PFT #94 - Personal Finance Tip of the Week: The Superbowl, Inflation and Compound Interest

Today is 2/11/24 which is the Superbowl with the Kansas City Chiefs vs. the San Francisco 49’ers and this marks the 57th time that this game will have been played.

This is a large amount of years, so we decided to run some math based on the amount at which things are consumed and what they cost.

Let’s start with advertising and the cost for a one minute spot during the game:

In 1967: $37,500. For 2024: $7 million. This equates to an increase 185 times.

To further that, this means gas would be $61 per gallon and the S&P would be at 16,000 - for context today it is at 5,000

As for as food and beverage:

Chicken wings would be $43/lb.

A 6-pack of beer: $340.

A bag of Doritos $18.5.

So needless to say, for most items, they only increase in price and this led us to look into inflation and compound interest. For example, that $1 football square would be $9.18. How about the average house? According to the St. Louis Federal Reserve, it was $24,400 and in February of 2024, it is $492,300

So let’s just put it out there . . It is expensive to be an American. Therefore, the best plan of attack is to budget and live within your means. In unison, the mission is to invest in yourself and build a moat for your future while balancing inflation.
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For context, the S&P since 1926 has averaged a return of approximately 10% and a 7% return when factoring in inflation.

If we were to emulate that, we can invest in exchange traded funds that closely mimic these returns such as the tickers of SPY, IVV, VOO and SPLG.

For context VOO has returned 9.99% over the last 30 years. According to Forbes, the average American works 42 years before taking retirement, so let’s see how much money adds up over time without inflation and expenses:

At $100 a month, the amount would be $679,602.

At $250 a month, the amount would be $1.69M.

At $500 a month, the amount would be $3.39M.

So this is fantastic and this shows the power of compound interest - and the reminder is that the more that you can invest, the more you make and you let the market do its thing.

So the next question is … will this prompt you to look at your budget and find a few dollars to put away? All it will do is make you money.

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