Explain the results in terms of the time value of money for both Larry and Beth.

The time value of money is the concept that a dollar today is worth more than a dollar in the future because of its potential to earn interest. Larry and Beth both experienced different outcomes based on their decision making regarding their finances, which can be explained by the concept of the time value of money.

Larry had $1200 but wanted to wait until he had saved up enough for his dream vacation. He chose not to invest his savings into something with higher returns, so after two years he still only had $1200. This means that despite waiting two years, Larry’s initial investment was still worth exactly what it was two years ago. This is an example of how holding cash without investing has no earning power – the same amount of money that you started with will remain unchanged over time due to inflation and other factors.

On the other hand, Beth invested her $1000 into bonds yielding 8% annually compounded quarterly. After two years, Beth had accumulated an additional amount of $832 due to her investments – this represents an approximate 83% return on her original investment within 2 years as compared to Larry’s 0%. In this case, Beth benefitted from understanding and leveraging the power of compounding interest on investments over a period of time – if she holds onto these investments for longer periods or invests more capital into higher yield assets such as stocks or mutual funds, then her wealth could potentially grow further exponentially depending on market conditions.

The difference between Larry and Beth’s outcomes serves as evidence for why utilizing the concept behind time value of money is important when it comes to personal finance management – if you opt-in for sound long term financial planning choices like investing in assets with high returns instead of just saving your cash in a bank account, you have better chances at creating wealth and achieving your financial goals faster than relying solely on traditional saving methods like Larry did.