Millionaire Teacher E-Book

Andrew Hallam

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 297

Veröffentlichungsjahr: 2011

Beschreibung

The incredible story of how a schoolteacher built a million-dollar portfolio, and how you can too Most people wouldn't expect a schoolteacher to amass a million-dollar investment account. But Andrew Hallam did so, long before the typical retirement age. And now, with Millionaire Teacher, he wants to show you how to follow in his footsteps. With lively humor and the simple clarity you'd expect from a gifted educator, Hallam demonstrates how average people can build wealth in the stock market by shunning the investment products peddled by most financial advisors and avoiding the get-rich-quicker products concocted by an ever widening, self-serving industry. Using low cost index funds, coupled with a philosophy in line with the one that made Warren Buffett a multi-billionaire, Hallam guides readers to understand how the stock and bond markets really work, arming you with a psychological advantage for when markets fall. * Shows why young investors should hope for stock market crashes if they want to get rich * Explains how you can spend just 60 minutes a year on your investments, never open a financial paper, avoid investment news, and still leave most professional investors in the dust * Promotes a unique new investment methodology that combines low cost index funds and a Warren Buffett-esque investment philosophy Millionaire Teacher explains how any middle-income individual can learn can learn the ABCs of personal finance and become a multi-millionaire, from a schoolteacher who has been there and done that.

Leseprobe

Contents

Acknowledgments

Foreword

Introduction

RULE 1: Spend Like You Want to Grow Rich

The Hippocratic Rule of Wealth

Can You See the Road When You’re Driving?

One of the Savviest Guys I Ever Met—And His View on Buying Cars

Careful Home Purchases

Millionaire Handouts

How Did I Become a Millionaire?

Looking to the Future

RULE 2: Use the Greatest Investment Ally You Have

Compound Interest—The World’s Most Powerful Financial Concept

The Bohemian Millionaire—The Best of Historical-Based Fiction

Gifting Money to Yourself

When You Definitely Shouldn’t Invest

How and Why Stocks Rise in Value

RULE 3: Small Percentages Pack Big Punches

With Training, the Average Fifth Grader Can Take on Wall Street

Financial Experts Backing the Irrefutable

What Causes Experts to Shake Their Heads

When the Best Funds Turn Malignant

Reality Check

Who’s Arguing against Indexes?

RULE 4: Conquer the Enemy in the Mirror

When a 10 Percent Gain Isn’t a 10 Percent Gain

It’s Not Timing the Market that Matters; It’s Time in the Market

On Stocks . . . What You Really Should Have Learned in School

Internet Madness and the Damage It Caused

Taking Advantage of Fear and Greed

Opportunities after Chaos

RULE 5: Build Mountains of Money with a Responsible Portfolio

What Are Bonds?

Profiting from Panic—Stock Market Crash 2008–2009

Having a Foreign Affair

Introducing the Couch Potato Portfolio

Combinations of Stocks and Bonds Can Have Powerful Returns

RULE 6: Sample a “Round-the-World” Ticket to Indexing

Indexing in the United States—An American Father of Triplets

Indexing In Canada—A Landscaper Wins by Pruning Costs

Indexing in Singapore—A Couple Builds a Tiger’s Portfolio in the Lion City

Indexing in Australia—Winning with an American Weapon

The Next Step

RULE 7: Peek Inside A Pilferer’s Playbook

How Will Most Financial Advisers Fight You?

The Totem Pole View

Is Government Action Required?

RULE 8: Avoid Seduction

Confession Time

The dumbest investment I ever made

Investment Newsletters and Their Track Records

High-Yielding Bonds Called “Junk”

Fast-Growing Markets Can Make Bad Investments

Gold Isn’t an Investment

What You Need to Know about Investment Magazines

Hedge Funds—The Rich Stealing from the Rich

RULE 9: The 10% Stock-Picking Solution...If You Really Can’t Help Yourself

Using Warren Buffett

Commit to the Stocks You Buy

Stocks With Staying Power

Selling Stocks

The Nine Rules of Wealth Checklist

Index

Advance Praise for Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School

Andrew Hallam’s book is just the right one for novice investors. He not only provides the winning strategy in terms of your personal financial life, but in investing as well. The book contains Hallam’s Nine Rules to become a millionaire, and he has them all right. If you know people who are financial train wrecks waiting to happen, recommend this book to them. It may be the best investment they make.

