You Should Make Investments Only After You Have Sufficient Liquidity

question 85

True/False

You should make investments only after you have sufficient liquidity and sufficient insurance to protect your existing assets.

---

Definitions:

Present Value

Today’s fiscal equivalent of money anticipated in the future or sequences of cash inflows, discounted using a specified rate of return.

Today's Dollars

Refers to the value of money in terms of the purchasing power of the current year, accounting for inflation.

Compounding Effect

The compounding effect refers to the process where the value of an investment increases due to the earnings on both the initial principal and the accumulated earnings from preceding periods.

Future Value

The value of an investment at a specific date in the future, accounting for specified interest rates or returns.