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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 invokes many images: The hair. The pout. The Tower. The casinos. And, naturally, The Apprentice. He is certainly among our society’s most recognizable personalities, and since the 1970s he has actually collected enormous wealth. But has that wealth made him economically independent? Not always, a minimum of not till recently. To see why, let’s take a brief take a look at how his financial investments and concerns have actually 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 . At first, he focused on multi-unit property complexes however then broadened into industrial residential or commercial properties, including hotels and office structures. By the 1980s Trump’s properties from genuine estate holdings, advancement activities, and residential or commercial property sales had grown considerably. There were liabilities (mortgage debt) associated with these possessions, however in the beginning they didn’t seem extreme, and as a result Trump had substantial net worth, or wealth.
1990s – The “Bad Wealth” Years
By 1990 Donald Trump had actually widened his investment interests to consist of football, airlines and casinos. It was the latter, in specific the Taj Mahal Casino in Atlantic City, that together with increasing financial obligations on his other homes resulted in a severe financial obligation issue. In fact, by the early ’90s his individual financial obligation had actually grown to $900 million and his service debt was almost $3.5 billion.
The issue? Despite having substantial possessions, the liabilities were extreme. To make matters worse, the possessions weren’t generating adequate cash circulation to cover the financial obligation payments. On paper, Trump might have still been a multi-millionaire, with overall possessions a number of million dollars more than overall liabilities; so he had wealth. But unfavorable cash circulation meant he was far from financially independent. In fact, he was on the brink of individual insolvency. Hence, the “bad wealth” years.
Donald Trump’s various monetary endeavors
show the difference between
bad wealth – which creates debt – and
good wealth – which produces money circulation.
2000s – The “Good Wealth” Years: Apprentice to the rescue
In 2003, NBC released The Apprentice, a reality TV reveal hosted and produced by Trump. During the first season Trump was paid $50,000 per episode, or roughly $700,000 for the year. Now, offered the program’s enormous success, he is reportedly paid $3 million per episode. Calling this venture a golden goose would be an understatement. It is a terrific example of “good wealth”: a property (in this case a company) that generates substantial favorable money flow.
But “The Donald” knew how to take an excellent thing and make it better. Starting with his realty 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 concentrate on reasonably low expense (and therefore low financial obligation) ventures that produce several income streams. Some examples:
Books and trips
The Apprentice souvenirs and video game items
Speaking engagements, where he apparently gets up to $1.5 million per discussion
Allowing (for a charge) his name to be displayed on buildings owned by others
These specific kinds of activities are normally beyond our reach. But the monetary concepts they illustrate are simple and relevant to us all: Seek to establish a portfolio of possessions that create positive cash circulation. And, by all methods, do not let your financial obligations spiral out of control.