Author Topic: Trump would have had more money if he had put his inheritance in an index fund  (Read 6027 times)


nobodyspecial

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Trump had an inheritance?
I thought he had achieved all this through charm, hard work and his business acumen !


OneCoolCat

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

Bearded Man

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

I'm curious, what where the fees for refinancing your student loans with sofi? I'm paying 6.8% on some of my loans and although I have cash to pay it off, I prefer investing it while I pay it down slowly. A lower interest rate would help that, but at what cost?

johnny847

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

I'm curious, what where the fees for refinancing your student loans with sofi? I'm paying 6.8% on some of my loans and although I have cash to pay it off, I prefer investing it while I pay it down slowly. A lower interest rate would help that, but at what cost?

Non sequitur much?

OneCoolCat

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

I'm curious, what where the fees for refinancing your student loans with sofi? I'm paying 6.8% on some of my loans and although I have cash to pay it off, I prefer investing it while I pay it down slowly. A lower interest rate would help that, but at what cost?

There are no hidden fees in refinancing with Sofi.  Once they approve you, you pick between a 5, 10, or 15 year payment plan at a lower interest rate.  The shorter the term of repayment, the lower the interest rate.  They cut a check to your current servicer and you start making payments the following month.

The downside to refinancing is that you lose certain loan forgiveness eligibility (no public service loan forgiveness, IBR, Payee, and the loans are not forgiven if something were to happen to you).

That said, if you have a ways to go and are paying 6.8%, I would recommend either refinancing or even better paying it off because 6.8% is a relatively steep interest rate.

I shared more on my experience refinancing in this thread:  http://forum.mrmoneymustache.com/welcome-to-the-forum/my-experience-refinancing-my-student-loans/

Feel free to ask any questions there as its more likely to grab my attention.

JamesAt15

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

This is true.

I think the point is still valid that Trump could have made almost the same returns (perhaps a bit less, perhaps a bit more, depending on market performance), by just buying an index fund, which has the added benefit that he then wouldn't have to work for the following X decades.

On the other hand, I am inclined to give Trump some points for presumably creating companies that employ other people. So his efforts would benefit the workers at those companies, possibly even more than they benefit himself, based on the above numbers.

Wow, that's...  surprisingly altruistic of Mr. Trump. Rather... odd.

notquitefrugal

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Was his dad's estate $200 million before or after state and federal estate and inheritance taxes? I assume those would have been substantial.

nobodyspecial

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On the other hand, I am inclined to give Trump some points for presumably creating companies that employ other people. So his efforts would benefit the workers at those companies, possibly even more than they benefit himself, based on the above numbers.
Would be an interesting analysis whether money invested in starting a company creates more jobs than the same money invested in the shares of an SP500 company.


forummm

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Was his dad's estate $200 million before or after state and federal estate and inheritance taxes? I assume those would have been substantial.

I don't know about back then, but it's easy to avoid paying those taxes now.

On the other hand, I am inclined to give Trump some points for presumably creating companies that employ other people. So his efforts would benefit the workers at those companies, possibly even more than they benefit himself, based on the above numbers.
Would be an interesting analysis whether money invested in starting a company creates more jobs than the same money invested in the shares of an SP500 company.
It depends on the company you create. Also keep in mind that when you invest in the market, someone else is selling. So whatever they do with that money could be creating or maintaining jobs too.

brandino29

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

Um, no.  First, the OP was the one that said he would have had more money, the article headline is in fact "Donald Trump isn't rich because he's a great investor. He's rich because his dad was rich."

The article actually even goes out of its way to acknowledge that it's tough to make a fair comparison:

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These calculations vary a lot depending on the size of fee you introduce, how much of the investments you take off for living expenses, which exact day of the year you buy the index funds in, etc. If Trump had invested $40 million in an index fund in January 1974, for example, he'd have $500 million less, after fees and dividend taxes, than he would have if he'd invested in August.

Then the article goes on to explain that the specific numbers aren't the point anyway. 

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But the exact numbers aren't the point. The point is that after decades of touting his business acumen, his ability to negotiate tough deals and spot good investments, and after spending this entire campaign season arguing that he's qualified for the presidency based on his skills in the market, Trump nonetheless has an investment record that at best roughly matches and at worst underperforms the market. He did only as well or possibly worse than a retiree with a Vanguard 401(k) did.

And it wraps it all up neatly by pointing out that Trump's total wealth essentially has nothing to do with his own track record but a result of having been gifted a shit ton of money in his 20s. 