Larry Swedroe

Author, The Quest for Alpha, Principal and Director of Research, The Buckingham Family of Financial Services

MillionaireTeacher is an enormously thoughtful gem of an investment book that every serious investor should read, study, and learn from. This wise and witty book gives the reader a fresh perspective on the simple concepts needed to sustain financial freedom. Most of all, it is delivered with a genuine simplicity that will capture the reader’s attention from the first page and hold it to the end.

Bill Schultheis

Author, The New CoffeeHouse Investor, Principal of Soundmark Wealth Management, LLC

Every once in a great while I read a financial book that I think should be shared with everyone I know. Millionaire Teacher is that book!

Charles E. Kirk,The Kirk Report

Unlike most investment book authors, Andrew Hallam has become a millionaire by living frugally and investing HIS OWN MONEY successfully. His book is a great guide for the average person seeking financial independence.

Michael B. O’Higgins

O’Higgins Asset Management, Inc.,

Author, Beating the Dow, Beating the Dow with Bonds

Andrew Hallam is proof that you don’t need a high salary, complex stock trading system or even a financial adviser to achieve financial independence. You can get rich by living within your means and using simple wealth-building tools such as low-cost index funds. Millionaire Teacher is a sensible and highly readable guide to investing that packs a lot of wisdom into its nine simple rules. There are important lessons here for everyone, from newbie investors to experienced stock pickers.

John Heinzl, Business/Finance columnist, The Globe and Mail

Andrew’s book is my “go to” book from here on out when asked for a recommendation for that graduating high school or college student. It is a joy to read and will undoubtedly raise the financial literacy of young people as well as adults.

Robert Wasilewski, President RW Investment Strategies

Author, Do-It Yourself (DIY) Investor blog

Copyright © 2011 John Wiley & Sons (Asia) Pte. Ltd.

Published in 2011 by John Wiley & Sons (Asia) Pte. Ltd.

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Library of Congress Cataloging-in-Publication Data

ISBN: 978-0-470-83006-2 (Paperback)

ISBN: 978-0-470-83008-6 (ePDF)

ISBN: 978-0-470-83007-9 (eMobi)

ISBN: 978-0-470-83009-3 (ePub)

To my mom and dad (Roger and Hilary Hallam) for your love, guidance, and model of what a fabulous marriage is meant to be.

And to Pele Hallam-Young, for being such an amazing wife.

Acknowledgments

I’d like to thank Ian McGugan, for encouraging me to write this book, and for showing me what great financial writing is supposed to look like. To the teachers at Singapore American School, who prompted me to write an understandable guide for the layperson. Many of you have turned an important corner by saying no to the excessive fees charged by certain financial service operators, and I’m excessively proud of you for that.

Hats off to Kris Olson, Keith Wakelin, Deb Wakelin, Neerav Bhatt, Gordon Cyr, and Seng Su Lin for allowing me to pry into their financially empowered personal lives for the betterment of others.

And for helping a technological Luddite, cheers to Excel master, Dan Skimin; the Jedi of patience, Lavinia Vasundran; technological coach, Dianna Pratt; and graphics guru, Paul Welsh.

Thank you to Facebook master Alex Wong; webmaster of infinite degrees, David Dixon; artist supreme, Fang Yang; my secret agent, John Kimzey; and the supplier of nutritional power, Jane Antique.

Nick Wallwork, of John Wiley & Sons, deserves my sincere gratitude for believing in this project, as do production master, Janis Soo; editor extraordinaire, Jennifer Wells, and the marketing tag team of Cynthia Mak and Cindy Chu.

Finally, thanks to my wife, Pele Hallam-Young, for her unwavering encouragement. Every day with her is Christmas.

Foreword

Every magazine editor cringes when a plain brown envelope with an unsolicited manuscript arrives in the mail. Chances are, it contains a letter that begins: “Dear fellow truth seeker. The international conspiracy to control our minds with fluoride is revealed in the 15,000-word article enclosed. Call me immediately to discuss when you will be publishing it.”

Despite the cranks, an editor lives in the hope that one of those plain brown envelopes may lead to something great. I can tell you that once a decade or so, that hope actually materializes. My proof? Andrew Hallam.

I had never met Andrew when an envelope landed on my desk at MoneySense magazine www.moneysense.ca/. It contained a typewritten article about Warren Buffett. I remember reading the piece in my office and staring out over Front Street in Toronto as I debated what to do. The writer’s enthusiasm jumped off the page; he also seemed unusually knowledgeable. On the other hand, who was the writer, this Andrew Hallam guy? And why did he spell Buffett’s name with just one t?

