£500 today or £1,000 in two years?

tara747

MSE_Martin wrote: »

Just to note the question was deliberately written so the company surety is not an issue. So saying "not sure it'd pay out" is not part of this - there is no credit risk

Yes, I understood the same. Obviously if there were *any* risk whatsoever, I'd take the £500. A bird in the hand and all that!

tgroom57 wrote: »

I find it easier to envisage saying - there is £500 in an account for you and an extra £500 will be added if you don't touch it in 2 years. Kind of combining what jamesd said above.

I've just come back from the Tesco free bus trip and asked them your question as above. They were in favour of £500 now - maybe those going in their own cars would have said differently.

OMG, there's an almighty assumption right there!!! Are you assuming that those who own/drive cars are better off than those who don't? :eek: Because I find that the opposite is often true. Indeed, cars can be a total money pit. I used to have one (had to commute to work), then got a job in the city centre, ditched the car, now cycle/walk to work. I am better off by thousands of pounds a year and my sig shows my current savings... :cool: Indeed, I know people who owe big money on HP for cars... that's the opposite of being well off in my book.

tara747

p.s. what is the Tesco free bus trip?

ViolaLass

tara747 wrote: »

OMG, there's an almighty assumption right there!!! Are you assuming that those who own/drive cars are better off than those who don't? :eek: Because I find that the opposite is often true. Indeed, cars can be a total money pit. I used to have one (had to commute to work), then got a job in the city centre, ditched the car, now cycle/walk to work. I am better off by thousands of pounds a year and my sig shows my current savings... :cool:

Tgroom did say 'maybe'. I think the assumption is that people taking a free bus ride may well not have a car and therefore may have different financial situations and priorities (to those who have a car). I don't think that's unreasonable.

FATBALLZ

Although it's been said company surety isn't an issue, in real life it will be an issue 100% of the time as no company is completely safe, so I suspect this influenced the results to some extent. In real life I'd also take the £500, as I wouldn't want the risk and uncertainty of trusting someone would still be around to pay out and actually would pay out 2 years down the line. If surety wasn't an issue I'd take the £1k but in real life I'd always take the £500.

tara747

tgroom57 wrote: »

But just before I left I thought of another angle. All those in favour of waiting the 2 years say 'Aye'.
By spending the £500 (not all at once, I promise) wouldn't that trickle contribute to sales on the high street and thereby stimulate the economy?
By withholding your 'winnings' are you delaying a recovery? Would you willingly wait 2 years for that?

Hmmm... maybe the govt should give everyone £500 instead of bailing out the banks and see if we can get the economy going again!!! :rotfl:

On second thoughts, they have already given away a lot of money to consumers to spend. The car scrappage scheme :mad: and ultra-low interest rates meaning savers are subsiding those with mortgages :mad: So you can't say that they're not trying!

p.s. if someone did give me £500 today I would save it. I'm not going to 'shop for victory' or whatever the govt want me to do... can't we do better than spending our way of recession by buying piles of cheap tat that we don't need?

ViolaLass wrote: »

Tgroom did say 'maybe'. I think the assumption is that people taking a free bus ride may well not have a car and therefore may have different financial situations and priorities (to those who have a car). I don't think that's unreasonable.

Well, you're right that they may have different priorities. I could afford to run a car if I wanted, but I choose not to and, as a result, am far better off financially. It is all about priorities.

Some people need a car, of course. If you live in the country you really can't do without one. Most people in towns and cities who work within 3 miles of their home don't need a car. Some choose to have one as it is a priority for them. But there is an opportunity cost - that money cannot be used in other areas.

Derivative

Risk-adjusted and on average, you're not going to be able to turn £500 into £1000 in 2 years.

So the question basically comes down to, are you poor or not.

If you're poor, then you'll "need" the £500 now. If not, you'd take the £1000.

The only situations I can see in which the £500 now can be better is if you have huge debts to pay down. If you have £500 on a CC now at 30% APR, you're still better off taking the £1k in two years.

spook

I opted for the £500 now option but I still haven't received my money.

It's a scam.

tara747

spook wrote: »

I opted for the £500 now option but I still haven't received my money.

It's a scam.

:rotfl::rotfl::rotfl:

Gorgeous_George

My instinct was to wait for the £1,000. However, after consideration it's a bird in the hand for me.

If something looks too good to be true, it usually is. The gain if you wait is only £500 - so not life changing - and unless there was a cast iron, government backed, insured guarantee, I'd take the £500 and have a holiday.

GG

super_woman

£1000 for me!!