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The time value of money - German Nande

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We’ve all heard the phrase “Time is money.” But what do these two things actually have to do with one another? German Nande explains the math behind interest rates, revealing the equation that will allow you to calculate the future value of your money (if you wisely put it in the bank, that is).

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TED-Ed Animations feature the words and ideas of educators brought to life by professional animators. Are you an educator or animator interested in creating a TED-Ed Animation? Nominate yourself here »

Meet The Creators

  • Educator German Nande
  • Director Franz Palomares
  • Animation Artist Celeste Lai
  • Narrator Addison Anderson
Additional Resources for you to Explore
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone, in a situation in which a choice needs to be made between several mutually exclusive alternatives given limited resources. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would be had by taking the second best choice available.

AMT are global experts in financial training, supporting our clients by delivering tailored learning and equipping employees with the skills and tools they require for success across financial markets and related sectors.

Need help figuring out how to solve the formula in this lesson? Check out this lesson on the order of operations.

How does this principle apply to interest rates on your mortgage? What if you want to buy a house? Check out this explanation from Khan Academy.

The value of money is determined by how much (or how little) of it is in circulation. But who makes that decision, and how does their choice affect the economy at large? Doug Levinson takes a trip into the United States Federal Reserve, examining how the people who work there aim to balance the value of the dollar to prevent inflation or deflation.
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About TED-Ed Animations

TED-Ed Animations feature the words and ideas of educators brought to life by professional animators. Are you an educator or animator interested in creating a TED-Ed Animation? Nominate yourself here »

Meet The Creators

  • Educator German Nande
  • Director Franz Palomares
  • Animation Artist Celeste Lai
  • Narrator Addison Anderson