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But has that Wealth made Him Financially Independent?

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

For the majority of people the name Donald Trump summons numerous images: The hair. The pout. The Tower. The casinos. And, of course, The Apprentice. He is definitely among our society’s most recognizable characters, and because the 1970s he has accumulated enormous wealth. But has that wealth made him economically independent? Not necessarily, a minimum of not till just recently. To see why, let’s take a brief appearance at how his financial investments and top priorities have progressed for many years.

1970s to 1980s – The Asset Accumulation Years

In 1971 Donald Trump relocated to Manhattan, where he quickly developed a name for himself as a leading New York City realty developer. At initially, he concentrated on multi-unit property complexes however then expanded into business properties, consisting of hotels and office complex. By the 1980s Trump’s possessions from property holdings, development activities, and home sales had grown substantially. There were liabilities (mortgage debt) related to these possessions, however in the beginning they didn’t seem excessive, and as a result Trump had significant net worth, or wealth.

1990s – The “Bad Wealth” Years

By 1990 Donald Trump had broadened his financial investment interests to include football, airline companies and gambling establishments. It was the latter, in particular the Taj Mahal Casino in Atlantic City, that together with increasing debts on his other residential or commercial properties caused a severe debt issue. In reality, by the early ’90s his personal financial obligation had actually grown to $900 million and his company debt was nearly $3.5 billion.

The problem? Despite having significant possessions, the liabilities were extreme. To make matters worse, the properties weren’t producing sufficient capital 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 unfavorable cash circulation suggested he was far from economically independent. In reality, he was on the edge of personal bankruptcy. Hence, the “bad wealth” years.

Donald Trump’s various monetary ventures

show the distinction between

bad wealth – which produces financial obligation – and

good wealth – which produces money flow.

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

In 2003, NBC introduced The Apprentice, a truth TV show hosted and produced by Trump. During the very first season Trump was paid $50,000 per episode, or approximately $700,000 for the year. Now, offered the show’s enormous success, he is apparently paid $3 million per episode. Calling this endeavor a golden goose would be an understatement. It is an excellent example of “excellent wealth”: a property (in this case an organization) that generates considerable positive cash circulation.

But “The Donald” knew how to take an excellent thing and make it much better. Starting with his genuine estate activities and particularly now with his media success, Trump has established and fully leveraged the branding of his name. And he’s done so with a particular focus on fairly low expense (and for that reason low debt) ventures that create numerous earnings streams. Some examples:

Books and trips

The Apprentice souvenirs and video game products

Speaking engagements, where he reportedly gets approximately $1.5 million per presentation

Allowing (for a fee) his name to be shown on structures owned by others

These particular kinds of are generally beyond our reach. But the financial principles they show are easy and appropriate to us all: Seek to develop a portfolio of properties that generate favorable capital. And, by all ways, do not let your debts spiral out of control.