President Donald Trump used real estate to build wealth. His exuberant personality helped him become a TV star and reach the Oval Office, but real estate made all of that possible. He’s negotiated some big deals throughout his business career and has even worked on various deals for the U.S.
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However, you don’t have to be a real estate mogul or political figure to leverage Trump’s dealmaking skills. Applying Trump’s “Art of the Deal” mentality can boost your savings if you do it correctly.
These are some of the strategies Trump used that can also work for you.
One of Trump’s greatest strengths in dealmaking is that he never made a deal just for the sake of making a deal. He waited several years in some cases before a property reached his desired price point.
It’s tempting to throw all of your money into investments, but there is value in monitoring opportunities and waiting for a compelling moment to invest. Warren Buffett is also a patient investor, with Berkshire Hathaway currently hoarding cash.
However, when a promising deal shows up, Trump doesn’t let it slip by. He aggressively invests in the deal with all of the capital he has saved up. Tremendous opportunities don’t show up every day. Waiting patiently ensures you are ready to pounce on those opportunities when they arrive.
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Trump famously uses leverage in his deals. It goes with the territory if you want to buy real estate, but he’s not the only one to use leverage. Although Warren Buffett famously touts index funds for the ordinary investor, he has used leverage to grow his portfolio for many years. Buffett leverages Berkshire Hathaway’s insurance subsidiaries’ float, which is the premiums they receive before having to pay claims.
Stock investors have two ways they can use leverage. The first option is to open a margin trading account, which involves borrowing money against your portfolio at a low rate. While this strategy can amplify your gains, it can also result in sharp losses during market corrections.
Margin accounts don’t make sense for everyone, but if you want leverage with less risk, buying deep in-the-money call options of your favorite stocks and funds may be a good choice.
If a stock trades at $100 per share, and you have $4,000, you can buy 40 shares. However, you can also put that $4,000 into a deep in-the-money call that lets you buy 100 shares at $65 apiece in one year. You get exposure to 100 shares, and you need $6,500 in your brokerage account before the option’s expiration date to buy 100 shares.
