The short version
The long version
First, some assumptions (which you should feel free to argue with the the comments below).
- Assume that today Mr. Trump is worth between $2 billion and $4 billion. Let’s say $3 billion for the maths.
- Assume that in 1974 he inherited $200 million from his folks.
- Assume that Mr. Trump put in significant effort to grow his fortune from $200 million in 1974 to $3 billion today.
Ok, here’s the alternative – rather than using the $200 million for business, Mr. Trump could perhaps have invested the money in an index fund, which is a simple way to effectively spread your money across all stocks in the market. One such fund is the S&P500, which since 1974 has grown by 1,922%. So, if Mr. Trump had invested $200 million in an index fund in 1974, he would be worth $4 billion today.
Conclusion: It seems plausible that Mr. Trump could be richer today had he split his money across all stocks. or, at the very least, he plausibly could have worked less.
Update on Wed. 23rd Sept. 2015
I should add that this analysis is probably more of an indicator of how index funds of stocks and inheritance can lead to significant wealth over long periods of time – more-so than an indicator Mr. Trump’s business acumen. As quora posts point out, there is uncertainty in what Mr. Trump inherited and is worth today. Furthermore, the above analysis assumes that none of the money was spent – in reality, keeping up with the S&P wouldn’t be so easy if a significant portion of the inheritance or returns on the inheritance were spent.
Update on Tuesday 23rd Oct. 2018
While it is true that Donald Trump did inherit a significant sum of money, he succeeded in growing it significantly, which is not an easy thing to do:
i) Having run a business myself, I have realised that not losing money is an accomplishment in itself. Making money is even harder.
ii) Back in 1974, it would have been far from obvious that the S&P500 would have performed as it did. At the simplest level, why invest in US stocks and not stocks in another country, or, why not invest in bonds, or, why not invest in a blend of these?