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  • raj75
    • #2
    • 20th Apr 10, 10:31 AM
    • #2
    • 20th Apr 10, 10:31 AM
    I am not sure everyone understood the question..
    Over 40% people voted for 750 now.. I don't think those 40% will say they don't need "500 now" instead of "1000 in 10 year time".
    • minerva_windsong
    • By minerva_windsong 20th Apr 10, 11:15 AM
    • 3,765 Posts
    • 8,672 Thanks
    • #3
    • 20th Apr 10, 11:15 AM
    • #3
    • 20th Apr 10, 11:15 AM
    Short term is a relative concept - I would quite happily wait, say, a few months to get the 500 rather than taking it now. To me, anything within a year is 'short term', a year to five years is 'medium term' and beyond that is 'long term'.

    Then again I suppose it depends how much you need the cash as to what you'd take when. I went for 500 now as that would help out my 'saving to move to London' fund massively, but the 1000 in ten years would probably end up in savings as well, so how much difference it makes to me personally I'm not sure.

    /pointless post
    "A mind needs books as a sword needs a whetstone, if it is to keep its edge." - Tyrion Lannister

    Married my best friend 1st November 2014

    Loose = the opposite of tight (eg "These trousers feel a little loose")
    Lose = the opposite of find/gain (eg "I'm going to lose weight this year")
    • djb77
    • By djb77 20th Apr 10, 11:51 AM
    • 17 Posts
    • 18 Thanks
    • #4
    • 20th Apr 10, 11:51 AM
    • #4
    • 20th Apr 10, 11:51 AM
    If you factor in inflation at say 3% on 1,000 in 10 years in would be the equivalent of 740 today and therefore, I voted for F.
    • Flickering Ember
    • By Flickering Ember 20th Apr 10, 12:20 PM
    • 11,677 Posts
    • 128,893 Thanks
    Flickering Ember
    • #5
    • 20th Apr 10, 12:20 PM
    • #5
    • 20th Apr 10, 12:20 PM
    750 today.
    Flickering Embers grow higher and higher...I need a break and I wanna be a paperback writer!
    • King Weasel
    • By King Weasel 20th Apr 10, 2:08 PM
    • 4,256 Posts
    • 5,407 Thanks
    King Weasel
    • #6
    • 20th Apr 10, 2:08 PM
    • #6
    • 20th Apr 10, 2:08 PM
    To prefer 10 now you would need a discount factor of over 58%, but to prefer 750 now it would be 2.92%. So if you think annual inflation would average more than this you should certainly go for option F. Option E (500) has an internal rate of return of 7.2% compared with G, so I would rule out A to E.

    I'd almost certainly go for 750 now.
    However hard up you are, never accept loans from your friends. Just gifts
    • pinkshoes
    • By pinkshoes 20th Apr 10, 6:37 PM
    • 16,626 Posts
    • 23,067 Thanks
    • #7
    • 20th Apr 10, 6:37 PM
    • #7
    • 20th Apr 10, 6:37 PM
    Assuming I could manage to make a 5% return each year by investing it, then 614 would give me approximately 1000 in 10 years time, so I'd accept anything over this to save the hassle of investing.

    (Thus the only option was the 750 NOW option)
    Last edited by pinkshoes; 21-04-2010 at 6:16 PM. Reason: spelling
    Should've = Should HAVE (not 'of')
    Would've = Would HAVE (not 'of')

    No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)
    • MSE Martin
    • By MSE Martin 20th Apr 10, 7:26 PM
    • 8,116 Posts
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    MSE Martin
    • #8
    • 20th Apr 10, 7:26 PM
    • #8
    • 20th Apr 10, 7:26 PM
    Interesting readin - i will try and clear it up so everyone understands its the first option.

    I note the analysis above - but what about the

    A. I need it now feelings some will get (especially those who it could help clear debt)
    B. The risk of dying before the payout if you wait.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

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    • Lokolo
    • By Lokolo 20th Apr 10, 7:28 PM
    • 20,188 Posts
    • 15,374 Thanks
    • #9
    • 20th Apr 10, 7:28 PM
    • #9
    • 20th Apr 10, 7:28 PM
    I am taking 500 now as I reckon I could double it in 10 years. Thus making it the more financially viable option!

    I don't need it now, I just would like it as its the obvious choice for me.
    • Diesel44
    • By Diesel44 20th Apr 10, 8:26 PM
    • 594 Posts
    • 494 Thanks
    Who in their right mind would turn down 750 now.
    Anything government backed must be unreliable. I think I would take now and 750 was one of the choices so whats wrong with taking 750 now, why wait 10 years for an extra 250.
    • DarkConvict
    • By DarkConvict 20th Apr 10, 8:29 PM
    • 6,249 Posts
    • 3,056 Thanks
    The poll needs to be more spread out.

    You have a massive gap of 10 years between F. and G.
    500 now or 750 now, taking 500 is losing you 250 for no reason at all.
    If the opens were more like 10 now, 20 in 3 weeks, 50 in 2 months, 100 in 6 months etc. It makes more sense.
    Although no trees were harmed during the creation of this post, a large number of electrons were greatly inconvenienced.

    There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies
    • banwa
    • By banwa 20th Apr 10, 8:55 PM
    • 948 Posts
    • 2,400 Thanks
    The question isn't 'how much money do you want?'

    The question is if someone was offered you a 10 note and said 'you can have this now or you could wait 10 years and you can have 1000', which would you take? Most people would say 'I'll wait, thanks'. But what WOULD you take now (and they won't up their offer if you turn them down)?

    If they were standing there with offering you 250 or to wait, it would make you think twice.

