The average cost of an NFL franchise today is roughly $1,000,000,000 (or 1 billion dollars).
But it seems that probably most of us don’t have $1 billion lying around.
Fortunately with enough saving, and enough time... one can save up enough to buy the Bengals.
Let’s say you have $0 in savings – so you’re starting at nothing.
But let’s assume that you are able to save $55k per year.
You know – what a typical person saves in a year :-)
Clearly $55,000 is less than $1,000,000,000 and you cannot buy the Bengals – yet.
But...
Let’s say you stash away that $55,000 every year into your "Buy the Bengals" fund.
And let’s say it is invested with an average return of 12%, such as growth stock mutual funds, or whatnot.
So now you’re saving $55,000 a year in investments that are earning a 12% return.
Doing a little math, you can have that $1,000,000,000 saved up in only 68 years.
Unfortunately there is a little thing called inflation. So the cost will keep going up.
So let’s assume 3% inflation per year, so the cost will go up by 3% every year.
After 10 years, you will have $910,180 saved – not bad!
But after 10 years, the Bengals will cost $1.3 billion – that darned inflation!
After 30 years, you’ve got a cool $13.2 million saved.
But after 30 years, they will cost $2.3 billion.
OK, so still not at the point of buying the Bengals yet.
But let’s keep working it.
After 50 years, you’ve got a cool $132 million saved.
But after 50 years, they will cost $4.2 billion.
Let’s fast forward ahead a mere 92 years
After 92 years you’ll have about $15.5 billion saved
And after 92 years the Bengals should cost about $14.3 billion.
So after 92 years of investing $55k per year at 12% interest, assuming 3% inflation, you’ll be able to buy the Bengals, and still have $1.2 billion left over for salary & expenses.
So all you need to do is....
1 – Simply save $55,000 every year
2 – Invest it in funds that will net you about 12% return
3 – Assume that inflation hovers around 3% for the next century
4 – Keep at it for 92 years
If you can bump up that rate of return to 15%, you can buy the Bengals in a mere 72 years. Conversely if you’re more risk adverse, and place the $ in bonds (even some high payout 5% bonds), it won’t be until the year 2366 that you can buy the Bengals (for $33 billion).
So you may be asking yourself, "I can find a 12% investment, and I can wait 92 years, and I can influence the private bankers who run the Federal Reserve to keep inflation at 3%, but how do I save $55k per year?"
That is a good question.
And the good answer is to save the money.
The median US household income is about $55k.
So if you’re median, you’ve basically just got to save everything that you make.
But how does one do that?
Ah, another good question.
And for another good answer, let’s look at this simplified equation:
INCOME – EXPENSES = SAVINGS
In other words, to save $ one needs to make sure their income is larger than their expenses.
The best ways to ensure this are to either increase income, reduce expenses, or both.
If you are making $55k per year and you need to save $55k per year, then you need the equation to be:
$55,000 (INCOME) - $0 (EXPENSES) = $55,000 (SAVINGS)
Of course for this to work, one has to have very low expenses.
But how does one do this?
The largest expense that most hold today is DEBT:
Mortgage. Rent. Car Payment. Car Lease. Credit Card Debt. Student Loan. Payday Lender. Rent-To-Own.
To get expenses very low, one has to eliminate their debt.
+ The first step is to not create any new debt.
+ The second step is to pay off the debt which exists.
To pay off the debt which exists means making a very strict budget & sticking with it, and using all extra income from budget to attack debt. Eliminate those interest payments asap so your $ can go into your "Buy the Bengals" fund, and not in the coffers of your credit card company.
And that’s that.
You can buy the Bengals.
So start saving!