Individuals and business sell income streams (future payment or Series of payments - cash flow instruments) for three basic reasons:

1. Access - People need or want access to their cash. Sometimes they have a serious need to pay off credit cards, finance long-term medical care, or to settle a divorce. Other times, they simply have a desire to purchase a dream home, take a vacation, buy a new car or boat, finance a wedding, or start a business, for example. In some cases, people want access to their cash just for peace of mind. They no longer want to worry about liquidity issues, collection hassles, or the financial strength of the person who owes the debt.

2. Interest or Yield - People will sell their income streams - even for less than face value - because they know that with cash in hand today, they can start earning interest or yield. Interest or yield is what gives us the ability to invest money this year and turn it into an even larger amount of money next year.

3. Inflation - Inflation eats away at the future value or "buying power" of money. You can buy more with a dollar today than you will be able to five, ten, or twenty years from now. People sell their income streams because they realize that over time, the payments they receive will drop in real value. Time Value of Money refers to the change in the value of money over time. A dollar today is worth more than a dollar tomorrow. Just think about what you paid for a gallon of gasoline a month ago, a year ago, a couple of years ago, and what you're paying today. Every day that goes by, the value of your money is eroding.