Hope all the fathers out there had a great Father’s Day. For my first Father’s Day, I, appropriately, go the gift of a hammock. The better gift though was that my son learned to crawl. It’s more of an inch worm-like scoot, but it is super cute. I almost want to set up some baby barb wire above him, because he looks just like a little soldier. (Mental Note: I need to get video of crawling in his camouflage pants.)
The other thing we did for Father’s Day was go some of the mansions in Newport, Rhode Island. Specifically we went to The Elms and The Breakers. We went in that order, which was great because The Elms, while being extremely impressive is just not up to par with The Breakers. For those lacking the history, there was a time where the big players in the Gilded Age built these tremendous mansions along the ocean and threw tremendous balls and parties. It’s a lot like the Hearst Castle.
It’s hard for me to describe these mansions. The Breakers is 65,000 square feet, or around 20 times the size of the typical “McMansions” that people were talking about a few years ago. Wikipedia points out that it cost $12 million to build at the time, but that’s $331 million in today’s dollars. That’s enough money to buy Detroit (just kidding). Aside from its size, the ornate carved marble, gold, and platnum that was used throughout the house is incredible. Having shopped for a new fence lately, I can’t imagine how much the majestic gate and fence must have cost in those times – especially since we have better manufacturing nowadays.
Throughout this tour it made me think, “What would you need to do to get this rich today?” In order to tackle that question, we need to define what “this rich” is. It’s one thing to spend $331 million on a house, but it is quite another to maintain it. These mansions typically had around 40 servants (as they were called at the time) working for them. These people had to be paid at least reasonable wages, so let’s put at $30,000 a year. That comes out to about 1.2 million dollars today, but let’s round that up to 2 million. It’s becoming clear to me that going through this step by step is going to be a little too involved fort this article, so let’s just say that you need around a billion dollars to pull this off. It’s worth noting that the family that owned The Elms only stayed there about 8 to 10 weeks of the year.
A billion dollars is more than Tom Brady or Peyton Manning have. You’d face long odds in acting your way to a billion dollars as Mel Gibson and Jack Nicholson seem to top the list around $450 million dollars. (Side Note: Julia Loius Dreyfus proves you can be doubly rich with her Seinfeld fortunes and inheriting billions from her father’s energy company, just like those in the Gilded Age.)
So how does one go about becoming a billionaire? That isn’t the kind of money you are going to win on Survivor or any other reality TV show. Nowadays, if you get extremely lucky and are the lone winner of one of the top lottery jackpots in history, you can expect to get at most $200 million after taking the lump sum and paying the taxes on the winnings. You’d still need to do some shrewd investment or business planning to grow that to a billion. You can’t plan on inheriting this kind of money (well if you can and you are reading this article contact me). Good luck into marrying into a billion dollars – I wouldn’t hold my breath.
What about the stock market? There’s certainly money to be made, but to earn a billion dollars that way, you’d have start with around $132,000 and invest in such a way that you make 25% consistently for 40 years and pay no taxes on it. That might actually sound a lot easier than it seems. If it does, take note that I doubt there’s anyone on Wall Street who has a record of making 25% for 40 years. Oh and after 40 years, you might be too old to really enjoy it.
In the end, the only way I see to get to a billion dollars with any kind of reliability is to start the next great technology company. Gates, Jobs, Ellison did with Microsoft, Apple, and Oracle. Google and Facebook have it’s billion dollar people. You can surely start other kinds of companies, but it isn’t like you are going to compete with Exxon or major airlines in a couple of years.
Hope that I didn’t burst your bubble with 4 minutes of history to just learn the obvious. If it makes you feel any better, these people from the gilded age were not always looked on fondly. They weren’t like Buffet (or even Gates) who have signed on to give most of their fortune back via charities. Nowadays it’s not exactly a great PR move to spend a couple hundred million dollars for a house that you live in only part of the year. Still don’t feel any better? How about this… almost all of the gilded rich ended up giving their money to various heirs and had it either diluted or wasted over the years to the point that these great mansions need to be preserved with funds by tours like the one I went on.
I’ve come to terms that I won’t be leaving the “gilded age” wealth to my son. That’s fine, there’s a lot more wealth below that. Perhaps just as importantly, there’s the kind of wealth that buys you a shirt with a cheeseburger driving a car… and that’s only $2.50.
Visiting those mansions is awe inspiring and sickening all at the same time. What amazes me is that people believe consumerism and keeping up with the relative “joneses” is “new” to society…
I’m not certain there were income taxes when those estates were built. It would be interesting to look at the economy of running an estate like those.
Lazy Man says
There weren’t income taxes back than, Rose. I meant to add that to the end of the article.
Technology is essentially the science of progress, so it stands to reason that tech would be a good long term industry.
I really have no desire to be super rich. Set me up with a house about 1.5X the size of my current one and enough money that I can take a few trips per year, trade in cars when they hits about 120K miles, send the kids to my alma mater (state school), and spend most of my time reading and writing, and I’d be happy as a lark.
The Floyd Mayweather style has no appeal for me.
Insurance Hunter says
The size of some of the most that are built by the rich today are amazing and crazy at the same time. The maintenance fees alone cost more than most people make in a year. Becoming super rich does not happen over life and in most cases, it take a few generations of family wealth to build it up.