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That's not really impressive. Worse, it suggests that his success is almost entirely the result of having inherited money from his father. His own actions might have even cost him money.

PloddingInsight

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The "study" takes out some investing fees, but it doesn't take out all the money he has spent since he received his inheritance!  I imagine his personal spending is fairly substantial.  Another major flaw.

slugline

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The "study" takes out some investing fees, but it doesn't take out all the money he has spent since he received his inheritance!  I imagine his personal spending is fairly substantial.  Another major flaw.

I thought of that too. It might be an entertaining exercise to calculate the results of investing every penny I've ever earned working (Social Security statement should be close enough) in an index fund at the end of each calendar year, somehow ignoring all spending/taxes, and reinvesting all dividends.

Marus

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.

Spork

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Trump had an inheritance?
I thought he had achieved all this through charm, hard work and his business acumen !

and I thought it was his career modeling hair care products.

Jeremy E.

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.
However, I don't think that qualifies him to be POTUS

brandino29

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.

I think it's debatable whether someone deserves credit for "getting very very wealthy" when that getting was in the form of a $40 million dollar inheritance, or $193 million in today's dollars. 

Johnez

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The article states he would be richer if he had invested in an index fund then post a graph showing if he invested in an index fund when he received the money he would have less than every estimate of his net worth.  It then goes to cherry pick dates inwhich he invests his money in the 80s.  The logical fallacy of the article is alarming.

Um, no.  First, the OP was the one that said he would have had more money, the article headline is in fact "Donald Trump isn't rich because he's a great investor. He's rich because his dad was rich."

Um, yes-the article is fairly clear:

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Trump nonetheless has an investment record that at best roughly matches and at worst underperforms the market. He did only as well or possibly worse than a retiree with a Vanguard 401(k) did.

The article is pretty worthless.  None of the numbers mean anything (what the hell is up with the random cherry picked dates?!) and doesn't provide anything worth dissecting.  Hell it's just 3 or 4 numbers cobbled together from a 5 minute google search and dribble on index funds.  That's it.





RosieTR

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.

Well, let's not forget about all the bankruptcies. As in plural. "But he never declared personal bankruptcy." Woowee.

http://www.forbes.com/sites/debtwire/2015/08/18/a-trip-down-donald-trumps-bankruptcy-memory-lane/

Marus

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.

I think it's debatable whether someone deserves credit for "getting very very wealthy" when that getting was in the form of a $40 million dollar inheritance, or $193 million in today's dollars.

The point of this article is to say "Ha Trump's not even that successful!" which is complete bullshit.  Taking 40 million and becoming a billionaire isn't easy.  A lot of people would fail to do it if they tried.  Even more people don't have the ambition to sustain that level of success for decades.

Obviously none of this qualifies him to be President, and personally I don't think becoming a billionaire is even that worthwhile of a goal.  But it's a real stretch to say he hasn't been extremely successful as a businessman.

letsdoit

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.

I think it's debatable whether someone deserves credit for "getting very very wealthy" when that getting was in the form of a $40 million dollar inheritance, or $193 million in today's dollars.


how about $413 million like the NYT is reporting ?

The point of this article is to say "Ha Trump's not even that successful!" which is complete bullshit.  Taking 40 million and becoming a billionaire isn't easy.  A lot of people would fail to do it if they tried.  Even more people don't have the ambition to sustain that level of success for decades.

Obviously none of this qualifies him to be President, and personally I don't think becoming a billionaire is even that worthwhile of a goal.  But it's a real stretch to say he hasn't been extremely successful as a businessman.

Slow2FIRE

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The equivalent of $413 million in today's dollars invested about 40years ago.

If he hasn't spent at least $2-3 billion dollars on his lifestyle over that time, he has horribly underperformed index funds.

bacchi

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The equivalent of $413 million in today's dollars invested about 40years ago.

If he hasn't spent at least $2-3 billion dollars on his lifestyle over that time, he has horribly underperformed index funds.

I'm sure he has. He doesn't seem like a LBYM type-of-guy, even when $400m million throws off $16million/year.

There is a reason that US banks are wary about loaning money to him.

Dicey

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I take issue with this article.  Trump has had to grow his net worth, in addition to funding an incredibly extravagant lifestyle.  If I tried to live like Trump, I'd be broke in about half an hour.  He deserves some credit for continuing to fund his billionaire lifestyle, in addition to getting very very wealthy.
You wouldn't be broke in half an hour if you started with $200M. Just sayin'.