And why are vampires in general so rich? In almost every vampire movie we’ve ever seen, vampires are running around with an endless leather wardrobe, riding in sleek, shiny cars that inevitably get blown up, only to be replaced by vehicles just as expensive as their predecessors. Not too many vampires riding around in a dented Saab. All that leather and PVC is expensive, and I don’t think I need to go into the costs of Italian sports cars. So how do they do it? Why are vampires so rich?
Well, for one thing, they don’t have kids. But for the most part, they start saving early, –at least, earlier than people who don’t live forever. When small funds, say $20 a week, are placed in a bank account with constant interest making the sum grow larger, –for hundreds of years, they grow to phenomenal proportions, even for vampires that didn’t just steal all their money from unwitting victims, like for instance, the Cullens.
Bhagwan Chowdhry, a Professor of Finance for UCLA Anderson, tells the Huffington Post why vampires make so much money, –and consequently, –why us humans are still broke from the financial collapse:
“So, the answer (my answer, in any event) to the question of “How did Edward Cullen become so rich?” was that he is a vampire and vampires live forever. What I am getting at is the power of compound interest. If you start to save early and let your savings earn interest for many years, most people are surprised to learn, how much your savings grow to. However, these calculations are not so easy to do — use of financial calculators or excel is nerdy and even some of my MBA students are not quite at ease with these tools, let alone teenagers or younger children. But children are very good at using the Internet. So, I asked my kids to go to a brilliant site called wolframalpha.com and asked them to type, like you would in Google search, “$20 per month, 5%, 110 years” in wolframalpha.com. You see, Ed Cullen, I am told, was born around 1901, and if he started putting away just $20 a month — not an unreasonable amount — it would have been about 110 years in 2010. Assuming an interest rate of 5% per year makes, the savings grow to a little over one million dollars. What if the interest rate were 10% instead of 5%? Now, the number is an astounding $90 million. But is 10% interest rate reasonable? It may be, if one were to include inflation, but it isn’t if we want to think about these numbers in constant dollars, i.e., assuming same purchasing power of dollars in 1901 as in 2010. Understanding the difference between nominal (i.e., including inflation) and real (i.e., constant purchasing power), is another financial literacy issue that most people don’t understand well enough.
Why are we often surprised to hear these answers? Evolution did not program us to think about compound rate of growth because in prehistoric times the main source of savings was simple storage over relatively short periods of time. Modern finance has allowed us to take advantage of risk-sharing and exchange, and thus exploit productivity growth potential across many people and over long periods of time…”
Believe it or not, this is one of those questions the ‘tweens are pretty much always wondering about, but never ask. Those of us over 14 are probably aware that vampires have just had a little more financial practice than the rest of us will ever get. Namely because, while we’re thinking about silly things like high school, traffic, and birth control, vampires are battling with their inner demons. Not that we should be exempt from financial education because we’re mere humans. In fact, we should take this opportunity to say “hey, fictional beings shouldn’t make more money than we do!” and trump those vampire bastards. Another benefit of having the “sissy” rich vampires constantly represented in the media, is that they may inadvertently teach the younger generation about finances, and prevent future financial crises.