9.1. Investments and the Time Value of Money

The ability to profit from investing money is the key to our economic system. In this text, investment in terms of personal financing is introduced and then applied to chemical process economics.

There are various ways to distribute one’s personal income. The first priority is to maintain a basic (no-frills) standard of living. This includes necessary food, clothing, housing, transportation, and expenses such as taxes imposed by the government. The remaining money, termed discretionary money, can then be distributed. It is wise to distribute this money in a manner that will realize both your short-term and long-term goals.

Generally, there are two classifications for spending discretionary money: