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Wednesday, July 15, 2015

How Donald Trump Lost $11 Billion


Trump's great wealth is more due to the wealth he started out with than to his own business acumen.

Forbes estimates that Trump is worth $4 billion. Trump says he is worth closer to $9 billion.

But what would have happened if he took his inheritance and just invested it in the stock market from 1974 when he took over his Dad's business and now?

Trump started out with between $40 and $200 million. If we take the midpoint of this of $120 million and calculate what would have happened at the historic 12.65% average annual return (rate comes from http://www.moneychimp.com/features/market_cagr.htm) for 1974 to 2014, it would have reached $15.8 billion.

So instead of nearly $16 billion, Trump is worth only $4 billion? Looks like he's made a bunch of dumb money decisions.

In other words, Trump has done far worse than if he just would have invested his Dad's money in the stock market.


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