By Professor Anthony Rivieccio MBA PFA
I’ll tell everyone a secret . In 1976, at 16 years old, I went to the store with my mother, picked up the normal amount of candy I was getting for about a year, put it on the cash register and when the normal price went from .99 cents to $1.29, I looked at my mother and said ” he’s a thief” . Little did I know that we were in the beginning of an inflation hike that would go over 10%, a year for several years. All I know is that my candy went up— and I guess I wanted to know why .
In 1984, in my first Marco economics in College, my professor and textbook said inflation was :” inflation is a general rise in the price level of an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services and vica versa”.
Ok! 37 years later , I’m still trying to ” technically” figure out what that means. After all, if you agree that prices go up based on certain factors then price should go down for the same reasons right?
We’ve had , on avg, 3% Inflation growth over the last 35 years ( vs 10% in the 1970 and early 1980s), are you aware ( for people age 50 and older) of any prices that have gone down? Are you aware of any prices for foods and services that have at least stabilized in the last 30 years? How about in the last 10 years ( for the younger ones!)?
According to Govt stats, it would be safe to say that inflation has gone up 2% per year in the last 10 years for a total period of 20%.
So in the last 10 years, for example:
*Movie Tickets – from $7 to $9
a 23% increase
*Stamps- from .42 to .55 cents
A 24% increase
*College from $6,000 to $10,000
A 40% increase
*Rent- from $800 to $1,500 a month
A 47% increase
*Wages -from $41,000 to $47,000
A 13% increase
So in short, while your money has been ” devalued” and your paying ” a bit more” for movies, stamps and other every day goods, the big items, from Rent to College have gone up 2x a much . So, what’s real inflation? Where’s the Corporate Greed? And where’s the thief?. Look real closly- before you answer.
Yes, part of the problem, if you look hard enough is your own employer. So what should you have done with your money the last ten years? Maybe , invest?.
In the last 10 years, regarding the stock market:
*Dow Jones -from 13,000 to 29,000
A 55% increase
Yes , inflation matters!. Corporate Greed & outright theft does as well. But maybe the lesson that we learned from Mom & Dad ( I did at 16) still applies : save and invest!
Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 25th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, thisisthebronX.info and The Bronx Chronicle. Mr. Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. For financial assistance, Anthony can be reached at (347) 575-5045. Have Facebook? Our professional page is: www.facebook.com/iwantmytaxmoney