But has that Wealth made Him Financially Independent?

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

For most individuals the name Donald Trump conjures up numerous images: The hair. The pout. The Tower. The gambling establishments. And, obviously, The Apprentice. He is certainly among our society’s most identifiable personalities, and given that the 1970s he has collected massive 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 quick take a look at how his financial investments and top priorities have actually progressed for many 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 genuine estate developer. In the beginning, he focused on multi-unit property complexes however then broadened into commercial homes, including hotels and office structures. By the 1980s Trump’s possessions from property holdings, advancement activities, and residential or commercial property sales had actually grown substantially. There were liabilities (mortgage financial obligation) connected with these possessions, but initially they didn’t seem extreme, and as a result Trump had significant net worth, or wealth.

1990s – The „Bad Wealth” Years

By 1990 Donald Trump had actually broadened his investment interests to include football, airlines and gambling establishments. It was the latter, in particular the Taj Mahal Casino in Atlantic City, that together with increasing financial obligations on his other properties resulted in a severe financial obligation problem. In truth, by the early ’90s his personal debt had actually grown to $900 million and his service financial obligation was nearly $3.5 billion.

The problem? Despite having considerable assets, the liabilities were excessive. To make matters worse, the assets weren’t creating adequate cash circulation to cover the financial obligation payments. On paper, Trump might have still been a multi-millionaire, with total possessions a number of million dollars more than overall liabilities; so he had wealth. But unfavorable cash flow suggested he was far from economically independent. In fact, he was on the edge of personal insolvency. Hence, the „bad wealth” years.

Donald Trump’s various financial endeavors

show the distinction between

– which generates debt – and

excellent wealth – which generates money circulation.

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

In 2003, NBC launched The Apprentice, a reality 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, given the program’s enormous success, he is reportedly paid $3 million per episode. Calling this venture a cash cow would be an understatement. It is a fantastic example of „good wealth”: a property (in this case a business) that creates considerable positive capital.

But „The Donald” knew how to take a good idea and make it better. Starting with his property activities and especially now with his media success, Trump has developed and completely leveraged the branding of his name. And he’s done so with a specific concentrate on reasonably low expense (and for that reason low debt) ventures that produce multiple income streams. Some examples:

Books and trips

The Apprentice souvenirs and game items

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

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

These specific types of activities are usually beyond our reach. But the monetary concepts they highlight are basic and appropriate to all of us: Seek to develop a portfolio of assets that produce favorable money circulation. And, by all means, do not let your debts spiral out of control.