past price trends.