But has that Wealth made Him Financially Independent?

Wealth and Capital Lessons from Donald Trump – Are you Ready to Be an Apprentice?

For many people the name Donald Trump creates many images: The hair. The pout. The Tower. The casinos. And, obviously, The Apprentice. He is definitely one of our society’s most recognizable personalities, and considering that the 1970s he has accumulated huge wealth. But has that wealth made him economically independent? Not always, at least not up until just recently. To see why, let’s take a short appearance at how his monetary investments and top priorities have developed throughout the years.

1970s to 1980s – The Asset Accumulation Years

In 1971 Donald Trump transferred to Manhattan, where he rapidly developed a name for himself as a leading New York City realty developer. In the beginning, he focused on multi-unit domestic complexes but then expanded into business homes, consisting of hotels and office structures. By the 1980s Trump’s properties from realty holdings, advancement activities, and home sales had actually grown substantially. There were liabilities (mortgage debt) related to these properties, however in the beginning they didn’t seem extreme, and as a result Trump had considerable net worth, or wealth.

1990s – The “Bad Wealth” Years

By 1990 Donald Trump had actually broadened his investment interests to consist of football, airline companies and casinos. It was the latter, in specific the Taj Mahal Casino in Atlantic City, that together with increasing financial obligations on his other residential or commercial properties resulted in a major debt problem. In reality, by the early ’90s his personal financial obligation had grown to $900 million and his company financial obligation was almost $3.5 billion.

The problem? Despite having substantial possessions, the liabilities were extreme. To make matters worse, the assets weren’t generating sufficient cash circulation to cover the debt payments. On paper, Trump may have still been a multi-millionaire, with overall possessions several million dollars more than overall liabilities; so he had wealth. But negative money flow implied he was far from financially independent. In fact, he was on the edge of personal bankruptcy. Hence, the “bad wealth” years.

Donald Trump’s numerous financial endeavors

show the distinction between

bad wealth – which produces debt – and

excellent wealth – which creates capital.

2000s – The “Good Wealth” Years: Apprentice to the rescue

In 2003, NBC released The Apprentice, a truth TV show hosted and produced by Trump. During the first season Trump was paid $50,000 per episode, or approximately $700,000 for the year. Now, offered the program’s huge success, he is reportedly paid $3 million per episode. Calling this endeavor a golden goose would be an understatement. It is an excellent example of “good wealth”: a property (in this case a company) that creates considerable favorable money flow.

But “The Donald” understood how to take a great thing and make it better. Starting with his realty activities and particularly now with his media success, Trump has actually developed and fully leveraged the branding of his name. And he’s done so with a specific concentrate on relatively low cost (and for that reason low debt) endeavors that create multiple income streams. Some examples:

Books and tours

The Apprentice souvenirs and game products

engagements, where he supposedly receives up to $1.5 million per presentation

Allowing (for a fee) his name to be displayed on buildings owned by others

These specific types of activities are generally beyond our reach. But the financial principles they show are simple and pertinent to all of us: Seek to develop a portfolio of possessions that generate favorable capital. And, by all ways, don’t let your debts spiral out of control.