If Trump had put money in an index fund, he’d be twice as rich

Miami /
Sep.September 03, 2015 04:30 PM

From the New York website: Donald Trump became a bestselling author, TV star and presidential candidate based on the premise that he is an exceptionally good businessman. But a look at the numbers suggests his talent for making money may be more fiction than fact.

The Washington Post calculates Trump made far less money through his career as a developer than he would have if he had simply put all his inherited wealth into an index fund at age 32.

Here’s how the math works: According to Business Week, Trump was worth $100 million in 1978. If he had put all that money into a run-of-the-mill index stock fund tracking the S&P 500 and reinvested his dividends into said fund, he would now be worth about $6 billion. Bloomberg puts his fortune at an estimated $2.9 billion, while Forbes puts it at $4 billion. In other words: Wonkblog claims he has been worse at making money than the average large company listed on the S&P 500.

Even if you use Trump’s own estimates of his wealth, which are widely considered inflated, the numbers aren’t in his favor. Trump told the New York Times in 1976 he was worth $200 million and claims to be worth $10 billion today. If he had invested $200 million in an index fund in 1976, he would now be worth $12 billion, according to the newspaper.

Major caveats are that the calculation doesn’t seem to account for any money Trump lost during his divorce, and it assumes Trump wouldn’t take cash out of the index fund to cover living expenses. In the alternate scenario, he would have to get a day job. But it’s safe to assume Trump could have landed decent paying work as, say, a lawyer or accountant. After all, he went to Wharton and is, in his own words,  “like, a really smart person.” [WashPost] – Konrad Putzier

 

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