Say "Donald Trump" in a crowded room, and you're guaranteed to get a mix of sneers and smiles. But whether you love "the Donald" or hate his guts, there's no denying he's been extremely successful in business, creating wealth, losing it, regaining it, losing it again, recreating it once more -- OK, you get the picture -- on a level that most of us can only dream of.
And when someone has been as successful as Trump has, it's foolhardy to ignore his success out of hand and not look for insights into how he achieved it. We asked three of our top investing and finance experts to weigh in, and they gave us insight on the freedom that wealth can provide, a reminder that Trump's success isn't exactly what he'd have us think it is, and a lesson in using the system to our benefit.
Here's what they had to say.
The biggest lesson that Donald Trump can teach us is to look beyond the headlines. For example, Trump tells a story of being a great businessman and real estate genius. But many don't realize that his corporations have filed for bankruptcy protection -- four times! Here are the details, according to The Law Dictionary:
- 1991: Trump's corporation filed for Chapter 11 bankruptcy protection when his Taj Mahal casino in Atlantic City was billions of dollars in debt. Trump had to give up half his ownership in it as part of the deal struck.
- 1992: Trump owed more than $500 million on his Trump Plaza Hotel in Atlantic City, so Chapter 11 was filed again, with Trump giving up about half his ownership again, along with his salary.
- 2004: Trump Hotels and Casino Resorts, owing close to $2 billion, filed for bankruptcy protection. Trump's stake in the company was reduced to 25%, and he no longer controlled it.
- 2009: This time it's Trump Entertainment Resorts that files for bankruptcy protection after missing a $53 million bond interest repayment. Trump resigned as chairman after this, and his ownership shrank again.
It's worth noting that the Trump Taj Mahal declared bankruptcy again last year, though at that point Trump was no longer running it. Trump has made a point of asserting that he has never personally declared bankruptcy -- but the fact that his business operations have had to file so many times suggests that he might not be the best corporate leader.
That's a good reminder to us all to look beyond a company's rosy narrative for the real truth. Look beyond an exciting product for actual growing revenue and profits. Look beyond the CEO's charisma for candid letters to shareholders, along with low debt and a strong balance sheet. Look for substance behind the sensation.
Donald Trump is most assuredly not your typical politician. While Trump's financial record isn't quite as stellar he might have us believe, he still has a net worth of roughly $4 billion. For someone who isn't a career politician, this financial stability gives Trump a measure of freedom to speak his mind that we rarely see from a presidential candidate.
The biggest takeaway for everyday Americans is quite simple: Once you achieve financial independence, you are beholden to no one. Nowhere is this clearer than with Trump. I can't imagine another politician daring to say some of the things Trump has stated over the past five months. Part of the reason he can get away with it is that he doesn't really need donors, and he doesn't have a political reputation on the line the same way career politicians do.
While I hope the average American wouldn't become so abrasive once reaching financial independence, the reality is that no one has control over that but the individual, and there may be no greater freedom than that.
Say what you want about Trump (I'm admittedly no fan), but he has certainly proven incredibly skilled at navigating the legal system and using the resources available to him to achieve success. Selena makes a great point about the numerous times Trump-run companies have declared bankruptcy, but I don't know that it's fair to call those failures, frankly. After all, Trump used corporate and bankruptcy law to turn struggling businesses into thriving and profitable ones.
For investors, I think there are two valuable lessons here.
For one, it serves as a strong reminder that failure is often just another step on the path toward success. Not every decision -- and not every stock we choose to invest in -- will work out, and that's fine, because it takes only a few big winners to make up for the losers.
We can also learn to take advantage of the tools available to us. For average investors, that means simple things like maximizing tax-advantaged investment vehicles, such as Roth IRAs or 401(k)s, and using investment losses to offset our gains in order to lower our tax bill. Too often people try to get rich through shortcuts or "can't miss" investing tips, rather than taking the most fundamental steps toward investing success. And believe me -- the shortcuts generally lead to long-term failure.
Love Trump or hate him, you can't deny that he has used the system to create the immense wealth that has allowed him to live life on his own terms. And we could all stand to learn a thing or two about that.
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