I decided to phone Andrew and I will always be glad that I did. He explained to me that he was a teacher on Vancouver Island. Investing was his passion. And, sure, he would be happy to rework his piece a bit and even give Mr. Buffett his full consignment of t’s.

The article turned out well, and over the next few years, Andrew became a regular contributor to our pages. He filed fascinating stories on the stock market, the art of haggling, and, eventually, on his decision to move to Singapore and take up a teaching job there at a school for international students.

Somewhere along the way, it became clear to me that Andrew was living, breathing proof that all the theory about personal finance could actually work in practice. He was a middle-income earner, and someone with no ties to Wall Street. But it was clear from his stories that he was amassing wealth at impressive speed.

Exactly how he was accomplishing so much was still unclear to me. Andrew and I always communicated by phone or e-mail, so I could only guess what he was like in person. That all changed when he arranged an opportunity for me to come to Singapore and teach a weeklong session on writing to his students at the Singapore American School.

Meeting Andrew face-to-face for the first time, I was struck by three things. First (and I realize how superficial this sounds) I couldn’t help but notice that Andrew was seriously buff.

Unlike those of us who come from the keg-shaped end of the physical spectrum, Andrew is one of those annoying, long-muscled ectomorphs who look as if they were designed to lope endlessly across wide savannas. He had told me he was a distance runner; I hadn’t realized he was good enough to win races against thousands of competitors. Every day in the week to come, I would see Andrew pull on a pair of running shoes and speed off to run distances that would have had me hailing a taxi and packing a lunch. He monitored his training with stopwatch precision.

The second characteristic I noticed about Andrew was his good cheer. That week, and in years to come, I would see Andrew face stress. I have never, though, seen him downcast or angry or petty.

The final thing about Andrew that caught my attention is his joy in teaching. Watching him bring a class of 15-year-olds to attention, then prompt, prod, and delight them through a lesson, made me realize that high school teachers are not given nearly enough credit for the miracles they accomplish every day.

So what does all this have to do with money? In this book, Andrew will tell you about his own experiences on the road to prosperity. But if I could underline one small portion of what he so ably communicates, it’s the importance of seeing money as part of a much broader experience.

Andrew has managed to accumulate wealth while also being a competitive athlete and an involved teacher, not to mention a happy, contented individual. His book demonstrates that you don’t have to be a tax accountant or a scrooge to wind up rich.

He approaches the topic of wealth building with an outlook that owes a great deal to his background in distance running. His recommended regimen begins with realism. Champions can’t lie their way to victory. They have to accept that training for a race involves a sustained effort over time.

The same goes with personal finance. Unlike many authors, Andrew isn’t here to sell you a get-rich-quick scheme. What he will do, though, is show you how a simple program followed over the years can help you build wealth faster than nearly all your neighbors. In fact, he explains how you can do better than 80 percent of investors simply by avoiding the high-priced products that financial advisers try to stuff into your portfolio.

Some writers attempt to scare you with predictions of financial apocalypse. Others try to thrill you with promises of the huge profits to be made in some hot sector. Andrew avoids both schools of silliness. Instead, with his usual good cheer, he shows you how a habit of optimism about the broad economy pays off in the long run—even in the middle of financial crisis. Especially if you’re a young investor, you will be fascinated to learn that you should be praying for the market to fall, not rise.

Andrew delivers his message in a way that anyone can appreciate. His writing is funny, personal, upbeat—and a withering critique of the many ways that the financial industry sabotages our attempts to build wealth. As you might expect from a gifted teacher, he manages to be both rigorous and accessible.

Andrew’s book is a joyous but realistic guide to how middle-income earners can amass the wealth they deserve. I’m glad I opened that brown envelope many years ago; you’ll be equally glad that you opened the pages of this book.

Ian McGugan

Introduction

If you were considering a profession and you wanted to become wealthy, certain lines of traditionally high-paying work might tempt you. Would it be law, medicine, business, or dentistry? Few, if any, would choose my profession if they aspired to be rich. I’m a high school English teacher—a middle-class professional if there ever was one. Yet I became a debt-free millionaire in my 30s.

I didn’t take exceptional risks with my money and I didn’t inherit a penny from anyone. When I went to college, I paid the entire bill myself. How did I pay for my own schooling and amass more than a million debt-free dollars before my fortieth birthday? Fortunately, I learned from (and was inspired by) some financially savvy characters, who urged me to master what I should have learned in high school. Because financial literacy isn’t adequately taught in most high schools, you might be among the millions who were shortchanged by our education system. This book is my attempt to make it up to you.

