A look at prices from when they were young can help clients grasp the pernicious impact of rising prices over time, says adviser Ara Oghoorian
This is an occasional feature in which an adviser shares a chart or other visual presentation that he or she finds valuable to help clients grasp an aspect of personal finance or investing.
The adviser: Ara Oghoorian, founder and president of ACap Asset Management Inc., Encino, Calif.
The chart: A table from the “Remember When...A Nostalgic Look Back in Time” series of booklets from Seek Publishing Inc. of Birmingham, Ala., that shows the cost of living for a specified year. The table includes average prices for things like a new house, a new car, rent, the per-gallon cost of gasoline and the prices of various food staples.
The reason it is useful: When a client or prospect is nervous about investing in stocks and only wants to hold cash or bonds, Mr. Oghoorian says he takes out a book close to the client’s birth year. He has a book for each decade from 1950 to 2000. The clients flip through the books and may feel nostalgic about aspects of popular culture from their era, but then they see how much cheaper things were when they were young.
“The booklet is excellent at showing how pervasive inflation is on purchasing power over time,” says Mr. Oghoorian. “I tell [them] that if you want to make sure your money lasts during retirement, it has to grow faster than inflation. And to beat inflation, you must own equities, not cash or bonds.”
Write to Anna Prior at anna.prior@wsj.com
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