Nonpartisan Post - Trump vs. Index Funds

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Nonpartisan Post - Trump vs. Index Funds

Frank S.
Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes

I hope you enjoy this iconoclastic and nonpartisan perspective.   Please do not comment on political issues as this is simply a comparison between performance of investment strategies related to Trump. 

Additionally, this is not an evaluation between the returns of REI or equities. There are other posts that address that.

Trump inherited his fortune and contacts.  What if he had retired immediately after getting his daddy's money?

Link:

http://fortune.com/2015/08/20/donald-trump-index-f...

In 1982, the first year Forbes published its list of the wealthiest Americans, the magazine calculated Donald Trump’s net worth at $200 million. According to Timothy L. O’Brien’s book, TrumpNation: The Art of Being The Donald, Mr. Trump said he was worth $500 million in 1982, not the $200 million reported by Forbes

By 2014, Forbes said his wealth had jumped to $4.1 billion. That’s a compounding annual return of 9.9 per cent. But Trump cries foul. He complains that Forbes downplays his wealth. According to Business Insider, he recently said his net worth is $8.7 billion.

Therefore, lets's go with Trumps estimate of $500 million and his assertion that he is worth $8.4 billion. Then, it follows that if Trump had invested that initial $500 million in Vanguard’s S&P 500 index fund, he would have compounded his money by 11.3 percent annually over 33 years. His $500 million would have grown to $17.11 billion. That’s $8.41 billion more than Trump says he has today or $13.01 billion more than what Forbes estimates he is worth today. 

Math is a wonderful way to debunk media myths.

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    IMO, BP is a respite from the non-sense of the political year - - at lease we share USEFUL and FACTUAL information. Fear, Uncertainty and Doubt(FUD) is what drives the stock markets. Hope members here are not so paranoid.

    0Reply
  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    10y
    Originally posted by @Jeff B.:

    IMO, BP is a respite from the non-sense of the political year - - at lease we share USEFUL and FACTUAL information. Fear, Uncertainty and Doubt(FUD) is what drives the stock markets. Hope members here are not so paranoid.

    I'm sorry, but I can't follow your comment.  

    I understand how it can be seen as politically charged, but please see the big picture. It is not. 

    Is there a error on the calculations? Is there something inaccurate?  To me it seems like factual information based on accurate data.

    I think its useful for  a few reasons; primarily, it shows the power of compounding interest. Then, it presents the beauty of being exposed to lazy investing.

    FUD affects the market (some call it irrational exuberance ) but it doesn't drive it. The market is driven by the largest and strongest economy of the world, the United States. ( USA! #1! At least in this particular case, we are #1).

    Finally, paranoia is a thought process believed to be heavily influenced by anxiety or fear, often to the point of irrationality and delusion (Thanks wiki!).  The information presented simply explains a case study. 

    Frank

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    No assertion intended towards you - - just the political process and  the current players.

    :Sickly Throwing Up:

    0Reply
  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    10y
    Originally posted by @Jeff B.:

    No assertion intended towards you - - just the political process and  the current players.

    :Sickly Throwing Up:

     I don't watch the news for that very same reason.  

    Best wishes, 

    Frank

    1Reply
  • Benjamin Timmins
    Landlord · Utica, MI · Member since 2015 · 190 posts · 99 votes
    10y

    Thats hardly non partisan @frank 

    @Frank S..

    The original post is heavily partisan, no matter what you claim.

    0Reply
  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    10y
    0Reply
  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    10y
    Originally posted by @Benjamin Timmins:

    Thats hardly non partisan @frank 

    @Frank S..

    The original post is heavily partisan, no matter what you claim.

    I apologize if this appears as a political statement. That's not my intention, at least subjectively.

    In summary, one can deduct that not all real estate magnates, as presented by the media, are good investors.

    I think there are many BP investors that beat the stock market returns, and consequently, do much better than celebrities.

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  • Judd Campbell
    Georgetown, KY · Member since 2014 · 179 posts · 55 votes
    10y
    But over those years he lived off the money spending a few million a year I would guess. Does the S&P example account for pulling out a few million each year? Back of the envelope math I would think that would make a big difference
    0Reply
  • Frank S.
    OP
    Specialist · Chicago, IL · Member since 2015 · 870 posts · 345 votes
    10y
    Originally posted by @Judd Campbell:

    But over those years he lived off the money spending a few million a year I would guess. Does the S&P example account for pulling out a few million each year? Back of the envelope math I would think that would make a big difference

    Let's see..

    If Trump sold 2 percent of his portfolio annually:

    $ 500,000,000 2% $ 10,000,000 

    This would've allowed him to live off $10 million per year, $833,000 per month, $27,397 per day.  That's a nice chunk of change!

    At the same time, his wealth would've gown at  9.3 % each year. 

    Then, the $500 million would've turned into about $9.4 billion today: 

      ---  $5.3 billion more than Forbes estimates 

      ---   $700 million more than Donald Trump claims

    Note:  this disregards any additional contributions through a variety of sources like "working".

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