Fear of market volatility can make seemingly safe investments appear alluring. The downside of playing it “safe,” however, is that you may actually be losing purchasing power by putting your money in investments that don’t keep pace with inflation.
For example, when the Ford Mustang launched in 1964, the cost of a '64 standard coupe was $2,368. Back then, $100,000 invested in a 6-month CD would have provided you with $4,300 in annualized income—almost enough to buy two Ford Mustangs!
Unfortunately, the income on the same $100,000 CD today would only provide you with enough income to pay for an exhaust system and engine cooling kit for your cherished Ford Mustang. The speed of a Mustang is apparently no match for the speed of inflation!
The Effects of Inflation: $100,000 6-Month CD Investment
Year | CD Rate1 | Annualized CD Income | MSRP Ford Mustang2 | Your CD Income Could Buy... |
1964 | 4.30% | $4,300 | $2,368 | Almost 2 Ford Mustangs ($4,300) ![]() |
1984 | 8.85% | $8,850 | $7,098 | 1 Ford Mustang plus 101 full gas tank refills3 ($8,850) ![]() |
2004 | 2.66% | $2,660 | $18,150 | A top-end engine kit for your Ford Mustang ($2,660)4 ![]() |
2023 | 5.30% | $5,300 | $27,770 | An exhaust system and engine cooling kit for your Mustang ($5,164)4 ![]() |
CDs are insured by the FDIC, offer a fixed rate of return, and are generally designed for short-term savings needs. The principal value and investment return of investment securities (including mutual funds) are subject to risk, will fluctuate with changes in market conditions, are generally considered long-term investments, and may not be in the best interest of all investors.
Talk to your financial professional today about investments with the potential to outpace inflation.
1 Data Sources: Federal Reserve, Bankrate, and Hartford Funds, 3/23. 2023 CD rate as of 2/28/23. Rates for previous years are the average CD rate; the CD rate for 2023 is thehighest available 6-month CD rate on Bankrate.com as of 6/23.
2 Sources: CJ Pony Parts and Ford, 3/23.
3 Data Sources: Energy.gov and 1A Auto, 3/23.
4 Data Source: CJ Pony Parts, 3/23.