[lixue]

Assuming a 10% return, which is about the max I could find for a single fund over 20 years, it'd take 84 years to turn $1M in to $3B.

Conversely, plenty of funds do 15-20% in the short term. 15% only takes 57 years, and 20% brings it down to 44.

So, doable, but you'd be considered a pretty amazing investor. And this all assumes the money was invested from the day he was born.

[jjeaff]

Except the premise is in accurate. He wasn't left with $1m. He was left with hundreds of millions in cash and cashflowing assets. Had he invested $250mm in the markets back then, he would be much ticket today.

[charlesdm]

Except it was likely property, and he couldn't liquidate those properties without incurring capital gains taxes (set at 49% in 1970)?

I don't know, perhaps you couldn't very easily leverage properties back then for cash (i.e. once they had been paid off), or interest rates were very high (a quick google teaches us that in 1970, the interest rate was 8.5%)?

[munk-a]

It actually wasn't property, a large portion was cash in terms of salary collected as an infant or various gifts. There was a report by NYT not too long ago.

https://www.nytimes.com/interactive/2018/10/02/us/politics/d...

[jackhack]

agreed -- not likely, and it assumes those gains every year which is not reasonable. More, it ignores one very important fact, the destructiveness of losses. A one-year loss can be devastating to a fund. which is why many favor "safety" over "gains".

It's not uncommon for aggressive growth funds to take a 20% tumble in a year. Downside is much, much more destructive than many understand especially when one must also account for fund management fees (typically .7%) which are collected whether the fund gains or loses!

But the simple fact is that a 50% loss requires a 100% gain just to get back to even, which is still a loss once inflation and operating costs are factored in.

Here's a simple question that most people fail: Q: A mutual fund loses 50% in a year. In order to break even the next year, your fund must earn ? 1) inflation 2) 50% + inflation 3) 50% + your income tax rate 4) 100% + inflation 5) 100% + inflation + operating costs + 'it depends'

The correct answer is 5. The correct answer is nearly 106%- One must make up for actual loss (100%) PLUS operating expenses for both years (usually 0.7% per year: 1.5%), plus inflation for both years (2%/annum: 4%). Of course there are tax implication for gains/losses taken outside of a qualified retirement plan (401k,403b,etc.) and sheltering losses can complicate substantially, but hopefully this illustrates a point about the impact of losses.

[superhuzza]

You're not considering a) leveraged stock purchases (using debt, like he did with real estate) and b) that his inheritance was significantly more than 1MM. Check out this analysis from forbes:

https://www.forbes.com/sites/katestalter/2016/09/01/would-do...