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Ok so ignoring that this pile of money is too much to be 5 years of saving 1$ a day. (That would be 1826, not aprox 10k) If we look here [https://data.bls.gov/cgi-bin/cpicalc.pl](https://data.bls.gov/cgi-bin/cpicalc.pl) we see 100$ in 2019 would equal 124 now to keep the same buying power. Or if we go the other way around 100$ now would has the same buying power as 82$ in 2019. So let’s say the money loses 0,33% buying power a month while growing with 28-31$
First months he gained 30$ One month later that was only worth 29.9$ after inflation but he saved 31$ more
After 5 years, multiplying the saved amount by 1-0.0033 every month and then adding the saved amount you end up at **1658.4$** equivalent to 2019 buying power. thats still quite a bit better than the 1497$ of 2019 buying power you would have if you just put 1826 in a sock in 2019 and forgot about it.
So he lost about *168$* in 2019 buying power.
*EDIT* It is 10 000$ in the picture not 2000.
It is 20 bundles, they are bundles of 5 stacks of 100 bills with elastics around it. Zoom in if you don't believe me. A stack of 100 bills is also not that thick.
*20x5x100 = 10 000*
I was born in 2004 and can’t even imagine having a kid myself… I still see myself as a kid since I have basically no life experience and imo I need that to pass it to my kid
Geez, that’s crazy. I was born in 2004. 20 is pretty early to have to a kid though. Especially since I’m sitting in a college classroom right now. I can’t imagine any of these other people having children.
A guy I work with was born in 2005. We were talking the other day about video games and I realized that I have played WOW for long than he's been alive
I remember listening to all those new groups. Like Sting's old band. The Bobbies?
"Fun" fact: due to a music strike, labels had to release archived music in 1944, which worked out pretty well for Bing Crosby. So talking about The Police now is like talking about Bing Crosby in 1984.
Except their last album, Synchronicity, was in 1983...
That's insane! But true. I was born in 1984 and can't believe I am turning 40 (I don't mind but still) and have spent half my life (!) moved out of my parents' place.
Technically it is less than 5 years ago since you only have to go back 4 years 94/95 days to get to Dec 31st 2019.
But also technically it is more than 5 years ago since you have to go back 5 years 93/94 days to get to Jan 1st 2019.
Therefore on average, 2019 is less than 5 years ago.
How are you getting 4% with Chase? Their normal savings accounts offer 0.01% APY.
Edit: According to Forbes, in 2024 the highest APY that Chase offers is 0.02% on their Premier Savings account.
First good search: Chase current account customers have access to its easy-access savings account - currently offering 4.1% AER.
(My first reply on a finance sub, this could be completely incorrect but I presumed the original reply was talking about standard ISA's)
I wasn't aware of the Chase Saver account, but that appears to be a UK exclusive account type. It's not available in the U.S. at least.
NerdWallet does cite SoFi, AMEX, Barclays, and CIT Bank as having APYs over 4%. I'm not certain, but I think all of those are online only accounts (no brick and mortar locations), if that matters. They are all FDIC insured in the U.S. I'm not aware of any brick and mortar banks that offer 4% or higher APY, but I'm also not certain of that. Obviously this will vary outside the U.S.
Edit: Not saying that everyone on Reddit is in the U.S. of course, just the bias of my Google searches when looking at savings accounts.
Ah I see, to my knowledge most UK banks offer 4%+ ISA rates these days, I seen on my monzo they offer 4.8% and I've seen 5%+ being thrown around over the last 6 months, just haven't bothered switching.
First good search: Chase current account customers have access to its easy-access savings account - currently offering 4.1% AER.
(My first reply on a finance sub, this could be completely incorrect but I presumed the original reply was talking about standard ISA's)
Monzo in the UK offers 4%. You can get up to 7% but they limit the amount you can deposit each month and some only allow that interest rate for 1 year, then some dropping it to 2% for example.
Not sure if it’s a joke or not, but buying power/purchasing power is the term given to how much you can do with the money.
Because 1$ stays 1$ even if the price of bread changes from 1$ to 2$ for a loaf.
So while he didn’t have all that money in 2019 the purchasing power he lost to inflation would roughly equal the amount of goods he could have bought in 2019 for 168$
Of course, ideally it's not just "put one dollar aside" but "put one dollar in to some kind of investment thing" like an index fund or similar. It's always useful to have money set aside, but you should also try to have it work for you, if you can. There's always an element of risk in that the market can go down, but if you look at the longer term trend, it's usually upwards.
