About the Time Value of Money

The Time Value of Money — Selling Lottery Annuity Payments and Personal Injury Structured Settlement Payments

It is important to understand the time value of money when considering selling your lottery annuity payments, personal injury structured settlement award, or other form of future income. Although the dollar amount received when selling future payments for cash is lower than the total amount you would have received through payments over time, for many, selling future payments for cash is the best option. At Structured Settlement Investments, selling your personal injury structured settlement payments, lottery annuity payments, or other form of future payments, can mean having the money you need, when you need it!

If you would like to learn more about selling your personal injury structured settlement, lottery annuity, or other payments, contact Structured Settlement Investments today to learn more.

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The Time Value of Money Explained

The phrase “time value of money” refers to the fact that money is worth different amounts at different times. $10,000 today will have less value than $10,000 in twenty years, due to inflation. You can buy more with $10,000 in 2008 than you will be able to buy in 2028; a larger house, more expensive car, etc. Therefore, when selling your personal injury structured settlement annuity payments, or other forms of future income, future money is worth less when provided now. The amount you will receive by selling these payments will be lower than the full amount you would receive over time.

To help you understand the time value of money, first let's consider a mortgage agreement that allows you to buy a $100,000 home. Instead of paying the $100,000 up front, the mortgage allows you to make monthly payments for a number of years. For the sake of this example, let's say 20 years. If your mortgage payment is $800 each month, over time, you would pay a total of $192,000 for your $100,000 home. $92,000 would be the price you pay for the privilege of owning a $100,000 home now with the help of a mortgage.

When selling your personal injury structured settlement, lottery annuity, or other payments, the financial picture is just the opposite. In the case of future payments, you may be receiving $100,000 over 20 years. Since there is a cost that comes with owning money today that will be paid in the future, you receive a cash payment that is less than $100,000 today (but which can become much more than $100,000 in time, depending on how you use the money). Many of those selling their personal injury structured settlement, lottery annuity, or other payments, find having cash in hand now to be the best option. Their financial circumstances may have changed, they may now find that they would be better served by a lump sum cash payment, or they may have financial opportunities available that having cash in hand enables them to pursue.

Contact Structured Settlement Investments

If you would like to inquire about selling lottery annuity payments, personal injury structured settlement payments, or other forms of future income, please contact Structured Settlement Investments today to speak to one of our helpful customer representatives.

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