The financial landscape can change a lot in a short period of time, which can make even the best personal finance book obsolete in just a few years. Ask David Chilton, who after 22 years brought The Wealthy Barber out of retirement and gave it a significant makeover in The Wealthy Barber Returns.
That’s why I was pleased to see that, after just five years, Millionaire Teacher author Andrew Hallam decided to release a second edition of his international best seller. The investment landscape had changed (for the better) and Hallam wanted to introduce readers to services such as robo-advisors, plus highlight new and cheaper products with which to build an investment portfolio.
There’s also some new and entertaining stories, like when Hallam offered four Gen Xers in Victoria $50 each to book an appointment with a financial advisor at a different Canadian bank and ask him or her to build them a portfolio of index funds. The results were hilariously predictable, as one advisor suggested the index funds were somehow riskier than actively managed funds, and another said an index fund isn’t as diversified as an actively managed balanced fund, as if you couldn’t buy more than one index fund in your portfolio.
“The higher fee balanced funds are worth the extra costs,” said one advisor, “because the money is managed. The index funds would just sit there, not doing much of anything.”
Andrew Hallam became a debt free millionaire in his 30’s. He wasn’t a corporate CEO, doctor or lawyer. He worked as a high school English teacher – in Singapore, no less – without the comfort of a traditional defined benefit pension plan enjoyed by teachers here in Canada.
Hallam wrote Millionaire Teacher for two reasons. One, as a high school teacher he saw first hand the type of personal finance education students received in school. And two, Hallam was motivated by his friends and colleagues who were getting bad advice from the financial industry on how to invest their money.
I highly recommend listening to Andrew Hallam chat with Dan Bortolotti in this edition of the Canadian Couch Potato podcast. You’ll learn why this Millionaire Teacher transformed from a stock-picking extraordinaire into a staunch proponent of index investing.
Millionaire Teacher: Second Edition
In Millionaire Teacher, Hallam shares his personal experiences with saving and investing in a witty and easy to read style. Throughout the book, Hallam explains the nine rules of wealth that you should have learned in school.
Rule #1: Spend like you want to grow rich – To stay out of harm’s way financially we need to build assets, not debts. But too many people hurt their financial health by failing to differentiate between their wants and their needs.
Rule #2: Use the greatest investment ally you have – Starting early is the greatest gift you can give yourself. If you start early and invest efficiently, you can build a fortune over time.
Rule #3: Small fees pack big punches – Instead of recommending actively managed mutual funds, advisors should be directing their clients toward index funds. With just three index funds you’ll beat the pants off of most financial professionals.
Rule #4: Conquer the enemy in the mirror – Whether it’s an index fund or an actively managed mutual fund, most investors perform worse than the funds they own because they like to buy high, and they hate buying low. That’s a pity.
Rule #5: Build mountains of money with a responsible portfolio – Ensuring that your account has a bond index, a domestic stock index, and an international stock index provides you with a greater statistical chance of investment success.
Rule #6: Sample a “round-the-world” ticket to indexing – A detailed look at indexing in the United States, Canada, Great Britain, Singapore and Australia. Regardless of where you live, if you build a diversified account of index funds, you’ll beat 90 percent of professional investors. In a taxable account, you’ll do even better.
Rule #7: No, you don’t have to invest on your own – This rule replaces “the 10 percent stock picking solution…if you really can’t help yourself.” A new rule with a look at intelligent options for investors who may need a bit of hand-holding. Get the low-down on target date retirement funds and robo-advisor platforms.
Rule #8: Peek inside a pilferer’s playbook – Many financial advisors have mental playbooks designed to deter would-be index investors and they initiate their strategies with remarkable success. If you’re prepared for what they might say, you’ll have a better chance of standing your ground.
Rule #9: Avoid seduction – It’s important to control the seductive temptation of seemingly easy money. There’s a world of hurt out there and rascals keen to separate you from your hard-earned savings.
Final Thoughts on Millionaire Teacher
Andrew Hallam knocked it out of the park with Millionaire Teacher, and the updated second edition means this must-read book for investing beginners won’t go stale.
Hallam does an outstanding job breaking down complex topics into simple terms, often using personal stories and anecdotes to really drive the point home. He blasts the financial industry over their excessive mutual fund fees and deceptive marketing tactics, and he encourages investors to take control of their own finances.
There’s an overwhelming number of mutual funds and ETFs to choose from, and countless “perfect portfolios” that experts have designed for the do-it-yourself investor. Hallam’s simple solution is to buy a domestic index, an international index, and a bond index – and rebalance annually to your age-related allocation breakdown.
Million Teacher is an outstanding personal finance book and deserves to be on your bookshelf next to gems like The Wealthy Barber Returns and Wealthing Like Rabbits. It should be required reading for high school and university students.
Time for a Giveaway!
The author of Millionaire Teacher was kind enough to send us a copy of the newly updated second edition to give away to one lucky blog reader. Let us know in the comments what you wish you learned about money in school and we’ll enter your name into the contest for a chance to win a copy of Millionaire Teacher: Second Edition.
The contest closes on Saturday March 4th at 5pm EST and we’ll announce the winner in the next edition of weekend reading.