Time value of money is a financial concept that illustrates how the value of money grows over time. This takes into consideration that the money can be invested at a specified interest rate, that grows.One financial concept is present value (PV) and another financial concept is future value (FV).

• how the present value formula is a good method to determine how much is needed to save monthly, in order to have a specified sum of money at retirement age in 25 years at 8% interest.
• how the future value formula is a good method to determine how much of a lump sum is needed today, to invest for 25 years to reach a specified retirement amount, with 8% interest.