£500 today or £1,000 in two years?

Pembroke

Whilst for the average man in the street it's a no brainer and taking the £1000 in two years is the correct choice there are many savy people here on MSE who would have no trouble converting £500 now into a lot more than £1000 in two years time, whether they buy wholesale stock to sell on, buy stock to make craft items or gamble.

Me I'd take the £500 now, and yes the £5000 as well.

Send me the cheque now please Martin.

RAS

Depends. If I have provident or payday loans or bailiffs at the door and had not handled that well, £500 could be the first step to sorting things out.

In my own position, probably the £1000 in 2 years time. I do not have the time to run a PT business at the mo nor the time to sort out the tax issues if I doubled the fund.

Absinthe_Fairy

I'd take the £1000 (or £10000) in two years rather than have half the money now, but then I'm in a reasonably good financial position anyway, able to save a few hundred each month. I imagine £500 (or £5000) right now would be a lifeline to a lot of people struggling to get by (especially as in two years their position might have improved).

Kaz64_2

I was one of the ones who voted to wait two years.... simply because there are no interest rates that would give that sort of return. I am lucky in that i don't have the wolves knocking at my door, so i can afford to wait (so long as I don't get run down by that bus!).

KeithBN

Why?
Quite simply this - £500 now is cash in your hand guaranteed.
£1000 in 2 years time is not guaranteed, there is a risk.
Oh sure, Martin said the company is "safe" but as we all know, there is no such thing as a guaranteed safe risk-free company, so there is no cast-iron guarantee that you would get the £1,000 in 2 years time (assuming, of course, you are around then yourself ;-) ).

So, simple risk management.
Look at it from a slightly different perspective.
I give you £500 now, in cash.
I then offer you the chance to risk that £500 for a potential £1,000 in two years time. Do you risk your £500, or do you keep it?
Remember there is no such think as a guaranteed safe company, so there is a risk.

Same applies, for me, regardless of how large the values are.

laurenjs88

aye, i'd take the £500/£5k now, mainly because you don't know whats going to happen in that time.

jamesd

It'd be really interesting to know the financial situation of people replying. That's because the poorer people are, the less likely the are to take the financial uncertainties from investing that will improve their long term situation. One of the ways to end up less poor is to act as though you're not poor in this area. But it's tough to persuade people whose lives revolve around budgeting to do things that are more efficient.

In some ways the main site here is an enabler for that sort of poor long term decision-making, because the focus is on the short term things, budgeting and certainty of result, not on the long term big picture investing and how to do that. Enabler not being intended to be strongly critical, more of an observation about a place that does a superb job at its defined mission and that mission is in many ways the core basic skills.

For background to this post see: Office of National Statistics' Wealth and Assets Survey, summary in the Guardian.

This US study showing that the more numerate the partner making the decisions in a household is, the better they are likely to do financially and the higher the percentage they have invested rather than saved is interesting. Makes me wonder about the effect of more of the interesting numeracy articles that Martin does - including this one! - can have. Sneaking education in...

krazykidskate

Surely the results will be influenced by how skint the person is and how old they are.


If you have savings and don't need the cash then doubling it in 2 years seems a no brainer.

But when I was younger I would have been much more interested in having the money upfront because it would have made a difference to what I could do that day/ weekend - 2 years on would have seemed a lifetime away - i wouldn't have sacrificed something for what would seem like a minor gain in the future. Two years on you'll probably benefit from higher wages, lower car insurance, more chance of credit so maybe its better to enjoy the 500 now? Also when you are young then 2 years is a much bigger percentage of your life and seems so much further away.

ViolaLass

jamesd wrote: »

It'd be really interesting to know the financial situation of people replying. That's because the poorer people are, the less likely the are to take the financial uncertainties from investing that will improve their long term situation. One of the ways to end up less poor is to act as though you're not poor in this area.

Except that one of the rules of investing is to risk only money that you don't need. If you're poor e.g. in debt, you need that money.

shellsuit

I'd take £500 now because I'm an impatient moo

I'd take £5000 now too, and make hubby pay off his CC!