So that's an average of about 5.5% pa compounded over that time, Sounds about right given the late 80s saw inflation generally running at the 10% level, before we moved into those low inflation times in the 90s.
Beej
The fish & chip shop near my parents' house opened in 1985. I remember that quite well as it was a big deal at the time, there being no other shops of any kind in the area.
Minimum order for chips was 50 cents then and that got you a big parcel wrapped up in white paper (not a small bag). Then it went up to 60c within a month or two. Last time I went into that shop was a few years ago and the minimum order was $2 and you didn't get as many chips as you used to for minimum order.
That's pretty basic in terms of the effects of inflation. Potatoes, cooking oil, old fashioned white butcher's paper, salt, power to run the deep fryer and some profit for the shop owner. In the order of 350% or so inflation over the past 23 years.
The fish & chip shop near my parents' house opened in 1985. I remember that quite well as it was a big deal at the time, there being no other shops of any kind in the area.
Minimum order for chips was 50 cents then and that got you a big parcel wrapped up in white paper (not a small bag). Then it went up to 60c within a month or two. Last time I went into that shop was a few years ago and the minimum order was $2 and you didn't get as many chips as you used to for minimum order.
That's pretty basic in terms of the effects of inflation. Potatoes, cooking oil, old fashioned white butcher's paper, salt, power to run the deep fryer and some profit for the shop owner. In the order of 350% or so inflation over the past 23 years.
It would be interesting to know how much of the purchase price is retained by the finance company on that.
I thought that this is worth a new thread, as it seems to come up a lot in other topics.
With IR reaching towards lows again, after inflation and taxes, the return on a savings account is actually negative.
How are people supposed to avoid this? This isnt even debt deflation, as in my case, i have no debt. What should a young person do? Spend every cent as soon as they get it and live for payday to payday? At least then i would have a heap of nice stuff and would be able to lose value on TVs etc rather than lose value on money/nothing in a bank account.
Or is the stockmarket an option? No cause thats still falling.
It seems that there is no option, not even saving, which will make money or even break even at the moment
I have debt and now it is even easier to service and pay off quicker.
Many thanks Rudd, keep those rates dropping and I will be debt free much sooner. Thanks.
All very well, Cuttlefish, but as we see almost every day these "great buys" can still fall further. Also as company profits fall there is an increased risk of dividends being cut (this has happened in several companies already), so if someone is buying a so called good company for its better than bank rate yield, they could well be disappointed on the basis of lower or no yield in addition to loss of capital. Just not worth the risk imo at this stage.Well (as I know you are aware) in the stockmarket at the moment there are opportunities to buy a $1 for 90c or much less in some circumstances.
Some of the stocks that are trading below cash backing and well below NTA, while producing good incomes must be worth a look in.
No, NC, it is most definitely not a Gen-Y thing. It is the 'thing' of anyone in any generation who has elected not to run their lives on credit and instead has savings which will soon be generating a negative return. Get that??Seriously your crackin me up prawn !
Soooooo hard done by, is it a Gen-Y thing ?
Great post Nomore4s. Improved my own sense of perspective.While I agree there is currently no reward for saving money from our government and tax system, to me worrying about inflationary effects on your savings is a bit silly imo, it is something most of us have no control over.
IMO the only people that should be looking to do something about it is people with large amounts of money saved up that don't need it in the short term and really want to make the money work for them.
For people with little to no savings, the first goal should be to get a decent amount saved so they can look at ways of investing that money to try and beat inflation.
Spending your savings because it is going "backwards" sitting in a bank account is just plain silly imo, you may end up with nice clothes, cars and big TVs etc but in 20 years the peolpe who have saved hard and then invested that money wisely to create passive income streams or wealth of some sort will be the ones who are really laughing.
While most investments are copping a hiding now in 12,18,24 months there are going to be plenty of very good investment opportunities around and the people with cash on hand, while currently "losing" money to inflation will be the ones to benefit if they invest that money wisely and make the most of those opportunities.
