Time Value of Money Matrix

The Time Value of Money Matrix is a 2x2 matrix that helps business owners and investors understand the relationship between time and money. It can be used to compare different investments and make decisions about how to allocate resources.

At a very high level, the Time Value of Money Matrix is used in the context of business, finance, investment.

Time Value of Money Matrix quadrant descriptions, including examples
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What is the Time Value of Money Matrix?

A visual explanation is shown in the image above. The Time Value of Money Matrix can be described as a matrix with the following quadrants:

  1. Short-Term, Low-Return: Investments that have a low return but can be realized quickly, e.g. a certificate of deposit (CD)
  2. Short-Term, High-Return: Investments that have a high return but must be realized quickly, e.g. day trading
  3. Long-Term, Low-Return: Investments that have a low return but can be realized over a longer period of time, e.g. bonds
  4. Long-Term, High-Return: Investments that have a high return but must be realized over a longer period of time, e.g. stocks or real estate

What is the purpose of the Time Value of Money Matrix?

The Time Value of Money Matrix is a 2x2 matrix that helps business owners and investors understand the relationship between time and money. It can be used to compare different investments and make decisions about how to allocate resources.

The matrix is divided into four quadrants, each representing a different combination of time and money. The top left quadrant is labeled “Short-Term, Low-Return” and represents investments that have a low return but can be realized quickly. The top right quadrant is labeled “Short-Term, High-Return” and represents investments that have a high return but must be realized quickly. The bottom left quadrant is labeled “Long-Term, Low-Return” and represents investments that have a low return but can be realized over a longer period of time. The bottom right quadrant is labeled “Long-Term, High-Return” and represents investments that have a high return but must be realized over a longer period of time.

The Time Value of Money Matrix can be used to compare different investments and make decisions about how to allocate resources. For example, a business owner may decide to invest in a short-term, low-return investment such as a certificate of deposit (CD) to increase cash flow and cover short-term expenses. On the other hand, they may decide to invest in a long-term, high-return investment such as stocks or real estate to increase their long-term wealth.


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What templates are related to Time Value of Money Matrix?

The following templates can also be categorized as business, finance, investment and are therefore related to Time Value of Money Matrix: AIDA Marketing Matrix, Affiliate Marketing Matrix, Agile Capability-Value Alignment Matrix, Agile Scaling Matrix, Ansoff Matrix, Asset Allocation Matrix, BCG Matrix, Brand Affinity Matrix. You can browse them using the menu above.

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