Talking Net Future Value with Mom

Amanda Steinberg

Armed with a B.A. in math and physics back in 1965, my mom had her heart set on motherhood. 

Fifteen years later, when she got divorced (I was three), she modeled for me what it took to go from being a woman afraid of finding her way in the world, to being an MBA-toting, high-earning, independent super mom.

She showed me I could handle any change, any “crisis,” reinvent whenever I needed to—and that I always needed to understand money and be able to provide for myself. 

Her support still keeps me going and thinking. On the phone just the other night, fresh from a visit with a retirement calculator, I found myself running some rough numbers with her.

“So, I’m 35 now, and in 30 years, it’s likely I’ll need over $100,000 a year then to generate the equivalent of a $50,000 lifestyle now—so I have to save more than $2 million by the time I’m 65.” 

To which Mom replies: “It’s all about net present and net future value.” What did she mean?

Net present value is as it sounds—what your money is worth today. Net future value refers to how much that same money is worth in the future, taking into account inflation (about 3% per year) and compound returns (we hope).

It’s easy to forget about net future value: i.e. that what you save now will be worth less in the future, unless you find a path to sustainable growth.

As I’m learning, that means investment and asset protection: protection against loss when there’s a financial shock, in your portfolio and your life. Thanks, Mom.

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