The ROI of Bling

in Financial Planning by

Every time I roll down ritzy Union Street in the Cow Hollow neighborhood of San Francisco, I’m smiling from ear to ear. Beautiful people are everywhere with their Lululemon yoga outfits sipping $8 lattes on cute outdoor marble-top tables. My engine is whirring as the bass is thumping to the electronic music of Empire Of The Sun.

This is the life! I think to myself as I take deep breaths of new car smell that permeates every nook and cranny. I press the one-touch moon roof to invite rays of sunshine to kiss my dashboard. Rhino provides the satisfaction of driving a $450,000 Lamborghini Aventador in my mind. Yet, he only cost $21,000 out the door. You see, Rhino is a silver 2015 Honda Fit. He gets no looks, no cat-calls, and no love from anyone, and that’s just the way I like it.

My return on bling is quite negative because I’m a champion of the Stealth Wealth Movement. But let me share three examples of how showing off your wealth a little more might attract more opportunities.

The Return On Investment Of Bling

Although it’s understandable to keep our wealth hidden from prying eyes, there are benefits to “bling” that must be told. After all, to be rich, sometimes you have to pretend to be rich. It’s those who take the accumulation of depreciating material possessions too far who wind up in the poor house. Let’s discuss some positive ROI examples of bling.

1) You’ll get more invitations to fabulous events. In the summer of 2014, a good friend of mine invited me to his 50th birthday party in London. For even the most frugal person, a trip to London for two would cost $3,000 in economy class plus $1,400 in AirBnB lodging for seven nights plus at least $500 for food and drink. London prices make New York City feel like a developing country. A $5,000 expense is not something to take lightly. If my friend knew I didn’t have $5,000 to spend, he probably wouldn’t have invited me because I doubt he’d offer to pay for all my expenses, even though he could.

While in London, I was able to cross off a bucket list item of not only attending Wimbledon, but also watching Roger Federer and Rafael Nadal play on center court. After Wimbledon, my friend treated us to play at Queen’s Club with seven-time Grand Slam Champion Mats Wilander for two hours. There were eight of us, and the cost to hire Mats was around $10,000. The London experience is something I’ll never forget. Even though my net worth is less than 1/100th of birthday boy’s net worth, he knew I had enough bling to hang out and celebrate given our discussions about buying various vacation properties around the world.

2) You’ll be able to comfortably associate with more people. One of the big problems in America is a growing rift between the rich, middle class, and poor. Even though the rich pay the largest absolute dollar amount in taxes, donate the most to charities, and establish foundations to help eradicate diseases, the rich are still seen with suspicious eyes.

The reality is that the rich are just like you and me. They have feelings, worries, insecurities, hopes, and desires. Dr. Thomas Stanley’s book, The Millionaire Next Door, reports that 80% of the millionaires he interviewed never inherited any of their wealth. Their average net worth is $3.7 million, with an average household income of $131,000, and average home value of just $323,000. The most insightful datapoint about Dr. Stanley’s book is not that his millionaires live frugally, it’s that about two-thirds of his millionaires are self-employed. They have the opportunity to bling all they want as their own bosses. By showing some bling, you’ll be able to befriend more people. By networking with more people, you increase your chances for more opportunities.

One of my vices is collecting watches. I remember wearing a Panerai GMT watch to work one day and having a Managing Director stop by and inquire about my particular timepiece. It turns out the Managing Director was a huge watch collector with a couple dozen watches to his name. We ended up going out for multiple drinks after work to chat about watches, among other fun things that had nothing to do with work. The relationship helped solidify my employment during difficult times, and may very well have provided a boost in promotion and pay down the road.

How short-sighted it would be to shun associating with any of the estimated 10 million millionaires in America just because they were rich? They might teach us a thing or two about building wealth. They might provide us employment opportunities. They might even be nice people to have a beer with!

3) You might get richer as a result. Have you ever wondered how the rich seem to always have access to great investment deals? There’s no Joe Schmoe investing in Uber, AirBnB, and Thumbtack at seed rounds. Everybody who is investing in these promising startups are already rich! Because of their connections, they are able to get first dibs in an investing environment with too many dollars chasing too few deals. One founder knows one rich venture capitalist who knows another rich CEO who invites her rich friends to also participate.

There are plenty of accredited investors – those who make $200,000 a year or who have a $1 million net worth or more – who have zero access to private investment opportunities. By comfortably associating with wealthier people and getting into their circles due to your bling, you have more opportunities to grow your wealth.

Wealth Misconceptions

One of the biggest misconceptions about the rich is that they are out of touch with reality, even if most of them never inherited a significant amount of wealth to begin with. They hole up at their private clubs and avoid associating with other people outside of their wealth class.

When I asked several tennis club members why they are willing to spend $120-$200 a month on a tennis membership rather than find some public park to play for free, here’s what they said.

After a long day of work, it’s nice to be able to book a court time at 6:15pm and play with a friend for an hour an a half. It’s a crapshoot playing on public courts,” said one member.

I know people who spend more on their cell phone bills every month than what I pay for my monthly tennis membership. I love tennis and I’ve chosen to allocate the income I would have spent on electronics towards a healthier activity,” said another member.

