Millionaire Teacher by Andrew Hallam

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Millionaire Teacher by Andrew Hallam

Post by candy_chia »

Dennis Ng wrote:yes, now you hear it from another person, Andrew Hallam, author of book "Millionaire Teacher: The Nine Rules Of Wealth That You Should Have Learnt In School"

- that it is Possible for a person Earning a Middle Class Income to Become a MILLIONAIRE by 40s or younger.

Well, I can speak with 100% confidence that I know this can be done. Why? Becos I've done it. My household income was average S$6,000 from 1993 to year 2008, or in 15 years, total income my household earned was about S$1.08 million. Yet, I managed to reach One Million Dollars (yes, excluding the Value of my House) by year did I do it?

I only save 20% of my income but the difference between me and most people is that I know how to Invest and Grow my money, that's how I reached one million dollars by age 39. Now I'm 42, and reached 3 million dollars. I'm sharing this with you NOT to try to boast to you, but share with the Intention and Hope that this can Inspire and Encourage many people to start to learn how to plan and manage your money properly, and most importantly, learn how to Invest to grow your savings.

The good news is if you're willing to learn, I'm teaching. You can read my books and the best way and most comprehensive way to learn from me is to attend the 3 seminars I conduct:"How to Save and Accumulate One Million Dollars" , "Secrets to Making Money in Stocks" and "Secrets to Making Money in Property". - these 3 seminars is the MOST holistic and Complete Financial Education that you can receive in Singapore.

P.S. I agree with most of what he said in the interview Except the part about Avoiding Debt.

Guess He Didn't learn about the difference between Good Debt and Bad Debt, and he also does NOT know how to use Good Debt (safely and mitigate risks of debt) to become Richer, which I teach in my seminars. [/size]

I also don't agree with the "standard recipe" he share 60% stocks, 40% bonds investment portfolio.

In fact, I have ZERO invested into Bonds, I Invest into UK Endowment instead, which has Capital Guarantee, (as safe or even safer than some government bonds) and annual returns 4% to 8%, higher than most safe bonds currently.

Several of my multi-millionaire sifus also do NOT invest in bonds unless when interest rates are high and start to fall which means bond prices can go up and make capital gains, not just the miserable interest (yield). So he's still teaching pretty much of what is normally taught in most Existing Personal Finance books.


Dennis Ng

The Straits Times
Mar 25, 2012
me & my money
Teacher preaches rules of wealth
Canadian educator caught investment bug early in life and wants to share secrets

By Joyce Teo

When Canadian high school teacher Andrew Hallam was in college, he worked at a bus depot during the summer, and met a 47-year-old mechanic who was a millionaire.

The latter suggested to the young man that he should choose a job that he loved doing, rather than choose a job simply because it paid well. And that he could earn a middle-class income and still become a millionaire by his 40s or earlier if he learnt about investing his money.

That meeting piqued Mr Hallam's interest in investing, which has become his lifelong passion.

He even considered getting into money management in his early 20s. 'But it occurred to me that I would benefit at the expense of my clients. Did I want to do the best for my client or myself?' he asked himself. In the end, Mr Hallam, now 41, chose teaching.

He came to Singapore eight years ago to take up an English teaching position at the Singapore American School but has switched to teaching personal finance this year.

He recently published a book Millionaire Teacher: The Nine Rules Of Wealth That You Should Have Learnt In School.

Having read about 400 finance books since he was 19, Mr Hallam says: 'There are all these academically irrefutable premises but the financial service industry doesn't want you to know them. I want to help people out there.' He is married to Pele, also a teacher at the Singapore American school. They have no children.

Q: Are you a spender or saver?

I'm a saver. People on middle-class salaries can amass wealth, but I don't believe they can do it if they are big spenders, especially while they're young.

My wife and I save roughly 70 per cent of our annual income. We INVEST ALL that WE SAVE, and we Spend The Rest.

I'm not as thrifty as I used to be. I spend most on food (mostly organic fruit and vegetables), travelling and massages. We both enjoy a massage at least once a week.

In order to grow wealthy, I think there's a rule of thumb that applies nicely: Never borrow money to buy a depreciating asset. A car is a depreciating asset. But over time, a house is an appreciating asset. Many people try to look wealthy before they truly have money.

Plenty of people borrow money to buy fancy cars and live an extravagant lifestyle, but most of those people are living well on borrowed time.

Q: How much do you charge to your credit cards every month?

I don't know what percentage of our spending we charge to our credit cards. But I do know that I've never paid a penny in interest to a credit card company. Credit card companies hate guys like me!

Q: What financial planning have you done for yourself?

I determined my financial planning by asking myself how much money I would need if I wanted to retire in a given year.

I figured out what kind of portfolio I would need to allow for that kind of income, and I made an estimated adjustment to cover the rising costs of living. It's all about cash flow.

