- Paperback: 208 pages
- Publisher: Wiley; 1 edition (November 1, 2011)
- Language: English
- ISBN-10: 0470830069
- ISBN-13: 978-0470830062
- Product Dimensions: 5.8 x 1 x 8.9 inches
- Shipping Weight: 12.8 ounces
- Average Customer Review: 4.6 out of 5 stars See all reviews (256 customer reviews)
- Amazon Best Sellers Rank: #363,819 in Books (See Top 100 in Books)
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Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School Paperback – November 1, 2011
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Q&A with Author Andrew Hallam
I think my book has a couple of differences to most personal finance books. First, it's very easy to understand—even for someone who knows nothing about finances. Second, it's real: I followed this advice myself, building a million dollar portfolio on a modest salary, at a relatively young age. My book doesn't just espouse financial theory, but it shows how I utilized that theory in real life.
And I chuckled while writing it, so readers get a chance to see my quirky sense of humor.
To be honest, many of the great endorsements I received came from my financial heroes---people who literally changed my life at a very young age, by teaching me (through their writing) the sound financial concepts that don't get taught in schools. My book espouses very similar, common sense messages about living below your means, investing effectively in low cost index funds, and thinking correctly about stock market swings (young people, for instance, should rejoice when the stock markets fall).
Why should anyone rejoice when stock markets fall?
Anyone with a job (who intends to keep working for a number of years) should prefer stagnating or falling stock markets. Foundations for great wealth are never established by purchasing stock market investments that are rising in value. Instead, we lay foundations for huge wealth when we enthusiastically buy assets that are cheap. For instance, the stock markets in the U.S. jumped up and down from 1965 to 1982 (17 years) without going anywhere. Most people, during this 17 year period, were growing distrustful of the stock market because they hadn’t made any money. But for patient investors who regularly invested during those 17 years, they were seriously rewarded when the markets erupted nearly 1,700 percent in the following 18 year period. All of those stock market assets they previously bought, at low prices, rose significantly during the next 18 year period (from 1982-2000). People who didn't start buying until the stock market started getting more expensive, voluntarily gave up significant, future riches.
The stock markets haven't made much headway in the past decade. Does that mean this is a good time to invest?
It seems counter-intuitive, but yes. And when the stock markets are volatile, or not moving much, the media is always suggesting that stocks are a bad investment—and that you should seek financial safety elsewhere. For 200 years, the same story has played out over and over again. The general population is always afraid of the stock market when it's most attractive, and they love investing when it gets more and more expensive to do so.
I'm currently preparing to teach a personal finance class to high school kids. And I'm going to show them a huge, long-term stock market chart, spanning the past 200 years. Then I'll ask them: "Show me what would have been the best 15 year historical time periods to plough money into the stock markets, on a monthly basis." Simply by asking them questions (and not giving them the answers) they'll quickly see, without me telling them, that the best times to regularly add money to the markets have always been when markets were stagnant or falling. And coincidentally, media headlines have always been scariest during those times as well! To maximize wealth, my students—and readers of my book---will need to think long term, not short term. And they'll learn to ignore the media.
Your book is a withering critique of the financial service industry. Why is that?
I definitely join the chorus of investment academics who believe that the investment business is (mostly) a giant scam, filled with empty promises and high fees, which hurt the average investor's returns. The big picture is pretty shocking. Take this example: If you had put $10,000 in the AVERAGE global stock, in 1981, and held it until today, with all reinvested dividends, it would be worth nearly $200,000 by 2011. I’m not talking about buying Microsoft or Apple shares, I’m talking about the average stock. But if you ask people who were investing 30 years ago, how many of them turned $10,000 into $200,000, you probably wouldn't find anyone who had. Most investors deal with brokers and financial advisors who skim money off the top, in fees that may appear small---but aren't. And people also become victims to the silly decisions that many brokers and advisors make.
You can find advisors without a conflict of interest (which my book shows) but you can also easily invest your own money. Warren Buffett suggests that, as an aggregate, financial advisors don't tend to add value. And I agree with him.
