What Can Trump’s Financial Moves Teach You About Your Finances?
Few people would dispute that Donald Trump has had plenty of financial successes — and financial failures. We, as onlookers, can learn lessons from both, to reproduce the wins without suffering the losses.
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Whether you love or despise Donald Trump, take a dispassionate look at what we can learn from his decades in the financial world.
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Take Bold Risks Today, Make Adjustments Tomorrow
“I’m a self-made millionaire who worked with Trump years ago in the commercial real estate space,” shared Brenda Christensen, serial entrepreneur and founder of Stellar PR. “It’s highly competitive, cutthroat even. The world got a glimpse of this on ‘The Apprentice’ long after I collaborated with him.
“Everyone in that sector, but especially Trump, is aggressive with investments. My experience working with him is that he is the ultimate risk taker.”
Fortune does in fact favor the bold — Trump earned hundreds of millions by stepping forward when others shied away. But bold risks sometimes come back to bite.
“It’s not surprising that he even went into the gaming industry, opening a casino and ultimately filing for bankruptcy to restructure debt,” said Christensen.
Calculated risks often pay off, and you can always implement Plan B tomorrow if the winds shift against you.
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Leverage Works, But Cuts Both Ways
In business and investments, you can leverage other people’s money and time to amplify your own returns and income.
Anthony Termini, a seasoned investment advisor and expert contributor for Annuity.org, has seen this play out repeatedly, and points out Trump as an extreme example of both the rewards and the risks. “Trump has leveraged all of his real estate projects to the maximum — most of them successfully. However, his overuse of leverage led to no fewer than six separate bankruptcies.”
Negotiate from Strength — or the Appearance of It
Christensen noted that Trump truly does negotiate better than anyone else. He knows how to portray strength, which is a trait that later endeared him to many voters.
“I’ve worked with titans like Mark Cuban, Bill Gates and others, and no one, and I mean no one, comes close to his expertise in the ‘art of the deal,'” she explained. “He was born of the commercial real estate crucible, which is even more competitive than tech.”
Find ways to shore up your disadvantages going into a negotiation, and double down on your advantages. Most of all, never hesitate to walk away if you don’t like the direction the negotiations take.
And never underestimate the power of knowledge in a negotiation.
In Business and Investing, Knowledge Trumps All
Sure, money is useful. But it’s just a tool, and only as effective as the person wielding it.
Long before becoming a controversial political figure, Trump swam in the shark-infested waters of finance, private equity and commercial real estate. “In making big money, knowledge is far more important than any other ingredient, including money itself,” Trump tweeted in 2013.
Don’t invest in anything you don’t understand. Don’t make crucial business decisions without gathering the facts you need first. Act from a position of knowledge and expertise, and if you don’t have it, find people who do to help inform your decisions.
Underwrite Investments for Risk First
Yes, Trump took bold risks in his real estate business. But they were always calculated risks, and Trump balanced the potential losses before the gains to be made.
“How much money can you stand to lose? That’s how much risk you should assume,” Trump wrote in his 2005 book, “Trump: Think Like a Billionaire: Everything You Need to Know About Success, Real Estate and Life.” “If you can’t afford to lose it, play it safe.”
Think in Decades and Generations, Not Months and Years
Termini puts it bluntly: “The first financial lesson from Donald Trump is that the best way to get rich in America is to inherit wealth. Trump inherited more than $400 million from his father and was the beneficiary of his grandmother’s trust, which made him a millionaire at age eight.” (Note that those figures come from a 2018 New York Times article, and Trump himself tells a different story.)
Regardless of exactly how much Trump received from his father and grandmother, you can look at his inheritance through two different lenses. Through a cynical lens, you can scoff and dismiss any and all successes that Trump ever achieved.
Through a more inquisitive lens, you can learn a lesson about generational wealth. The shrewdest among the wealthy plan not just their own success, but their children’s, grandchildren’s and beyond.
Start with a simple question: What time horizon do I use in my financial planning? The least financially stable and savvy live hand-to-mouth. Others move on to living on a monthly budget, then making annual financial plans, and then longer-term plans such as retirement and their children’s education.
The savviest planners raise their children with not just financial literacy but wealth literacy — and with a family estate to create generational wealth.
Final Thoughts
Brian Meiggs, founder of My Millennial Guide, aims to take a nuanced look at the man that many either lionize or demonize.
“Donald Trump’s financial strategies and bold investments often yielded significant gains, highlighting the benefits of taking calculated risks and leveraging favorable policies,” he said. “However, his high-profile bankruptcies and legal troubles underscore the importance of diversification and careful financial planning.
“From Trump’s experiences, we can learn to balance ambition with caution, ensuring that our financial decisions are well-informed and resilient against uncertainties.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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