What Sam Merlotte of True Blood Can Teach You About Investing
With the season premier of True Blood upon us, I began thinking about how lessons on life, money, and success are all around us if you just pay close enough attention. If you understand how compounding works, it is so easy to get rich if you have enough time.
Consider Sam Merlotte, the Bon Temps bartender and resident landlord. His character is around 30 years old, give or take several years, when the show began.
Sam Merlotte Already Has a Decent Engine to Fund His Investments
Given his small but decent investments at the start of the series, it is reasonable to assume that Sam could generate an extra $25,000 in cash per year to put into investments. He already has several cash generators, including the eponymous Merlotte’s bar and restaurant and a handful rental houses. His living expenses are low (he lives in a trailer behind the bar) and drives a functional, yet older model, vehicle.
If Sam invests the money at a reasonable rate of return comparable to what the equity markets have produced over the past two centuries, how much wealth would he have at various ages? Here is the breakdown of his riches, exclusive of the bar itself and his holdings at the starting period.
- 40 years old = $350,000 portfolio
- 50 years old = $1,000,000 portfolio
- 60 years old = $2,400,000 portfolio
- 70 years old = $5,000,000 portfolio
- 80 years old = $10,150,000 portfolio
- 90 years old = $20,300,000 portfolio
- 100 years old = $40,350,000 portfolio
When he was 70, Sam Merlotte could still be living in Bon Temps, tending his bar and restaurant, generating cash to live upon, spend, and give away. He’d be collecting Social Security. He’d also have the equivalent of $5,000,000 sitting in his investment portfolio. Unless he suddenly developed a penchant for conspicuous consumption by driving a Bentley or wearing Patek Phillipe watches, none of his friends, family, employees, or customers would have a clue.
The average person has no desire to get on a private jet and spend their weekends at exotic locales or spending six-figures a year on designer clothes. The average person wants financial independence, the freedom to determine their own schedule, and the ability to afford more than his neighbors. Security. Freedom. Prestige. That’s the basic psychological profile most people fit when it comes to money.
If you are a high performance, competitive adrenaline junkie who wants to rent out night clubs and give away free champagne to random strangers as you wear diamonds, that isn’t going to be enough for you. However, to the average person, Sam Merlotte would be a wild, raging success. Doing what you love, spending time with your friends, and having enough secret wealth that you can spend tens of thousands of dollars each month without ever touching your principal? That is the American dream.
The Main Reason People Don’t Get Rich When They Are In the Same Position as Sam Merlotte Early In Life
Why don’t most people achieve this success? That is easy. Most people, when in Sam Merlotte’s position at 30, wouldn’t see that $25,000 as a stream of capital for investment. They would go buy a Mercedes, borrowing most of the money, and then pay it off over three to five years.
Then, they’d build a nicer home. Then, they’d need to fill it with furniture and gadgets. Then they’d donate some to a few local charities to get their name on a building. Then they’d add other expensive toys that required maintenance and upkeep, consuming cash rather than producing it. Those small differences, over 10 to 70 years, cause the end results to be orders of magnitude apart.