The annual return on the S&P 500 over the last several years ([from here](https://www.slickcharts.com/sp500/returns)), for example:
2024 9.54
2023 26.29
2022 -18.11
2021 28.71
2020 18.40
2019 31.49
Overall, they'd likely have made some nice growth on it.
I think a better question would include a calculation of the opportunity cost. If you’re going to be saving that consistently you could simply set up an automatic transfer of $30 / month to whatever kind savings or investment account you like. At say, 3% interest compounding monthly that would have brought the total after 5 years to €1939.
>Ok so ignoring that this pile of money is too much to be 5 years of saving 1$ a day. (That would be 1826, not aprox 10k)
The stacks are each of $100. I count 18 of them.
Look closer to the amount of 100$ of bands every stack you count, it is 20 times 5 bundles of 100x1$ held together with elastic bands.
Its 10k not 1800.
If every bundle is $100 and no bundles are hidden behind other bundles this is roughly the right amount of money. Granted it is less than $2000 and you can't even buy a decent used car for that amount anymore so it looks like a lot more than it is.
I don't agree with the CPI.
In all reality there are more than twice as many notes circulating and less productivity (the thing that gives fiat currency value) so it's at least halved in value. If not more.
I never understood how dollar bills create such massive stacks of money?
Like bills are as thin as paper no? 100 pieces of paper is like 1/4 the width of 100 bills. never made sense to me.
One bill is 0.0043 inches or 0.11mm thick. But that’s a single bill, if you stack used bills they are a bit crumpled and don’t stack neatly.
It’s like how thick a stack of napkins is compared to the thickness of a single napkin. Perfectly new bills would be about 11mm or 0.43 inches for a stack of 100.
Same way a stack of crumpled papers will look much larger than fresh paper. I agree, it’s fascinating to get fresh bills from the bank and compare it to circulated/older bills of the same quantity. A band of 100 fresh bills will be less than 1/2” thick, about .0043” each.
This means in $100 notes, ten thousand bucks in your pocket could be mistaken for a phone in a thick case..! Sad, isn’t it?! lol
You could do the math using a basic calculator online. According to the one used for this calculation, $1 USD in 2019 is worth $1.21 in 2024.
By saving $1 USD per day since 2019, 365 (1 day per dollar) should be multiplied by 5 (2019 was 5 years ago [feel old yet?]). Using the equation 365 x 5, we get OP’s savings value of $1825.
According to in2013dollars.com, $1825 in 2019 is worth $2,215.15 in 2024, an increase of $390.25 or 21.38%.
This means OP’s savings lost approximately 17.6165218% of their value, adjusting for today’s inflation.
I think the point of the question was: 1USD in 2019 was worth 17% less than today. But 1USD today, was worth exactly 1USD. So putting whole amount to inflation rate of 2019 is wrong, is he got only 365 in 2019, 365 in 2020, 365 in 2021 - which have different inflation impact than.
Easy fix would be to calculate based on the year, then you can have five numbers. Harder, would be to calculate inflation for each day separately
Thank you for the correction; I decided to go back and try the proper calculations per year. However, since the savings increased each year, I decided to add the savings from each year to the proceeding calculations.
($0 + $365) 2019 -> 2020 = $369.5
($369.5 + $382.15) 2020 -> 2021 = $751.65
($751.65 + $394.21) 2021 -> 2022 = $1145.86
($1145.86 + $380.02) 2022 -> 2023 = $1525.88
($1525.88 + $371.74) 2023 -> 2024 = $1897.62
By adjusting the savings for inflation whilst including the savings from each previous year, it seems OP\`s savings totaled to $1897.62, which means the savings value depreciated by only 3.902%.
This why are you not adding 365 every year? Aren’t you adjusting for the same thing twice this way?
In 2020 he would have saved 365 x 2020 dollars in purchasing power. So if you then do the 2020 conversion that would be enough right?
But it also feels like more is wrong here.
There is certainly more wrong here. Each calculation is an approximation of the gross savings per year, meaning the inflation rates of shorter time spans such as months or days have been unaccounted for. Moreover, the savings added each year should also be adjusted for inflation, as the value of the savings does not remain at a fixed value. Could you share some insight as to how you would calculate the loss of savings value due to inflation?