One of the reasons why I joined a club is because I felt a little ostracized by my community for having built and sold a company. People started making snarky remarks about how I’m a one-percenter now and how I should never have to worry about anything again. I got tired of having to explain myself, so I thought joining a club would help. I just want to play tennis!” responded another member.

As you can tell from the responses, all three share a love for tennis, which is the main reason why they joined. Only the last member felt that he’d feel more comfortable joining a private club because he was tired of being made to feel bad for his success. It’s not like any of them were outwardly trying to show off their wealth to others.

The rich tend to congregate with one another because they realize that anything they say about their wealth could come across as arrogant. For example, let’s say a person is worth $5 million dollars and earns $500,000 a year after 30 years in the business. He’s been frugal all his life and wants to finally bling it up by buying a $100,000 Porsche 911. His desire might sound ridiculous to others who make and have less. But to his friends who have similar financial attributes, he doesn’t have to hide.

Show A Little Bling If Necessary

No matter what I write, nothing will change the growing negative perception of the rich as long as there are people who are still struggling in a nation as wealthy as ours. If you are fortunate enough to accumulate a healthy fortune, my opinion is that it’s best to turn on stealth mode to avoid any negative attention.

But if you are still looking to build your freedom fund, then perhaps it’s a good idea to show a little bling. People might invite you into their circles if they know you can afford to hang. Others might even think you might have more money than you really do, leading to more opportunities. And finally, after a lifetime of saving and investing, sometimes it’s just good to let loose.

Readers, have you ever showed a little bling that resulted in new relationships, life experiences, and opportunities? How do you decide how much to bling it up, if ever?

Control Your Bling With Personal Capital

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Financial Samurai

Sam is the former Managing Editor of the Daily Capital blog. He worked in finance from 1999-2012 before deciding to focus full-time on his online endeavors - FinancialSamurai.com and the Yakezie Network. Sam is an avid tennis fan who loves to travel. He received his BA from William & Mary and his MBA from UC Berkeley.

11 comments

  1. Melissa

    I wear nice jewelry from time to time but that’s about it. Bling isn’t really my thing although it’s fun to go fancy for parties sometimes. I do have a friend who loves designer handbags and goes all out but that’s not really my thing. She has enough bling for the both of us. And I love to save!

    Reply
  2. Nathan Householder

    I had went on a date with a young woman who was devastatingly gorgeous. I approached her, and on our first date we met in Manhattan. She was complaining about the rain getting on her purse, which costed €7,500. Her uncle was in lower Manhattan with his Lamborghini. I played it cool, worked with what I had, which was okay but certainly not enough to blow 10 grand on a given Saturday. It turns out that her family was former royalty. I was able to solidify a good relationship based upon humor, adventure and obviously a little spending. We still talk, and I am scheduled to fly to Rome this summer to visit. She knows what I make now, and still chases me down.

    Reply
    • Financial Samurai

      Now that sounds amazing! Sounds like she is a keeper. Congrats! This could be one of the biggest ROI of Bling stories around if you guys take it the next step. Please report back and let us know how it goes.

      Best, Sam

      Reply
  3. Greg T

    The worship of consumption and “bling” is nothing new. People who use affectations of wealth to game another are just low-level sociopaths and I try to avoid them. Material things can never substitute for meaning or character.

    Reply
    • Anonymous

      Amen brother

      Reply
  4. Charleston

    Very nice Sam. Thought I was on the wrong site when you mentioned Rhino.

    A bit different from the typical blogs on http://www.financialsamurai.com/, and I like it.

    Reply
  5. Josh

    I’m usually on board the Personal Capital blogs. But this one’s pretty rough. I don’t relate to a person who can’t hang out in a public park because he feels judged for being successful. There’s also a pretty silly side to the whole Lulu lemon in Cow Hollow scene. Financial Sam seems to take it all a bit too seriously. And guys comparing their big watches? For real?

    Reply
    • Financial Samurai

      It’s a crazy world out there Josh! Lots of different perspectives and beliefs. The people who get ahead are those who can blend in the best. It’s best to keep things low key for sure. I had a lot of fun with this post because I’m a proponent of the Stealth Wealth movement. I was challenged to write about the benefits of showing off one’s wealth, so I had to think hard about this one.

      Reply
    • Anonymous

      Agreed, thankfully the rest of us live in areas where people, wealthy or not, don’t seemso materialistic. Even if I had the moola, I wouldn’t feel compelled to buy a Rolex and then hide it at home!

      Reply
  6. Stephanie

    Thanks for giving perspective on why wealthy hang with wealthy. I’ve never been wealthy, but I have always understood why they hangout together. They don’t get judged for their money and they can hangout with people who can afford their lifestyle. Lots of problems solved.

    Reply
  7. kammi

    Great article. I was raised in a boarding type school for the well-off (sons and daughters of Government, etc) and it is constantly recognized whenever I am around the affluent. I think that the wealthy also recognize class (although there are obviously those who lack it). I have been able to talk with a lot of really affluent individuals because they were able to recognize things about me based on my upbringing, which is nice. So I guess that’s my lifelong “bling”, a gift I am quite grateful for which has given me immense opportunities to connect with other similar individuals throughout my life.

    Reply

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