Right now the average cost of a new car is about $36,000.
But what will a new car cost in 40, 50, or even 60 years?
Right now it’s 2018. Inflation has averaged about 3-4% per year. So if we assume a 3.5% inflation rate over 62 years (2018 to 2080) then the average new car cost will go from roughly $36,000 to $288,000!
Imagine, for all of us under 20, living in a world where a basic new vehicle costs over a quarter of a million dollars.
But this is just vehicles. This principle applies to most everything including travel. So that $350 airplane ticket has gradually become a $2,800 cost. Now how about housing? Well that $200,000 house (assuming a 4% yearly inflation) will blow up to $2.2M. Is this possible? You bet.
Actually the price of a house was about $7,300 in 1950. Fast forward 60+ years and we’re looking at massive inflation!
What does this mean for you?
First you need to realize that while inflation can certainly be a force working against you, there are also ways to take advantage of it for the better. One of these ways is through ownership in stocks. Historically stocks have performed at roughly 5-7 percent above inflation meaning this ownership vehicle can certainly become a powerful hedge.
Meanwhile others are building wealth through real estate. Just like the house, real estate as a whole has done quite well in most economic seasons.
An crucial step is to simply take action. If you’re young, willing to learn, and able to take risks, the world of investments can become a plentiful field of opportunity.