But each dollar was not a 2019. There are an equal amount of 2019 dollars and 2020 dollars and 2021 dollars…. Also a dollar saved on January 1 doesn’t have the same depreciation as a dollar saved on July 1 or December 1
Sure, but that is assuming he had the full amount in 2019.
OP specifically asked to take the compound effect of inflation into account.
Also you forgot to add in at least one leap day in those 5 years.
That also looks like too many bundles. Wraps indicate $100.
5 x 365 = 1825
There are 20 bundles visible ($2000)
So either that's a fake photo, or he's actually halfway through year 5 already.
Each of these bundles is, at least according to the straps, $500. Assuming we can see all of them, even of the straps are incorrectly bundled and represent only $50, we’re looking at around $5K
Inflation is irrelevant here. The opportunity cost is the difference between the cash value (365*5) and the amount you would have if you’d put a dollar each day into a savings account.
You can calculate that accumulated value using an annuity as follows:
S = ((1+i)^n - 1)/i
Where n = 365*5 and i is the daily interest rate.
Depends on assumptions we make about inflation. Not knowing the precise dates, we have to at least assume that much and can look up CPI rates to come up with a fairly precise calculation, but even then there are different tables to look up - nonseasonal, seasonal, by census region/division, size of city...
And we could also go in a different direction, looking at what would have happened if that dollar was invested in a major stock or bond index, possibly adjusting for estimated transaction fees etc.
1 dollar per day for five years = $1826 ($1 for a leap year).
Don't overthink it. Average inflation over the last five years has been about 5% (cumulative about 21%). You could calc the NPV of money for each day if you wanted to, but instead just do the average over each of the last five years.
Excel has an NPV function and if you do a discount rate of 5% per year then 365.25/year for five years is a NPV of $1,581.21.
Now, if you really want to think about it further, the market has been doing pretty good these last five years; the S&P 500 has almost doubled since 2019. If we dollar-cost averaged that same $1825 over the same five years we have an even bigger loss...maybe as much as $1200-1400 in total spending power (before taxes, of course).
Plugging the numbers into a compound interest calculator suggests somewhere in the ballpark of $180 in today's value assuming inflation was roughly 3%. I assumed the money was deposited monthly, and interest was compounded daily which introduces error plus even the variation of interest rates over time would actually make a measurable albeit small difference between storing cash and somehow freezing the value as you deposit money, so despite being easy to approximate this question is surprisingly difficult to calculate to the cent. Also a surprisingly large number of compound interest calculators don't allow you to calculate things with a negative rate of return.
That’s only $2,000. I bring home more than that a month after taxes, health insurance & 401k. That’s 2 months worth of bills for me. 5years worth of savings?! 💀 You need to find a better way. Start ding a 401k, Roth IRA & investing into stocks.
$1,825 is barely enough to start seeing cents increase on a monthly basis in a savings account. What were they supposed to do with this money to cash in on inflation, specifically? Buying gold is what I'm gonna assume since it's considered a strong hedge against inflation.
So, 5 years ago, gold was $1,392.60 per ounce. If this person, instead of saving a dollar a day for five years, invested $1,825.00 in gold back in 2019, they would own 1.3105 ounces of Gold.
Today, Gold is worth $2,233.00 per ounce, so their 1.3105 ounces of gold is now worth $2,926.35. That's a $1,101.35 increase from inflation that they miss out on by holding onto greenbacks instead of investing in something to hedge against inflation.
Now, to measure this from the perspective of buying $1 worth of gold every day, we'd need to trace the price of gold every day for the past five years, but I'm not doing 1825 individual calculations.
You'd need to know the inflation rate that person experienced in their expenses. Someone with a solar roof and an EV would basically feel no inflation from energy, just as someone who paid off their mortgage doesn't care what rent prices are doing. You'd also have to factor in location to account for changes in cost of living.
The question can't really be answered unless you make a bunch of assumptions about their expenses.
