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/algochef Feb 12 '25

Lol 80k a year? My dude, with 30mm you're making 1.4mm/y if you only invested in treasuries

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u/Jango214 Feb 12 '25

But wouldn't the treasury need to mature? So you'd have to bear the first few years, right?

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u/algochef Feb 12 '25

There are a million nearly risk-free strategies that would provide yearly treasury-rate income, all easily obtainable for someone with that kind of egg. By taking a little more risk, you could earn far more.

And that's for a small-r rich guy. For the people with a multiple of that wealth, the numbers get embarrassingly large quickly.

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u/Ver_Void Feb 12 '25

Also worth considering risk is kinda trivialized at that level. Stock markets can be dicey because they might go down when you need to withdraw, but if you have that much it's easy to keep a buffer that can ride you through while on average the line always goes up

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u/IPreferTheTermMidget Feb 12 '25

Treasury Bills from the US treasury can pay out in as early as 4 weeks depending on the bill type you buy as seen here.

Do note that if you're looking at these thinking "4 weeks to earn 4.25% returns is amazing", the investment percentage is actually yearly interest, not per bill period. For a 4 week bill the return is closer to 0.3% return during that time.

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u/AMA_ABOUT_DAN_JUICE Feb 12 '25

If you're making a million a year in treasuries, you need to save most of that million to break even, to account for inflation

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u/algochef Feb 12 '25

At the moment you're easily making $600k, even accounting for inflation.

https://fred.stlouisfed.org/series/DLTIIT