"...if you are looking for the first, and possibly only, book to read if you want to figure out how to finance the rest of your life, you can read Andrew Hallam’s “The Millionaire Teacher.”" -- Scott Burns
"'Millionaire Teacher' is a an inspiring must-read." -- Canadian Business
"It’s that kind of experience and wisdom that makes 'Millionaire Teacher' such an outstanding book. It’s easy to find excellent books about investing, but it’s rare to read an author who so clearly understands how people think and act in their financial lives." -- canadiancouchpotato.com
"The book itself focuses on nine rules of wealth that people should have learned in school... These rules nicely distill what has been said in many of the better personal finance books out there: particularly those that cover indexing and the futility of high-cost actively managed investment approaches." -- Financial Post
"I would recommend Hallam’s book as a great investment guide for the investor that wants to be more engaged with their portfolio." -- Jim Yih, retirehappyblog.ca
"Written simply, the book is suitable even for those who have little knowledge of finances." -- Personal Money"If you want to make sure that your money is invested wisely, then this is the book for you." -- turnonepoundintoamillion.com
"...quirky, upbeat and above all interesting...a book for anyone." -- blog.iii.co.uk
"This book is engaging and easy to read." -- retireby40.org
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Top Customer Reviews
Rule 1. Spend less than you make. The author referenced stories from a book I read many years ago, The Millionair Next Door. Most million dollar homes are NOT owned by millionaires. And most millionaires DON'T live in million dollar homes.
Rule 2. I wish my parents had taught me the power of compound interest when I was in high school. I learned it later in life, but I lost out on some of the power. One of my grandsons has $300 saved up. I'm going to teach him and his brothers that if he adds $30 to it every month and earns 10% for the next 48 years, he'll have $375,000 at age 60! How can he achieve 10% interest? See rule #3.
Rule 3. Invest in Index Funds. The author explains that spreading your money over three index funds ... home country, international & government bonds ... as Warren Buffet does, a 10% annualized return over a long period of time is very achievable. The author says "It's not timing the market; it's time in the market".
Just do exactly what this book says (like buy Vanguard funds and avoid trend stocks). I lost $10K chasing newsworthy Rx stocks and Tech companies. It's all newspaper rhetoric. I analyzed swing-trading charts like I was plotting a trip to the moon: you can't predict or plan anything!
The only thing that helped me make some serious cash with stocks is the CAN SLIM Method (O'Neil) and this book. For teachers and any other professional making less than $60K a year, this is THE way. Time will pass and you'll lock in "slowly but surely" gains. It's the marathon way of investing, not a get-rich-quick sprint.
After you execute this book's simple financial plan, just focus on how to learn they kids goodlier and give them knowledges. Nothing left to say.
That said, I will take exception with his suggestion to put what I consider lots of your money into bond funds. Since interest rates peaked in 1981 when money market funds were paying about 14%, owning bond funds has been a good thing. But with interest rates near zero, we may be looking at a 20 or 30-year bear market for bonds. The great Peter Lynch the author quotes to support his suggestion to put money into index funds also said put all your money into stocks and none into bonds. Warren Buffett is also quoted, but the fact that he recommends individual investors put all their money into stock index funds with none in bond funds is also ignored. Lynch did say to sell all stocks and go 100% into 30-year US Bonds if the yield on them hits 9%, but we are a long way from that.
Ignoring half of what these two great investors said is why I give 4 stars instead of 5. I can't tell you that you are wrong to put half of your money into bond funds, but two really great investors do.
The Expat Teacher's Property Guide
Vanguard US Bond Index (VBMFX - 35% or whatever your age is),
Vanguard Total Stock Market Index Fund(VTSMX - 35%),
Vanguard Total International Stock Index Fund (VGTSX - 30%);
remember to rebalance once a year, and you are all set. The rest of the book is pretty much trying to convince you that the above is the absolute right thing to do and never believe otherwise no matter what your financial adviser tells you, which is an easy and fun read.
But what I found missing in this book is the guidance on how to deal with employer-sponsored 401k accounts. I do have an IRA account with Vanguard, but a much bigger chunk of my retirement investments are with Putnam - my employer sponsored 401k plan. The only index fund available through this plan is Putnam S&P 500 index. They don't offer any bond index or international stock index fund, and the rest are all actively managed mutual funds with quite high expense ratio. As far as I understand, you can not take money out of the 401k to put into an IRA while still employed. So in this case, does that mean I'm stuck? I tried to find answers in the real example in Chapter 6 but couldn't. The medical doctor seemed to have all the old investments at his fingertips ready to be transferred to Vanguard. Does he have an ongoing 401k at all? What to do if the majority of his investments are in a 401k plan offered by his current employer?
I've read some of the other reviews and it looks like the author responded to some of those. Thank you Andrew, for doing so. If you see my question here, could you respond with some practical suggestions? And thank you for writing such an intuitive yet useful book. I enjoyed reading it and learned a lot.