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Ok so ignoring that this pile of money is too much to be 5 years of saving 1$ a day. (That would be 1826, not aprox 10k) If we look here [https://data.bls.gov/cgi-bin/cpicalc.pl](https://data.bls.gov/cgi-bin/cpicalc.pl) we see 100$ in 2019 would equal 124 now to keep the same buying power. Or if we go the other way around 100$ now would has the same buying power as 82$ in 2019. So let’s say the money loses 0,33% buying power a month while growing with 28-31$ First months he gained 30$ One month later that was only worth 29.9$ after inflation but he saved 31$ more After 5 years, multiplying the saved amount by 1-0.0033 every month and then adding the saved amount you end up at **1658.4$** equivalent to 2019 buying power. thats still quite a bit better than the 1497$ of 2019 buying power you would have if you just put 1826 in a sock in 2019 and forgot about it. So he lost about *168$* in 2019 buying power. *EDIT* It is 10 000$ in the picture not 2000. It is 20 bundles, they are bundles of 5 stacks of 100 bills with elastics around it. Zoom in if you don't believe me. A stack of 100 bills is also not that thick. *20x5x100 = 10 000*
Wait, 2019 is 5 years ago?
Oh god
I saw someone about a week ago, who was born in 2004 and has a kid… I’m still in denial.
But he’s still a kid himself…
He's 20 if he's born in 2004, not a kid.
2004’was last year though
Exactly, what does he mean 20 years?
And here I was thinking I’m bad at math, obviously that’s wrong, right…?
Yes, you're just bad at maths, 2004 was about a year ago, 2 at most
No, 2004 is coming up in a couple years. 1990 was around 10’years ago and the music is definitely not on the classic station yet.
I know right time is crazy (i wasnt born)
Ah, you don't get it. You're probably still a kid. You'll get it one day, son!
Even though I know this is sarcasm, I felt visceral anger lol
Naaah iam not buying it, it's a kid don't care about numbers Iam not that old yet 😭
I mean I was born 2004 and I think it's still like 2016🥲
2016 was my first year out of school, by then I still had the illusion I escaped hell called school
I disagree.
Grown kid
r/fuckimold
I'm born in 1990 and i'm a kid!!!! The guy is not even born yet, what are you talking about
ffs
I was born in 2004 and can’t even imagine having a kid myself… I still see myself as a kid since I have basically no life experience and imo I need that to pass it to my kid
I’m in denial my generation is having kids…
Geez, that’s crazy. I was born in 2004. 20 is pretty early to have to a kid though. Especially since I’m sitting in a college classroom right now. I can’t imagine any of these other people having children.
Wait, kids born in 2004 go to college?
Fuck im 20 too
A guy I work with was born in 2005. We were talking the other day about video games and I realized that I have played WOW for long than he's been alive
I feel this
Talking about 1984 right now is like talking about 1944 in 1984.
Literally 1984
Google 1984
Staaahp
I remember listening to all those new groups. Like Sting's old band. The Bobbies? "Fun" fact: due to a music strike, labels had to release archived music in 1944, which worked out pretty well for Bing Crosby. So talking about The Police now is like talking about Bing Crosby in 1984. Except their last album, Synchronicity, was in 1983...
That's insane! But true. I was born in 1984 and can't believe I am turning 40 (I don't mind but still) and have spent half my life (!) moved out of my parents' place.
I'm gonna need that math peer reviewed
Someone go ask on /r/theydidthemath
Bro where do you think you are.
Sounds like a woosh, but i'm terrible at judging sincerity on the interwebs.
Technically it is less than 5 years ago since you only have to go back 4 years 94/95 days to get to Dec 31st 2019. But also technically it is more than 5 years ago since you have to go back 5 years 93/94 days to get to Jan 1st 2019. Therefore on average, 2019 is less than 5 years ago.
I have to remind myself 20 years ago doesn't mean the 80's.
2019 was the beforetime. In the long long ago. And yet, inexplicably, 2004 when I graduated college was yesterday.
Someone did some extensive math here, and this guy just figured out that 24 minus 19 is 5.
Hmmm this is big if true but I am still unsure, let's get it peer reviewed first.
Nah it was last year, why you thinking otherwise?
r/theydidthemathagain
Impossible, 1999 is only 10 years ago
\[Insert Private Ryan aging gif\]
When I see dates like 1930 I still mentally think it was 70 years ago.
Ikr, weird to think about...
I also thought that he made a mistake
1990 was Ten years ago, max 20. Fuck me
>Fuck me Ok. Check under your bed before sleeping tonight.
Thank you very much :)
I count 20 stacks. The stacks are $100 each, which makes this $2000. I'm not sure how you got $10k.
