What's the point of investing? Plenty of people below 50 today – and a good many older – might well wonder.
Two stock market crashes, two recessions and a global house-price slump make the last decade a worse advert for investing than One Direction are for clean-living youth. Yes, silver and gold investing stand out in contrast, but they don't actually yield any interest. Nor do cash, bonds, Treasuries or stocks anymore.
But while the point of investing might be hard to see today, its purpose is plain:
"Investing [is] the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future."
So says Warren Buffett, grand old sage of stock-market investing, defending his methods (and attacking gold investing despite its 10-year outperformance of everything else but silver) in his recent letter to shareholders. Put another way, investing aims to make life cheaper in future, in terms of what you've already amassed today.
Put in $10 and get $20 back – with inflation failing to eat all your gains – and you're ahead. Like Buffett says, it's real purchasing power that matters. So here's what US citizens have been up against over the last 55 years.
In the raw, this chart says you now need $2.30 to enjoy the quantity of goods and services you got for 25¢ back in 1957.