But has that Wealth made Him Financially Independent?

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

For the majority of people the name Donald Trump conjures up lots of images: The hair. The pout. The Tower. The gambling establishments. And, of course, The Apprentice. He is definitely one of our society’s most identifiable personalities, and because the 1970s he has actually accumulated massive wealth. But has that wealth made him financially independent? Not always, a minimum of not till recently. To see why, let’s take a short take a look at how his financial investments and top priorities have actually developed over the years.

1970s to 1980s – The Asset Accumulation Years

In 1971 Donald Trump moved to Manhattan, where he rapidly developed a name for himself as a leading New york city City realty designer. At first, he focused on multi-unit property complexes but then expanded into commercial properties, including hotels and office buildings. By the 1980s Trump’s assets from genuine estate holdings, development activities, and property sales had grown considerably. There were liabilities (home mortgage financial obligation) associated with these properties, but initially they didn’t appear to be excessive, and as an outcome Trump had significant net worth, or wealth.

1990s – The « Bad Wealth » Years

By 1990 Donald Trump had broadened his financial investment interests to consist of football, airline companies 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 homes caused a severe debt issue. In reality, by the early ’90s his individual debt had grown to $900 million and his company debt was almost $3.5 billion.

The issue? Despite having considerable properties, the liabilities were extreme. To make matters worse, the assets weren’t producing enough capital to cover the financial obligation payments. On paper, Trump may have still been a multi-millionaire, with total assets several million dollars more than overall liabilities; so he had wealth. But unfavorable money flow indicated he was far from financially independent. In reality, he was on the edge of personal bankruptcy. Hence, the « bad wealth » years.

Donald Trump’s numerous monetary ventures

show the difference between

bad wealth – which produces financial obligation – and

great wealth – which produces cash flow.

2000s – The « Good Wealth » Years: Apprentice to the rescue

In 2003, NBC released The Apprentice, a TV show hosted and produced by Trump. During the very first season Trump was paid $50,000 per episode, or roughly $700,000 for the year. Now, offered the show’s enormous success, he is apparently paid $3 million per episode. Calling this venture a money cow would be an understatement. It is a great example of « great wealth »: an asset (in this case a company) that creates substantial positive capital.

But « The Donald » understood how to take a good idea and make it better. Starting with his genuine estate activities and specifically now with his media success, Trump has actually established and fully leveraged the branding of his name. And he’s done so with a specific concentrate on fairly low cost (and therefore low financial obligation) ventures that create several earnings streams. Some examples:

Books and trips

The Apprentice souvenirs and game products

Speaking engagements, where he reportedly receives up to $1.5 million per discussion

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

These particular kinds of activities are typically beyond our reach. But the monetary principles they highlight are easy and pertinent to us all: Seek to develop a portfolio of assets that create positive cash circulation. And, by all ways, don’t let your financial obligations spiral out of control.