As a high school student, did you ever sit in an algebra class, an English class, a history or biology class and wonder: “What kind of real-world benefit is this going to have on my life? Are Hamlet’s soliloquies, the formulas in trigonometry, or the intimate knowledge of a dead piglet’s inner workings really going to benefit me outside the walls of the classroom?” There is no easy answer to these questions.

But the subject of money is undeniably essential. Unlike a pig dissection or a challenging algebraic formula, everyone benefits by mastering it. Most families don’t want to talk about money around the house though. It gets as much conversational airtime as the extended family oddball that nobody admits being related to anymore. You know—the promising uncle and his mail-order bride who both work as directors in the exotic film industry.

Want proof that money is a taboo subject? Did your parents share how long it took them to pay off their house, and what factors affected this? Did they explain how credit cards worked, and where and how they invested their money? Did they provide insight into how they chose your family’s cars over the years? Did they reveal how they paid for those cars, or what kinds of taxes they owed on their homes and incomes? In most cases, they probably didn’t.

Without a sound financial education, students can graduate from top universities with starry academic titles, but with little more financial knowledge than an eighth grader. Once they enter the workforce, they might as well be walking outside naked during a winter’s blizzard.

But don’t blame your parents, high school teachers, or college professors for your frostbitten butt. Most of them stumbled into their own snowstorm, years ago, grabbing the odd garment as they raced out the door of their homes.

Poor planning and inadequate financial educations cause too many people to fall into poor consumption habits and weak investments, especially when trying to keep up with the profligate spending habits of their neighbors, the Jones, who seem to have it all.

You can’t follow Mr. Jones’s habits if you want to grow rich. You can’t spend like him. You can’t borrow like him. And you certainly can’t invest like him.

Mr. Jones, after all, invests money with the average financial adviser who promises wealth, or at the very least, an eventual, sound retirement. But too many advisers are like the character of the wealthy Pardoner in Geoffrey Chaucer’s Canterbury Tales, with one important difference: When the Pardoner extorted money from Christian pilgrims—with the promise of a heavenly reward—the payoff was in plain view (unlike today’s hidden advisory fees). The majority of financial planners don’t have interests that are aligned with yours, no matter how friendly they appear. Because you didn’t learn this in school, you’ll likely find yourself with the wrong investment products and paying hidden fees toward someone else’s Mercedes-Benz. This book will help you avoid that pitfall.

But why should you bother with my book when hundreds of others distill similar themes? To explain that, I need to tell you why I wrote Millionaire Teacher.

Many of my teaching colleagues became aware that—besides teaching English—I had also published numerous articles on personal finance, two of which were nominated as finalists for National Publishing Awards for financial writing in Canada.

For that reason, they asked me to teach them about money. I wanted, however, to deliver more than a handful of seminars. I wanted to find the simplest books I could on the concept of sound investing, buy boxes full of them, and gift them to my colleagues.

So I did just that, buying 80 books that represented 12 different titles. Then, as if I were teaching a group of English students, I met the readers in small groups to discuss what they had learned.

But there was a problem. Many of the terms used by the financial authors were as decipherable as Egyptian hieroglyphics to my colleagues. Too many financial writers don’t seem to realize much of what they write flies over the head of the average person.

I needed a different vehicle to extend my teaching, so I created this book with help from more than 100 of my friends and colleagues. Continuing to hold free financial seminars, I probably did more questioning than lecturing to find out what the average university-educated person understood about money so I could teach to the broadest possible audience.

When writing Millionaire Teacher, I shared my work with dozens of non-financially minded people who were keen to learn about investing. They provided feedback about what they understood and what they didn’t, so I could make necessary changes to either explain financial jargon or avoid using it.

The result is this book: written by a millionaire teacher who listened closely to his students. In it, I share the nine rules of wealth you should have learned in school...but didn’t. You will learn how to spend like a millionaire and invest with the very best, while avoiding the trappings of fear, greed, and the manipulations of those wanting their hands on your wallet. I followed these timeless, easy-to-apply rules and became a debt-free millionaire in my 30s. Now let me pass them on to you.

RULE 1

Spend Like You Want to Grow Rich

I wasn’t rich as a 30-year-old. Yet if I wanted to, I could have leased a Porsche, borrowed loads of money for an expensive, flashy home, and taken five-star holidays around the world. I would have looked rich, but instead, I would have been living on an umbilical cord of bank loans and credit cards. Things aren’t always what they appear to be.