Inflation and Jurassic World
“Jurassic World,” just one of the summer’s major blockbusters, has been raking in the ticket sales. The fourth movie in the Jurassic franchise took just 13 days to reach $1 billion at the international box office, the quickest ever to do so (“The Avengers” took 14 days to reach that amount). The first weekend alone saw a record-breaking $500 million come in worldwide ($208 million domestic), before bringing in another $106 million domestic in the second weekend, which is yet another record for the movie—the biggest non-debut weekend in movie history. It’s safe to say that “Jurassic World” is a big hit, and since all these records have fallen in the span of just 13 days, it’s not a stretch to say more records may be on the way for the Indominus Rex.
Jurassic World, Mrs. Doubtfire, and E.T.
While it doesn’t quite reach the ranks of “Avatar” or “Titanic” and may not get there, “Jurassic World” is putting up huge numbers. If you look at the all-time worldwide box office chart, according to Box Office Mojo, “Jurassic World” is 21st on the list, sitting right above “The Dark Knight” and right below “The Hobbit, an Unexpected Journey.” At the top of the list are “Avatar,” “Titanic,” and “The Avengers.” The Domestic chart shows “Jurassic World” in 11th place, just under “E.T.”
What About Inflation?
But if you keep looking, there’s another chart (also courtesy of Box Office Mojo) that tells quite a different story, with the fourth installment of the “Jurassic” franchise reaching only 90th place, just below “Mrs. Doubtfire” and above “Aladdin.” This last, seemingly contradictory list shows the all-time domestic gross sales too, but with all the numbers adjusted for inflation. When all movie ticket prices and sales are adjusted for the impact of inflation over the years, the box office shows quite different results. When adjusted for inflation, the top movie in domestic box office gross sales is the 1939 film “Gone With the Wind” at $1.64 billion, followed by “Star Wars” with $1.45 billion, and “The Sound of Music” with $1.16 billion.
That is a huge difference from the box office charts that you will see in most other places. Compared to “Gone with The Wind,” “Jurassic World” hasn’t made much domestically, simply because the dollar has lost value.
And THAT is why you need to be wary about your investments.
Inflation Makes All the Difference
If a 1939 movie made that much money after adjusting for inflation, that means the dollar was just that much more valuable back then. So if you invest money and leave it there all those years, sure it may grow and gain interest, but at the same time, the purchasing power may fall on you.
You have to remember to factor in inflation when thinking about the rate of return you expect from your investments. If you invest $1,000, and you get $60 of interest but the dollar inflates by three percent, you may come out with more money than you started with, but find that it’s worth three percent less. The investment didn’t adjust for inflation, so the purchasing power of your investment decreased.
This is just one example of how inflation can devalue your investment. Obviously, it’s hard to stop inflation. But one thing you can do is this: keep adding to your investment. So if you have an account with $1,000, try putting some more money in it every few months, so that it gathers more interest. This won’t prevent inflation, and is not sure to keep pace with inflation, but it helps.
Inflation is a tricky subject. It can make your purchasing power go down. It can make “The Sound of Music” higher grossing than “Avatar.” It can dwarf the success of “Jurassic World.” And even worse, it can devalue your investment while you aren’t even looking. So keep your eyes forward to the long run of investing, and don’t let inflation kick you and your investment down.