GeezerVison

Which MeasuringWorth comparator is best for you?

Present worth of a past amount

The Merriam-Webster dictionary says a comparator is “a device for comparing something with a similar thing or with a standard measure.” The principle of the MeasuringWorth is that there is no one standard measure for comparing what a monetary value in the past is worth today. The best measure depends on the question asked.

Our five "relative value" comparators can provide several alternative answers with a guide to the best choice. Many websites and other resources will give you one answer based on a consumer price index. This simplification can be misleading, as any transaction is valued in different ways by different people and in different time periods. Thus, when making comparisons over time, these alternative ways of understanding value must be taken into account.

For the United States we have two comparators (from 1774 on), one that gives the relative value today of a financial amount in the past.  It is called Purchasing Power Today -US$  Its answers change every month or quarter as soon as a new measure’s observation is announced. 

The second is Seven Ways to Compute the Relative Value of a U.S. Dollar Amount and gives the relative value of amounts between any two years.  It uses only annual data, and presents in-depth descriptions of our definitions of the types of relative worth and the measures we use.  For scholarly applications, we recommend this comparator be used because its annual observation-based design is more readily reproduceable.

We also have relative worth comparators for the United Kingdom (from 1270 on), Australia (from 1828 on), and Spain (from 1850 on). These all use only annual data.

For assistance on how to pick the best measure, consult the Tutorials.

Comparing the growth rates of economic variables over different periods and for different lengths of time

The growth of most variables over time, in economics and elsewhere, is usually measured as a percent increase (or decrease). To compare growth rates over different times in history and for different durations, economists use the concept of annualized growth rate. The growth comparator here makes these comparisons for 23 annual economic and demographic series as far back as the 13th century.

The year-to-year inflation rate in the United States (1775 on) and the United Kingdom (1265 on)

This inflation rate comparator gives you the year-to-year inflation rate for all the years in the range you choose and the annualized growth rate for the entire time period.

How much would your savings grow in the past, depending on what it is invested in

One's savings accumulates over time at different rates depending on where it is invested. Savings accounts at banks are very safe; however, they pay a low rate of return compared to the stock market. Bonds can pay more than saving accounts, but they sometimes require investors to keep their money tied up for extended periods. Stocks are usually the most risky and for many periods have given their owners high returns; however, they can go through long periods of no appreciation, such as from 1965 to 1982 or even decline as from 2007 to 2009. The saving comparator can tell you how your savings would have grown in the past depending on which type of asset you chose as an investment for your savings.

How much should your 401k & IRA grow in the past, depending on what it is invested in

Each year millions of Americans save part of their income in a 401(k) or an IRA (Individual Retirement Account.) The money put in either of these is not subject to income tax and is one of the largest financial asset of household, worth more than $30 trillion.
Picking the financial assets to make a retirement account grow the most is the job of whoever is managing the funds, be it the individual, a large investment house or a hedge fund. The retirement comparator is a way to compare how you (or they) have done relative to four different types of generic portfolios at different levels of fees. It also demonstates how expensive the annual fees can be. For example, if a plan that is 20 years old and has a one percent fee as a percent of the value of the fund, the owner has paid ten percent of that portfolio in management fees.

What is a historic price in British Pounds worth in US dollars today (and vice versa)?

If you seek to know the present worth of a past monetary value that is valued in a currency different than your own, the problem becomes more complicated. Instead of dealing with only the changing value of the item in your currency, you must also deal with the changing value in the other country's currency and the changing exchange rate between the two. Thus, there are three variables to account for instead of one. The conversion comparator uses the CPI and GDP deflator in both the United States and the United Kingdom and gives a range of answers that depend on which year's exchange rate applies.

Comparing the growth rates of daily stock indexes over different periods and for different lengths of time

The stock growth comparator can calculate the growth rate of the DJIA, S&P500 and NASDAQ in the United States between any two days from when each index began to the present. The answer is determined using the annualized growth rate between the two days compounded daily.

---

Please let us know if and how this discussion has assisted you in using our comparators.