How much can a high school English teacher know about finance? Enough to become a millionaire in his 30s.
In this gem of a book, Canadian, Andrew Hallam, shows how he developed his million-dollar investment portfolio on a humble teacher’s salary. Through inspirational and humorous examples, he encourages people not to borrow money to buy depreciating assets, and he shows how you can easily grow wealth, by turning savings into productive investments. Seasoned investors also stand to gain from his refreshing, no-holds barred style that explodes conventional wisdom, such as revealing why it’s often better to manage your own funds, rather than hire a professional financial advisor, whose self-serving decisions could be hemorrhaging your financial future.
Hallam‘s nine rules are comprehensive, covering the foundations of financial health from the ground up. ‘Rule 1: Spend Like You Want to Grow Rich’ tackles spending and saving basics. He advocates wise advice for those in today’s world of hyper consumerism: “You can’t follow Mr. Jones’ 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.” Hallam reveals the hidden danger of making home purchases on a low interest rate and advises taking the plunge only if you can still afford to make the payments if the interest rate doubled.
Guess what make of car most millionaires drive in the US? If you‘re thinking that the answer has to be a high status car, like a BMW or a Mercedes Benz, then you’d be wrong. It‘s the Toyota. Hallam red flags new car purchases as a prime anti-investment (especially for those who aren’t yet wealthy) and reveals the car-buying wisdom that millionaires have long caught onto: When buying a car, think of the resale value. The bulk of depreciation on a new vehicle occurs in the first year. If you’re not rich—but you want to be—never buy a new car; let somebody else cover the bulk of the depreciation.
‘Rule 2: Use the Greatest Investment Ally You Have’ is about how to make compound interest work for you and why starting as early as possible is key.
Hallam also explains what stocks are and how the stock market works in a way a fifth grader could understand, using the imaginative analogy of how Willy Wonka of Charlie and the Chocolate Factory grew his little chocolate shop into a company with shareholders. With lively images and metaphors, he also explains how investors make money from shares using Mr. Burns from The Simpsons as a hypothetical investor.
The veteran might be very interested in ‘Rule 3: Small Percentages Pack Big Punches’, where Hallam denounces actively managed mutual funds (or unit trusts, as they are known outside of North America) and advocates investing in index funds instead. He also illustrates how, with just three index funds, your money can be spread into almost every available global money basket. And he isn’t just making this up as he goes along. Hallam‘s views are also backed by Warren Buffett, the world‘s most successful investor; numerous Nobel Prize-winning economists agree. Mountains of academic evidence suggest that if you build portfolios of indexes, you’ll beat 90 percent of professional investors, over your lifetime.
Rule 4, titled ‘Conquer the Enemy in the Mirror’ elaborates, with gifted clarity, how most investors allow their emotions to sabotage their investment returns – while providing strategies on how investors can avoid being influenced by their self-damaging alter egos.
Chapter 5 covers how bond indexes should be blended with stock indexes (‘Rule 5: Build Mountains of Money with a Responsible Portfolio’) to increase the safety of investment portfolios, while providing opportunities to juice investment returns by using Warren Buffett‘s advice, of being “greedy when others are fearful and fearful when others are greedy.”
Readers from outside the U.S. are also treated to suitable strategies with ‘Rule 6: Sample a “Round-the-World” Ticket to Indexing’ with case studies of indexing in the U.S., Canada, Singapore and Australia that can be applied to other countries as well.
Millionaire Teacher has the sound solutions for anyone who has ever felt that they spend too much, save too little or can’t wrap their heads around all that dull financial jargon. It also delivers myth-busting goodies for the old hands at the investing game, delivered with wit and humor.
