An investor who could predict the future would be a very good investor indeed. However, while we can analyse trends and make informed guesses, the truth is that nobody knows what will happen in the future. Looking to the past, however, can help us to understand the evolution of personal finance and wealth management, and perhaps even provide clues for what's ahead.
The new infographic from Equilibrium illustrates just how much the world of personal finance and wealth management has changed over the years, showing that many prices have continued on a mostly upwards trajectory due to the effect of inflation. However, it also demonstrates that other markers, such as the value of commodities, have performed less predictably, rising and falling as per the external circumstances of the time. That said, the overall picture painted is one showing just how much prices have climbed over time.
We can see that the cost of everyday goods, such as a loaf of bread and a pint of milk, have tended to increase steadily over time, as have other useful markers such as a pint of beer or a litre of petrol. It also shows that house prices have climbed consistently through the years and continue to do so, with this a result of housing demand continuing to outstrip supply.
To view a full, high resolution, printable version of the infographic, click here. Once opened in the new tab, simply click the image to zoom in.
There are clearly many difficulties when it comes to comparing prices from one date with another. Prices are impacted by movement in inflation, which itself is partly determined by rising or falling wages, and therefore it is only to be expected that the price of goods will increase as people earn more money, and vice versa. However, it is still useful to see how costs and valuations have changed over time, and how this has impacted personal finance in particular.
Measuring the wealth of the world's richest person was made much simpler following the introduction of the World's Billionaire List from Forbes magazine in 1987. This, the definitive rundown of the wealthiest people in the world, has shown a steady increase with regard the wealth of the richest individuals on the planet. In 2015, the fortune of American business magnate Bill Gates was calculated at a huge $79.2 billion, significantly higher than the $20 billion attributed to Yoshiaki Tsutsumi, who was named the world's richest man in 1987.
However, it is difficult to say whether today's richest people are wealthier than the richest of yesteryear, again owing to the impact of inflation. And although measuring wealth has become more standardised of late, it remains a complicated task comparing today's billionaires with those from the past, such as John D Rockefeller and Andrew Carnegie, who were believed to have net worths of around $374 billion and $372 billion respectively.
Food and drink
Rises in the cost of food and drink have served to reduce purchasing power and have meant that people continually need more money at their disposal in order to buy the goods that others could buy much cheaper years before.
Gold and other commodities
While the price of everyday goods has tended to go just the one way - up - other useful markers have seen much more varied fortunes, including commodities such as gold. Widely perceived as one of the most valuable metals in the world, gold's value has moved up and down across time and is impacted by various factors, including the stability of economic markets. This is because gold is sometimes viewed as a safe haven by investors, especially in times of economic uncertainty.
What will the future bring?
The face of personal finance and wealth management is ever-changing, and predicting the future is a virtually impossible task. While the average price of a house, for example, is on a seemingly endless upwards trajectory, we cannot say for sure how long this will last. Likewise, while inflation has remained predominantly positive of late, who is to say it will not swing back to negative in the near or distant future, having a huge impact on spending power?
What is clear, however, is that the wealth management industry will continue to adapt in order to meet changing client demands. The array of services currently on offer to clients has evolved greatly over the past five, ten, 15, 20 years and so forth, and will continue to do so as we move forward - be that with increased or decreased prices and regardless of the impact of inflation.
ONS House Price Indexes
ONS Retail Prices and Cost of Living Index (1914-2014)
Prices of a bottle of Coca-Cola and mars bar calculated using various sources