Did Donald Trump inherit a lot of money and then increase his net worth at an unremarkable rate?
Is he a self-made man or a business genius?
When did he inherit his assets? How much did inherit? Did his father shuttle a lot of money his way prior to the inheritance? How much did his wealth increase per year on average?
When did he inherit his assets? How much did inherit? Did his father shuttle a lot of money his way prior to the inheritance? How much did his wealth increase per year on average?
10 Answers
Donald Trump inherited a lot of money and the growth of his wealth has been in line with that of the S&P 500.
Donald Trump's self-described net worth was $200 million in 1982.
If he invested that money in the S&P 500, he'd be worth about $8.3 billion today.
Today he claims his net worth is $8.7 billion. So based on his own claims, he has barely outperformed the S&P since 1982.
Some articles claim that Donald Trump's inheritance was somewhere between 40 and 200 million in 1974.[2][3] Here's one of those estimates:
Trump took over a $200 million real-estate-development business from his father, Fred Trump, in 1974. Dáte estimates that Trump's share of the empire — he has three siblings — was $40 million.[6]
Since 1974, the S&P 500 is up about 74-fold. So his current claimed net worth of 8.7 billion would equate to about 120 million in 1974, which is right in the middle of estimates of what he inherited.
His performance was very close to that of the market from 1982 to present, and possibly from 1974 to present.
If he spent a small percentage of his net worth each year, it's possible her outperformed the market over time. If his inheritance was at the low end of those estimates, he outperformed more. It's also possible he received some money from his father prior to that inheritance. If that's true or if his inheritance was at the high end of those estimates, then he underperformed the market.
Another way to look at the data is to assume he inherited $40 million in 1974, at the low end of estimates. If he had invested that $40 million in an S&P 500 index, fund, he'd be worth about 3 billion today — which is in line with third party estimates of 3 and 4 billion today for his net worth.
Regardless, the inescapable conclusion is that a very large percentage of his net worth is the result of inheritance and normal compounding.
[5] National Journal
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The fact Trump has been very coy about the value of his inheritance speaks volumes.
If he had a return on capital to brag about you can be sure he would be bragging about it. Instead he focuses on exaggerating his net worth by at least 2.5x.
Estimates for the inheritance range from $40-200 million. And no one knows yet when exactly he got it. If it was towards the lower end of the scale in the mid-late 70's then he has made a good return. If it was $200 million in the late 60's then his return on capital has been less than the rate of inflation, making his entire career a waste of time from a financial perspective.
Hopefully someone will uncover the truth during his presidential campaign.
If he had a return on capital to brag about you can be sure he would be bragging about it. Instead he focuses on exaggerating his net worth by at least 2.5x.
Estimates for the inheritance range from $40-200 million. And no one knows yet when exactly he got it. If it was towards the lower end of the scale in the mid-late 70's then he has made a good return. If it was $200 million in the late 60's then his return on capital has been less than the rate of inflation, making his entire career a waste of time from a financial perspective.
Hopefully someone will uncover the truth during his presidential campaign.
When I lived in New York City (Queens actually), Donald Trump was my landlord, although it was actually a company owned by his dad (Fred Trump), if I recall correctly. Many now-wealthy sons, such as the Koch Brothers, inherited their wealth from their father. (By some accounts Donald Trump inherited between forty and a hundred million dollars from his dad's companies.) But inheriting it is one thing; keeping it or enhancing it is another.
It is certainly true that Donald Trump has had many business successes; but it cannot be denied that he has also had many failures, including having to be bailed out by banks on several occasions when his companies were over-leveraged and in serious financial trouble-- at one point circa 1990, Mr. Trump was as much as five to eight billion dollars in debt. (The 2012 book "The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed" by Brian Miller and Mike Lapham is one of many books and magazine articles that discuss the wheeling and dealing Mr. Trump did, and the favorable treatment he received from many of his creditors, which enabled him to stay in business.) And firms he owned or controlled have indeed gone bankrupt at least four times.
