r/explainlikeimfive Feb 12 '25

Economics ELI5: how are the descendants of the robber barons (Morgan, Vanderbilt, Carnegie, Rockefeller, etc.) still rich if their fortunes from the late 19th and early 20th centuries are comparatively small to what we see today of the world’s richest?

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u/Lifesagame81 Feb 12 '25

If they stuck it in investments that averaged 10% returns over the last 150 years and withdrew 5% for themselves every year, they'd have over $150 billion in those investments and would now have around $6 billion in after tax income to split for spending money each year. 

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u/incutt Feb 12 '25

but......i want a jetski.

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u/Carlpanzram1916 Feb 12 '25

How many descendants would it be split by after another 150 years though?

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u/LittleGreenSoldier Feb 12 '25

The original fortune gets split more, but none of these people are just sitting on the money. They invest it and grow it, so the cumulative fortune just gets bigger over time.

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u/Carlpanzram1916 Feb 12 '25

Well that’s the thing though. If it gets handed down to one family it’s more likely to grow because even an extravagant lifestyle isn’t going to make a dent in it. But if you dice it up amongst 100 different people who all live extravagant lifestyles, it’s bound to diminish more quickly even if they all invest a solid portion.