    The question is, what's your limit (or minimum)? If someone offered me 500 now or 1000 in 10 years time, I would definitely take the readies.
    Last edited by banwa; 20-04-2010 at 8:55 PM. Reason: sp
    Debt 26k 18/10/14
    • irishwench69
    • By irishwench69 20th Apr 10, 11:08 PM
    • 794 Posts
    • 5,634 Thanks

    I would go for option F, 750 now, factoring in the following:

    * Barring disaster(!) I'm very likely to be around in 10 years time (and more )
    * I would invest it, and even balancing inflation against savings rates, I think I could get more than 1,000 in 10 years time.

    I'm sure there are some who'd go for the 750 for instant gratification, I just think I could get more over the ten year period! If it was 250 or less, it's less likely.

    500 is possibly on the line (especially if you went for the longer term game of index linked trackers or some sort of investment (or even putting it in as a payment into your pension fund!) rather than cash based savings accounts......)

    IW x
    Official DFW Nerd Club - Member no. 222
    Debt free wannabe - Proud to be dealing with my debts!

    Remember the MoneySaving mantras!

    IF YOU'RE SKINT......
    Do I need it? Can I afford it? Can I find it cheaper anywhere else?

    Will I use it? Is it worth it? Can I find it cheaper anywhere else?
    • King Weasel
    • By King Weasel 21st Apr 10, 1:32 AM
    • 4,256 Posts
    • 5,407 Thanks
    King Weasel
    The way the question is phrased ("guarantee" etc) is intended to take risk - or some risk - out of the equation, this being one of the factors that might make you even prefer 10 now, in the circumstance described above by banwa, for instance.

    But it still leaves inflation, so people might have different answers purely because they have different views of how fast prices will rise over the next decade. People who think in terms of the return on investing the money are implicitly making an assumption about inflation, since this is the predominant influence on the % return. This might have been removed by making the 1000 index-linked.

    We would then be left with "pure" time preference (ie the value placed on a reward now compared with one in the future) plus the value placed on choice (ie the value placed on the possibility of spending the money at some point in the next ten years). The offer of a bowl of fruit now or a larger one in 10 years time would remove the choice element while retaining the time preference element.

    Hope you're all clear now.
    However hard up you are, never accept loans from your friends. Just gifts
  • Rothschild
    Id take the 250 now.

    Could buy a cool piece of furniture with it and have that to show off for the next 10years.

    In 10years time id probably have forgotten about that i was owed 1,000 and would have wasted 10years of going without something just for 750 extra. (1/3 of 1 single months pay).
    • ixwood
    • By ixwood 21st Apr 10, 4:03 AM
    • 2,512 Posts
    • 1,987 Thanks
    Interesting responses. It's the need for immediate gratification that keeps poor people poor.

    It's almost like asking whether people would take a loan (and get less in the future for more now), which a lot of people would/do.

  • DeepBlue
    Too many ways to interpret the question...
    I agree that it isn't clear what the scenario is. My understanding is: given the choice, would you choose A or G? If G, what about B or G? If still G, what about C or G etc? i.e. what is the minimum amount that you would accept in preference to a guaranteed 1000 in the future.

    I suspect that many people are reading it as: would you prefer 10 or 750 now (or any other intermediate option). Having made that choice, would you keep your current choice or take 1000 in 10 years?

    For most, it seems less about the need for money now or later, and more about a calculation of compound interest. I don't need the money now, and so my decision is how low can I go and still make the now money grow to more than 1000 in 10 years. 500 in a well performing pension fund (for a higher rate tax payer) would probably do it comfortably.

    If the question is "how desperate is the average person for money now (and how many can wait, if the return is higher)?" then the Now options should have stopped at 200....
    • grumpyoldwoman
    • By grumpyoldwoman 21st Apr 10, 8:16 AM
    • 92 Posts
    • 7,841 Thanks
    I based my choice on how likely I am to be here in 10 years, and how much 1000 then would be worth now. I figured it would be worth about 750 now, but, as I have to pick the minimum I would want now rather than having to wait, I plumped for 500.

    I know I'd be losing out slightly but you can't have your cake and eat it, can you? It's like those competitions that offer you a lump sum now (say 20000) or a small amount (say 2000) every year for the rest of your life. If you're young and healthy then picking the small amount every year for life would work out better, but if you're in your 60's with health problems then the lump sum would be a better option.
  • newjustine
    Jam tomorrow?
    Based on this information, I'd be very happy to take 150 now - but how likely are the other immediately-available options?
    This kind of choice has been researched by an academic, Professor Frank Hartmann at Rotterdam School of Management, Erasmus University in the Netherlands. He applied it to the matter of banker's bonuses. Would bankers prefer to take a bonus now, or would they be prepared to hold out for a maturing bonus? The theory was also recently tested by a TV programme here in the Netherlands, who put one of their reporters out on the street to run an experiment, offering passers-by a probable chance of a small amount of cash immediately, or a lesser chance of a larger amount of cash at some point in the future.
    I'm told there'll be English subtitles on the TV clip later in the week - it's worth watching when they're there, because it gives an insight into our motivations for reward and how easily we're tempted by an unrealistic prospect!
    The TV piece takes the first seven minutes of a programme called Nieuwslicht on TV channel Vara. As a new poster (but a seasoned reader) on these pages, I'm not allowed to post links yet - but search for news about Frank Hartmann at Rotterdam School of Management and you should find it.
    • Sooler
    • By Sooler 21st Apr 10, 9:04 AM
    • 2,898 Posts
    • 2,107 Thanks
    I think the results skewed to 750 show how many people vote with their eyes rather than their head
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