Thus, while it is true that Mr. Trump had the benefit of a wealthy father with many real-estate holdings, it is also true that he developed the ability to maximize that wealth. But as his critics have pointed out, part of this is business sense and the rest is the ability to manipulate existing laws as well as getting preferential treatment from public officials. As Max Ehrenfreund, a Washington Post columnist, recently pointed out, one of Trump's biggest skills is being able to "use the laws on corporate bankruptcy to shield his assets from the losses he has incurred in business," as well as getting other people, the taxpayers included, to put up the cash for his business ventures, via "tax abatements and other subsidies." So, we may indeed say that Donald Trump is successful, but we should also note that the average person would not have been given the benefits or the advantages that Mr. Trump seems to have used to build upon what his wealthy father left him.
It is certainly true that Donald Trump has had many business successes; but it cannot be denied that he has also had many failures, including having to be bailed out by banks on several occasions when his companies were over-leveraged and in serious financial trouble-- at one point circa 1990, Mr. Trump was as much as five to eight billion dollars in debt. (The 2012 book "The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed" by Brian Miller and Mike Lapham is one of many books and magazine articles that discuss the wheeling and dealing Mr. Trump did, and the favorable treatment he received from many of his creditors, which enabled him to stay in business.) And firms he owned or controlled have indeed gone bankrupt at least four times.
Thus, while it is true that Mr. Trump had the benefit of a wealthy father with many real-estate holdings, it is also true that he developed the ability to maximize that wealth. But as his critics have pointed out, part of this is business sense and the rest is the ability to manipulate existing laws as well as getting preferential treatment from public officials. As Max Ehrenfreund, a Washington Post columnist, recently pointed out, one of Trump's biggest skills is being able to "use the laws on corporate bankruptcy to shield his assets from the losses he has incurred in business," as well as getting other people, the taxpayers included, to put up the cash for his business ventures, via "tax abatements and other subsidies." So, we may indeed say that Donald Trump is successful, but we should also note that the average person would not have been given the benefits or the advantages that Mr. Trump seems to have used to build upon what his wealthy father left him.
In his book "The Art of the Deal" Donald Trump states he started out with about $200,000 straight out of college. That includes real estate his father helped him own. He received $40-$200 million when his father died in 1999. He was worth $1.6 billion at this time, estimated by Forbes.
His father did loan him money throughout his life on some occasions, and Trump did enjoy a great leg up since he was already very familiar with real estate and came from a reasonably powerful family. He acknowledges this. He started out his career doing door to door rent collection for his father, and he did other real estate related jobs for him before college as well.
Most people seem to think he started out life with a huge inheritance but I'm not certain those people know how inheritance works. Unless the money is in a trust fund left by a deceased family member, you rarely receive it on your 18th birthday.
His father did loan him money throughout his life on some occasions, and Trump did enjoy a great leg up since he was already very familiar with real estate and came from a reasonably powerful family. He acknowledges this. He started out his career doing door to door rent collection for his father, and he did other real estate related jobs for him before college as well.
Most people seem to think he started out life with a huge inheritance but I'm not certain those people know how inheritance works. Unless the money is in a trust fund left by a deceased family member, you rarely receive it on your 18th birthday.
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As a politician I kinda like Donald Trump but he is a horrible businessman. These 2 articles prove that....
Why Donald Trump would still be a billionaire even if he never worked a day of his life
Here's how Donald Trump's net worth since 1988 stacks up against other successful businessmen
Just investing in the S&P 500 and Trump would be richer today than if he ever invested in real estate or anything else.
Trump inherited his wealth. He also was so bad at money management he borrowed between $30m and $100m from his siblings inheritance.
He seems a fraud to me based on these facts.
Why Donald Trump would still be a billionaire even if he never worked a day of his life
Here's how Donald Trump's net worth since 1988 stacks up against other successful businessmen
Just investing in the S&P 500 and Trump would be richer today than if he ever invested in real estate or anything else.
Trump inherited his wealth. He also was so bad at money management he borrowed between $30m and $100m from his siblings inheritance.
He seems a fraud to me based on these facts.