I'm currently setting myself up to try and take advantage of the current situation once things settle down a bit and that means saving hard and leaving my cash in a bank account with the highest interest rate I can get, and until I find a better investment with a risk profile that suits me that is where my money will stay. I personally am not going to waste time worrying about the effect inflation is having on my savings in the current climate because frankly I don't see any better options around atm without taking some huge risks that I'm not comfortable with atm.
Oh, right. Great advice. Buy all sorts of stuff that you neither need nor want.Spend it all on stereos and home theatre. Too cheap not to.
Spending all my cash doesnt help me get ahead, hence why i havnt and am still saving, despite in being a negative return.
I dont need an incentive to save, but our country, and the whole western economy does, and that incentive is not being provided.
Just so depressing to have such short sighted leadership.
So, despite all the G20 meetings, summits, serious vows by politicians to "make real changes", nothing has changed, nor can we expect that it will.
Just so depressing to have such short sighted leadership.
Many voices mentioned that the whole world economy is locked into growth model, which eventually will create so called hockey stick growth, exponential = not sustainable.
Current stimulus packages don’t address the underlining problem, they just try to keep the model alive pushing accelerator to the floor on a journey toward concrete wall.
When all future money are spent, with interest rates at or below zero, second shock will happen where the only solution will be:
reduced production
reduced consumption
reduced population.
It's funny how everyone in a bank's "trading room" was cheering when the RBA announced a 1% cut. Am I the only one who think it's ridiculous? What the !@#$ is there to cheer about? Does it punish people who save wisely and live within their means? Ohhhh..it's socially unacceptable and "unAustralian" because you supposed to simulate the economcy by spending more and getting into debt and buy as many properties as you can.
Great news about the interest rate cut today.
I WAS going to use the money to buy a new plasma - but Harvey Norman are giving me 48 months interest free!!
Think I might GET the plasma over 48 months - and book a holiday with the extra money!
Awesome!!!! Oh, and I might take a kick back to interest only on my mortgage after the scare of the past two years....
Brad
And the government has now acknowledged it will almost certainly go into deficit with all this flinging about of much money. And will that deficit be deemed acceptable when we are facing up to the next election? Of course not! It will have to be paid for somehow. Can't all the people who are celebrating these rate cuts see there must be more taxes and charges in the future to save the political skin of the Labor Party whose history of running deficits will very quickly be jumped on by the Opposition.
So, despite all the G20 meetings, summits, serious vows by politicians to "make real changes", nothing has changed, nor can we expect that it will.
Just so depressing to have such short sighted leadership.
Gee whiz trinity, don't you listen to, read, watch the news? Aren't you feeling hugely grateful that your government wants you to understand the value of huge credit and continued spending?So, where did all the gov't surpluses go? In less than a year Rudd gov't it is all gone? Where is the infrastructure? Where are the better schools? Better health-care? Was the money spent bailing out the greedy CEOs and financing their Christmas parties?
Gee whiz trinity, don't you listen to, read, watch the news? Aren't you feeling hugely grateful that your government wants you to understand the value of huge credit and continued spending?
Yep some bailing out has certainly happened. God forbid that failed business should see the consequences of their incompetence.
Then about half the surplus will be landing in the bank accounts of the poorest Australians next week, i.e. welfare recipients and families in receipt of Tax Benefit something or other, with the government's best wishes and hopes for a big pre-Christmas spend up on anything, just anything at all. They don't want these people to do anything constructive with this largesse, just as they have declined to channel this money into useful infrastructure where we'd see some lasting benefit and more durable jobs.
And why not? Because, dear Trinity and all other faithful taxpayers, the government is desperate for a quick spurt in the economy, so that the next quarter's figures look a bit less ghastly and they can say "Hey people, we're still not actually in recession, aren't we just the best?"
And presumably they also want you to completely ignore that it has been the irresponsible overuse of credit that - along with some very dubious practices on Wall Street, plus of course let's not forget the role of the ratings agencies - has brought the world to this current debacle. Heaven forbid that any lessons might be learned from all this. No, just go forth and rack up more credit, dear people, spend, spend, spend, and those figures just might look good enough to let the government claim they have even a faint idea what they are doing.
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