Personal Finance and Investing

progree

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3. Since Jan. 2021, purchasing power of US Total Stock Market is down 13.3%

Reply to mahatmakanejeeves (Original post)

Sun Jun 19, 2022, 01:42 PM

Jun 2022

Thanks to a 10% increase in prices (according to the CPI), and a decline of 3.7% in the Vanguard Total (U.S.) Stock Market Index Fund VTSAX (this includes reinvested distributions, so it is total return).

The 3.7% decline in VTSAX in nominal dollars combined with a 10% reduction in the purchasing power of a dollar results in a 13.3% decline in the purchasing power of this portfolio since the end of January 2021.

I chose January 2021 as the starting point because it's about when the upward bend in the CPI curve began. https://data.bls.gov/timeseries/CUSR0000SA0

Separately, my FIXED DOLLAR annuity has lost 10% of its purchasing power since January 2021. And unlike stocks, purchasing power doesn't "bounce back" or "recover" after a while, but rather continues to erode and erode and erode, though hopefully at a slower rate than lately. So I'm lovingly kissing away forever 10% of the annuity's value. In just 1 1/2 years.

More detail https://www.democraticunderground.com/111693491

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Seven ways you can financially prepare for a recession [View all] mahatmakanejeeves Jun 2022 OP

A problem that I sometimes have with some points there is "historical data" question everything Jun 2022 #1

Stock market is down more than 20%, but is still around where it was Dec. 2020. Midnight Writer Jun 2022 #2

Since Jan. 2021, purchasing power of US Total Stock Market is down 13.3% progree Jun 2022 #3

Here's a quiz. PoindexterOglethorpe Jul 2022 #4

I think I read that the average pullback in a year is 14% -- some years have a downturn progree Jul 2022 #5

Good chart. PoindexterOglethorpe Jul 2022 #6