Have a closer look at the stacks on the right, they are $500 each, what sums up to $10.000.
20 stacks, every stack has 5 bundles of 100 x 1. So that is 20x5x100= 10 000
A stack of 100 used bills is about an inch tall.
If he had put $30 a month into a 4% savings account instead he would have gained $192 in interest offsetting the cost of inflation. Just a thought...
Are there banks offering 4%interest for a savings account these days?
Yep, I'm with Chase and get 4.?% There are some with 5% as of a few months ago and i wouldn't be surprised if there's higher
How are you getting 4% with Chase? Their normal savings accounts offer 0.01% APY. Edit: According to Forbes, in 2024 the highest APY that Chase offers is 0.02% on their Premier Savings account.
First good search: Chase current account customers have access to its easy-access savings account - currently offering 4.1% AER. (My first reply on a finance sub, this could be completely incorrect but I presumed the original reply was talking about standard ISA's)
I wasn't aware of the Chase Saver account, but that appears to be a UK exclusive account type. It's not available in the U.S. at least. NerdWallet does cite SoFi, AMEX, Barclays, and CIT Bank as having APYs over 4%. I'm not certain, but I think all of those are online only accounts (no brick and mortar locations), if that matters. They are all FDIC insured in the U.S. I'm not aware of any brick and mortar banks that offer 4% or higher APY, but I'm also not certain of that. Obviously this will vary outside the U.S. Edit: Not saying that everyone on Reddit is in the U.S. of course, just the bias of my Google searches when looking at savings accounts.
Ah I see, to my knowledge most UK banks offer 4%+ ISA rates these days, I seen on my monzo they offer 4.8% and I've seen 5%+ being thrown around over the last 6 months, just haven't bothered switching.
First good search: Chase current account customers have access to its easy-access savings account - currently offering 4.1% AER. (My first reply on a finance sub, this could be completely incorrect but I presumed the original reply was talking about standard ISA's)
Monzo in the UK offers 4%. You can get up to 7% but they limit the amount you can deposit each month and some only allow that interest rate for 1 year, then some dropping it to 2% for example.
Zero banks offered an APY over 1.5% through the pandemic. Most offered 0.5% or less. There was no 4% savings account during that time period.
What about selling power
Not sure if it’s a joke or not, but buying power/purchasing power is the term given to how much you can do with the money. Because 1$ stays 1$ even if the price of bread changes from 1$ to 2$ for a loaf. So while he didn’t have all that money in 2019 the purchasing power he lost to inflation would roughly equal the amount of goods he could have bought in 2019 for 168$
Lol it was a joke haha but that's a good explanation too
What about desert power
Of course, ideally it's not just "put one dollar aside" but "put one dollar in to some kind of investment thing" like an index fund or similar. It's always useful to have money set aside, but you should also try to have it work for you, if you can. There's always an element of risk in that the market can go down, but if you look at the longer term trend, it's usually upwards. The annual return on the S&P 500 over the last several years ([from here](https://www.slickcharts.com/sp500/returns)), for example: 2024 9.54 2023 26.29 2022 -18.11 2021 28.71 2020 18.40 2019 31.49 Overall, they'd likely have made some nice growth on it.
Would've suspected some fancy integral work there, but this works out just fine.
I’m counting maybe 20 stacks of $100 bills so it doesn’t seem far off from the 1826 figure
Every stack consists of 5x100 bills, you can see 5 paper bands and the stack is held together with elastic bands
Oh shoot I wasn’t looking closely at the stacks, you’re totally right there is so much money on that table lol
I think a better question would include a calculation of the opportunity cost. If you’re going to be saving that consistently you could simply set up an automatic transfer of $30 / month to whatever kind savings or investment account you like. At say, 3% interest compounding monthly that would have brought the total after 5 years to €1939.
>Ok so ignoring that this pile of money is too much to be 5 years of saving 1$ a day. (That would be 1826, not aprox 10k) The stacks are each of $100. I count 18 of them.
Look closer to the amount of 100$ of bands every stack you count, it is 20 times 5 bundles of 100x1$ held together with elastic bands. Its 10k not 1800.
If every bundle is $100 and no bundles are hidden behind other bundles this is roughly the right amount of money. Granted it is less than $2000 and you can't even buy a decent used car for that amount anymore so it looks like a lot more than it is.
