But has that Wealth made Him Financially Independent?

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

For many people the name Donald Trump invokes numerous images: The hair. The pout. The Tower. The casinos. And, naturally, The Apprentice. He is certainly one of our society’s most recognizable 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 quick take a look at how his monetary investments and priorities have developed throughout the 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 designer. At initially, he focused on multi-unit domestic complexes but then expanded into industrial homes, consisting of hotels and office buildings. By the 1980s Trump’s possessions from realty holdings, advancement activities, and property sales had actually grown considerably. There were liabilities (home loan debt) connected with these properties, but initially they didn’t appear to be excessive, and as a result Trump had substantial 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 specific the Taj Mahal Casino in Atlantic City, that together with increasing debts on his other homes resulted in a major financial obligation issue. In reality, by the early ’90s his individual financial obligation had actually grown to $900 million and his business debt was almost $3.5 billion.

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

Donald Trump’s numerous financial ventures

show the difference in between

bad wealth – which creates debt – and

excellent wealth – which produces money flow.

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

In 2003, NBC launched The Apprentice, a truth TV reveal 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 massive success, he is supposedly paid $3 million per episode. Calling this endeavor a money cow would be an understatement. It is an excellent example of « excellent wealth »: an asset (in this case a business) that generates substantial favorable money flow.

But « The Donald » knew how to take a good thing and make it better. Starting with his property activities and particularly now with his media success, Trump has actually established and fully leveraged the branding of his name. And he’s done so with a particular concentrate on relatively low expense (and therefore low debt) ventures that generate multiple earnings streams. Some examples:

Books and tours

The Apprentice souvenirs and game items

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

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

These particular types of activities are generally beyond our reach. But the monetary principles they illustrate are simple and relevant to us all: Seek to develop a portfolio of assets that generate favorable cash flow. And, by all ways, don’t let your debts spiral out of control.