Finance and Investing

Money is worth more today than in the future. We would all rather have $1,000 today than $1,000 in a year's time.

But how much more valuable is money now vs a year from now? Would you take $1000 now or $1100 a year from now?

Deciding what rate of return is acceptable to you is important for determining the rough degree of effort that will be required and what kinds of investments are worth pursuing. Someone trying to make 4%+ per year on their money has a much simpler task than someone trying to make 18%+.

Your answer will depend on what you are trying to achieve and what opportunities and knowledge you possess. Most prominent value investors want a minimum 10% return per year (often they are dealing with larger sums of money, which can make it harder to make higher returns).

This desired rate is what is used as the 'discount rate' when making a 'discounted cashflow' valuation of an asset.

My discount rate is 15%, as my goal is to make 15%+ per year in perpetuity.