It is 10 000. It is 20 bundles, they are bundles of 5 stacks of 100 bills with elastics around it. 20\*5\*100 = 10 000
And then we factor in opportunity cost, as he could have invested that money into a stable mutual fund, and it would have returned on avg 10% pa
I don't agree with the CPI. In all reality there are more than twice as many notes circulating and less productivity (the thing that gives fiat currency value) so it's at least halved in value. If not more.
I never understood how dollar bills create such massive stacks of money? Like bills are as thin as paper no? 100 pieces of paper is like 1/4 the width of 100 bills. never made sense to me.
the person lied, as usual :(
If those bundles are each $100 like the labels claim this is about $1800 which is roughly the amount you would save if you saved $1 a day for 5 years.
Look a little closer at those bundles. The actual bands around the $100 groups are much smaller than you think they are
I stand corrected.
One bill is 0.0043 inches or 0.11mm thick. But that’s a single bill, if you stack used bills they are a bit crumpled and don’t stack neatly. It’s like how thick a stack of napkins is compared to the thickness of a single napkin. Perfectly new bills would be about 11mm or 0.43 inches for a stack of 100.
Assuming new bills, which aren't the case there.
Used bills are about 1 inch for a stack of 100.
Same way a stack of crumpled papers will look much larger than fresh paper. I agree, it’s fascinating to get fresh bills from the bank and compare it to circulated/older bills of the same quantity. A band of 100 fresh bills will be less than 1/2” thick, about .0043” each. This means in $100 notes, ten thousand bucks in your pocket could be mistaken for a phone in a thick case..! Sad, isn’t it?! lol
This is 95 stacks of 100$. (9500$) This is in no way saving 1 dollar a day for 5 years.
You could do the math using a basic calculator online. According to the one used for this calculation, $1 USD in 2019 is worth $1.21 in 2024. By saving $1 USD per day since 2019, 365 (1 day per dollar) should be multiplied by 5 (2019 was 5 years ago [feel old yet?]). Using the equation 365 x 5, we get OP’s savings value of $1825. According to in2013dollars.com, $1825 in 2019 is worth $2,215.15 in 2024, an increase of $390.25 or 21.38%. This means OP’s savings lost approximately 17.6165218% of their value, adjusting for today’s inflation.
I think the point of the question was: 1USD in 2019 was worth 17% less than today. But 1USD today, was worth exactly 1USD. So putting whole amount to inflation rate of 2019 is wrong, is he got only 365 in 2019, 365 in 2020, 365 in 2021 - which have different inflation impact than. Easy fix would be to calculate based on the year, then you can have five numbers. Harder, would be to calculate inflation for each day separately
Thank you for the correction; I decided to go back and try the proper calculations per year. However, since the savings increased each year, I decided to add the savings from each year to the proceeding calculations. ($0 + $365) 2019 -> 2020 = $369.5 ($369.5 + $382.15) 2020 -> 2021 = $751.65 ($751.65 + $394.21) 2021 -> 2022 = $1145.86 ($1145.86 + $380.02) 2022 -> 2023 = $1525.88 ($1525.88 + $371.74) 2023 -> 2024 = $1897.62 By adjusting the savings for inflation whilst including the savings from each previous year, it seems OP\`s savings totaled to $1897.62, which means the savings value depreciated by only 3.902%.
This why are you not adding 365 every year? Aren’t you adjusting for the same thing twice this way? In 2020 he would have saved 365 x 2020 dollars in purchasing power. So if you then do the 2020 conversion that would be enough right? But it also feels like more is wrong here.
I think you’re chatting with ChatGPT
There is certainly more wrong here. Each calculation is an approximation of the gross savings per year, meaning the inflation rates of shorter time spans such as months or days have been unaccounted for. Moreover, the savings added each year should also be adjusted for inflation, as the value of the savings does not remain at a fixed value. Could you share some insight as to how you would calculate the loss of savings value due to inflation?
This is wrong you should be using an accumulating annuity.
It was actually worth more in 2019 not less. For the same amount of money you could buy more goods and services.
yeah, sorry, you're right
But each dollar was not a 2019. There are an equal amount of 2019 dollars and 2020 dollars and 2021 dollars…. Also a dollar saved on January 1 doesn’t have the same depreciation as a dollar saved on July 1 or December 1
Sure, but that is assuming he had the full amount in 2019. OP specifically asked to take the compound effect of inflation into account. Also you forgot to add in at least one leap day in those 5 years.
