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


For many people the name Donald Trump creates lots of images: The hair. The pout. The Tower. The gambling establishments. And, naturally, The Apprentice. He is definitely among our society's most recognizable personalities, and considering that the 1970s he has collected massive wealth. But has that wealth made him economically independent? Not always, at least not till just recently. To see why, let's take a brief appearance at how his financial investments and top priorities have actually progressed over the years.


1970s to 1980s - The Asset Accumulation Years


In 1971 Donald Trump relocated to Manhattan, where he rapidly developed a name for himself as a leading New York City realty developer. At initially, he focused on multi-unit property complexes however then expanded into industrial homes, including hotels and office complex. By the 1980s Trump's properties from realty holdings, advancement activities, and residential or commercial property sales had actually grown substantially. There were liabilities (home mortgage debt) related to these assets, however at initially 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, airline companies and gambling establishments. It was the latter, in specific the Taj Mahal Casino in Atlantic City, that together with increasing financial obligations on his other residential or commercial properties caused a severe financial obligation issue. In reality, by the early '90s his personal financial obligation had grown to $900 million and his service debt was almost $3.5 billion.


The problem? Despite having significant properties, the liabilities were extreme. To make matters worse, the assets weren't creating adequate cash flow to cover the financial obligation payments. On paper, Trump might have still been a multi-millionaire, with total properties several million dollars more than overall liabilities; so he had wealth. But unfavorable money flow meant he was far from economically independent. In fact, he was on the verge of individual bankruptcy. Hence, the "bad wealth" years.


Donald Trump's different financial endeavors


show the distinction in between




bad wealth - which produces debt - and


great wealth - which creates capital.


2000s - The "Good Wealth" Years: Apprentice to the rescue


In 2003, NBC launched The Apprentice, a truth TV show hosted and produced by Trump. During the first season Trump was paid $50,000 per episode, or roughly $700,000 for the year. Now, provided the program's massive success, he is apparently paid $3 million per episode. Calling this endeavor a golden goose would be an understatement. It is a great example of "excellent wealth": a possession (in this case a business) that generates considerable favorable capital.


But "The Donald" understood how to take an advantage and make it better. Starting with his property activities and specifically now with his media success, Trump has established and completely leveraged the branding of his name. And he's done so with a particular concentrate on reasonably low cost (and therefore low debt) endeavors that produce numerous income streams. Some examples:


Books and trips


The Apprentice memorabilia and video game products


Speaking engagements, where he reportedly receives approximately $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 typically beyond our reach. But the financial concepts they illustrate are simple and relevant to all of us: Seek to develop a portfolio of assets that create positive cash circulation. And, by all means, do not let your debts spiral out of control.