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Donald Trump equates the degree of his own success with level of his net worth. Forbes currently values him at about $4 billion. (However, he claims he is worth closer to $9 billion).
Regardless of the exactly the figure, the presidential candidate is certainly a multi-billionaire and he seldom fails to tout his wealth during campaign appearances. How did Trump accumulate all that wealth?
Casinos and Cufflinks
Donald Trump’s secret to success really isn’t such a secret. He got his start from his father, Fred Trump, who built his own real estate empire of sorts with about 27,000 residential properties across Brooklyn and Queens. When the elder Trump passed away in 1999 he had a net worth about $300 million.
Donald Trump built upon his father’s success and expanded the real estate empire. In 1980 be broke ground at New York’s Trump Tower . . . an event that took place at the start of the longest bull stock market in history. He continued to buy, build and diversify into casinos, airlines and golf courses.
Throughout his career as a real estate mogul, Trump has always capitalized on his name. In 2001 he built the Trump World Tower, a 90-story residential building in New York. Two years later, the marketing of the Trump name reached a new level with the TV reality show “The Apprentice.” Soon after you could find Trump-branded merchandise, like dolls and cufflinks, across the country. Today, of course, towers emblazoned with the Trump name grace the skylines of New York, Chicago and Las Vegas.
“I’m proud of my net worth. I’ve done an amazing job,” said Trump when he announced his candidacy and stated his net worth was just under $9 billion.
But has Trump really done such an amazing job at accumulating wealth?
The $10 Billion That Got Away
In 1987 when Trump published “The Art of the Deal,” his net worth was about $1 billion. Now, 28 years later, his net worth is about $4 billion, according to Forbes.
Trump also claims his net worth is more than double the figures that analysts cite. This is primarily due to the large amount of worth he places on his personal brand. Real estate licensing deals, brand and branded developments make up $3.3 billion of his net worth, according to Trump.
Indeed, he could have reached that $10 billion threshold had he done what many wealth advisors suggest: invest in an index fund.
Donald Trump’s total gains from 1988 to 2015 were 300%. The S&P 500 gained 1,336% over the same period.
Not only would investing in an index fund have been far easier than the real estate deals and television shows, it also would have generated 4.5 times better returns.
The Other Billionaires on the Block
While Trump failed to beat the stock market through his investments, other billionaires did, during the same time period.
Warren Buffett outperformed the market and did a far better job than Trump at increasing his net worth. Buffett’s net worth increased 2,612% between 1988 to 2015.
Bill Gates also beat the S&P 500 in the same period. Bill Gates’ net worth was about the same as Trump in 1988 (valued at $1.1 billion). In 2015, Bill Gates’ net worth is $80 billion, or a gain of 7,173%.
Other real estate moguls outpaced both Trump and the S&P 500. For example, Donald Bren had a 722% gain in his net worth from 1988 to 2015.
More Risk-Averse Than You Think
Trump sells himself as a bold leader and a go-getter who can bring about great change as president. However, he is a much more cautious business person than he would have you believe.
He holds few stocks for someone of his wealth. He avoids taking on debt after it nearly destroyed his wealth in the early 1990s. With increasing frequency, he lends out his name to initiate deals rather than building new real estate himself.
Essentially, Trump has been receiving cash flows without risking any of his own money.
Trump says he hopes to become next president and is qualified by his wealth and success in business. But, the numbers show that he is a bit less than an unqualified success. Trump missed out on $10 billion by failing to invest in the market.
How Rockefeller really got rich
Upon his death, John D. Rockefeller held a fortune worth $336 billion in today’s dollars. But the conventional account of how he actually made his billions is way off base.
The truth is, much, if not most of Rockefeller’s vast fortune was due to one simple move. And by making this same move, ordinary people across America are getting rich, too. The best part: you can join them today. All it takes is a few minutes.