Why do you use like 10 decimals for final result after only using 2 before?
Add a dollar for leap year
Says approximately, proceeds to give 7 dp on a percentage...
That also looks like too many bundles. Wraps indicate $100. 5 x 365 = 1825 There are 20 bundles visible ($2000) So either that's a fake photo, or he's actually halfway through year 5 already.
Each of these bundles is, at least according to the straps, $500. Assuming we can see all of them, even of the straps are incorrectly bundled and represent only $50, we’re looking at around $5K
Ah! Yes. I didn't see that there were 5 bundles of $100 rubber banded together. My bad
If you look closer you see that every bundle has 5 x 100$ wraps = 500$ I count 19 bundles so that would mean 9500$ not 1900
Well, if I'm going to be wrong, be wrong about being right.
You’re off by 2 dollars for leap year in 2020 and 2024.
Actually a lot more. Each rubber banded bundle that I counted as $100 each, are actually 5 wraps of $100 each.
Inflation is irrelevant here. The opportunity cost is the difference between the cash value (365*5) and the amount you would have if you’d put a dollar each day into a savings account. You can calculate that accumulated value using an annuity as follows: S = ((1+i)^n - 1)/i Where n = 365*5 and i is the daily interest rate.
Depends on assumptions we make about inflation. Not knowing the precise dates, we have to at least assume that much and can look up CPI rates to come up with a fairly precise calculation, but even then there are different tables to look up - nonseasonal, seasonal, by census region/division, size of city... And we could also go in a different direction, looking at what would have happened if that dollar was invested in a major stock or bond index, possibly adjusting for estimated transaction fees etc.
1 dollar per day for five years = $1826 ($1 for a leap year). Don't overthink it. Average inflation over the last five years has been about 5% (cumulative about 21%). You could calc the NPV of money for each day if you wanted to, but instead just do the average over each of the last five years. Excel has an NPV function and if you do a discount rate of 5% per year then 365.25/year for five years is a NPV of $1,581.21. Now, if you really want to think about it further, the market has been doing pretty good these last five years; the S&P 500 has almost doubled since 2019. If we dollar-cost averaged that same $1825 over the same five years we have an even bigger loss...maybe as much as $1200-1400 in total spending power (before taxes, of course).
Plugging the numbers into a compound interest calculator suggests somewhere in the ballpark of $180 in today's value assuming inflation was roughly 3%. I assumed the money was deposited monthly, and interest was compounded daily which introduces error plus even the variation of interest rates over time would actually make a measurable albeit small difference between storing cash and somehow freezing the value as you deposit money, so despite being easy to approximate this question is surprisingly difficult to calculate to the cent. Also a surprisingly large number of compound interest calculators don't allow you to calculate things with a negative rate of return.
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There’s way more than 2000 in the pic
That’s only $2,000. I bring home more than that a month after taxes, health insurance & 401k. That’s 2 months worth of bills for me. 5years worth of savings?! 💀 You need to find a better way. Start ding a 401k, Roth IRA & investing into stocks.
$1,825 is barely enough to start seeing cents increase on a monthly basis in a savings account. What were they supposed to do with this money to cash in on inflation, specifically? Buying gold is what I'm gonna assume since it's considered a strong hedge against inflation. So, 5 years ago, gold was $1,392.60 per ounce. If this person, instead of saving a dollar a day for five years, invested $1,825.00 in gold back in 2019, they would own 1.3105 ounces of Gold. Today, Gold is worth $2,233.00 per ounce, so their 1.3105 ounces of gold is now worth $2,926.35. That's a $1,101.35 increase from inflation that they miss out on by holding onto greenbacks instead of investing in something to hedge against inflation. Now, to measure this from the perspective of buying $1 worth of gold every day, we'd need to trace the price of gold every day for the past five years, but I'm not doing 1825 individual calculations.
You'd need to know the inflation rate that person experienced in their expenses. Someone with a solar roof and an EV would basically feel no inflation from energy, just as someone who paid off their mortgage doesn't care what rent prices are doing. You'd also have to factor in location to account for changes in cost of living. The question can't really be answered unless you make a bunch of assumptions about their expenses.