Studies have shown that if you have a diversified investment portfolio of, say, $100,000, its real worth is $4,000 a year. In other words, you can sell 4 per cent of your portfolio each year and have a strong likelihood that you'll never run out of money.

This 4 per cent rule is a fairly standard one. I knew that if I could live off 4 per cent of my portfolio, I would be financially free. That doesn't mean that I would quit work and lie around all day. But it did mean that I could choose to work or not work, in any given year. This can certainly reduce the blood pressure.

I diversify my money across international stocks and Canadian bonds and I rebalance my assets. I have 60 per cent in stocks and 40 per cent in bonds as I want my bond allocation to equal my age.

Most college endowment funds and pension funds do the same with the rebalancing of asset classes but it's not easy for most people to do - psychologically.

I own just three low-cost index funds - a total US stock market index, a global stock market index and a Canadian bond market index.

:shock: I have medical insurance, but no other insurance. I think the best insurance of all is to have no debts, and enough money saved to live off it.

Q: What advice would you give to investors?

Two things significantly reduce many people's portfolio returns:

• They often chase 'what has done well lately'. This is one of the worst pursuits an investor can take part in.

Studies show that if a particular unit trust has, for example, returned an average of 10 per cent a year for the past 20 years, the average investor in that fund, for that duration, would have made only 7 per cent a year.

Investors would have added more money when the fund was 'doing well' and they would have added less money or even sold some of their investment when it underperformed. In essence, they would pay a much higher than average price for the units of the fund.

Such behaviour, over the long term, can be the difference between amassing a $500,000 account and a $1 million account. But this behaviour is very common.

• Most people also pay investment fees that are too high. I pay roughly 0.09 per cent each year for my exchange traded funds. But most people in Singapore pay roughly 15 times that amount if they invest in actively managed unit trusts.

Most people still get drawn to a fund because of its strong historical returns, ignoring the academic evidence suggesting that portfolios of Low-Cost Funds, over a Lifetime, have Much higher Statistical Odds of Outperforming Funds with Higher Expenses.

Q: Moneywise, what were your growing-up years like?

I grew up in Kamloops, British Columbia, Canada. My dad was a mechanic and I was one of four kids. If we wanted something material, after the age of 12, we had to earn the money to pay for it ourselves. My parents bought me underwear and socks until I turned 15. I was really on my own, although I was still under their roof. My parents didn't have a lot of money, but it has worked out well for me.

The Chinese suggest that wealth doesn't last three generations. The generation that works hard and succeeds wants to make life easier for their kids. So they buy things for them and essentially weaken them.

Children of the affluent grow up with expensive expectations. .

~~ They're typically the same people who borrow money to buy depreciating assets.
~~~ And this results in the Beginning of the End

I know that if my parents did the metaphorical heavy lifting for me when I was young (by giving me money or buying me things), I would not have developed the financial muscles I have today.

Q: How did you get interested in investing?

I started to invest when I was 19 years old, after meeting the millionaire mechanic, so I've given myself plenty of time to apply Einstein's Eighth Wonder of the World: compound interest.

Twenty years ago, I started investing a minimum of $100 a month and I increased that every year.

I also read finance books, of which two of the best are The Four Pillars Of Investing by William Bernstein and Common Sense On Mutual Funds by John C. Bogle.

Q: What property do you own?

I don't own any property. I like the thought of buying property when it 'isn't performing well'. For this reason, I wouldn't buy property in Singapore today. I bought an acre of oceanfront land on Vancouver Island in Canada, during a mini recession in 2002. Property prices hadn't moved much in a decade, so I bought it.

Then when people started piling into property, prices soared and I sold it for three times what I paid, in 2007. It cost just $147,000. I sold it for $484,000.

Q: What's the most extravagant thing you have bought?

I bought a 1974 Mercedes-Benz for $3,000 in Canada and then spent another $7,000 restoring it. The car was cheap by Singaporean car standards, but it was my most extravagant purchase to date.

Q: What's your retirement plan?

I believe that I'm financially independent now. My portfolio is worth roughly $85,000 a year (based on the 4 per cent rule).

But I have no plans to retire. I love teaching at the American School. You know that you've found the perfect vocation when your job doesn't feel like work. My job is so much fun.

Q: Home is now...

A rented four-bedroom apartment at Dairy Farm Estate.

Q: I drive...

My wife's 2003 Mazda 3.



Q: What is your worst investment to date?

I bought into a Ponzi scheme in 2003. Of course, I didn't know that it was a Ponzi.

My friend told me about Insta-Cash Loans, which paid 54 per cent interest a year. The high interest rate scared me - think of how crazy the investment must be, but what's crazier was I eventually changed my mind.

My friend was collecting his interest every year and travelling all over the world, so after five years, I went to meet the company's head.

I still thought it was a scam but after hearing my friend had collected interest payments of more than $100,000, I invested $7,000. I received interest payments for a while but the party ended in 2006, when the firm went bankrupt.

In the end, I lost money as I had to pay 25 per cent tax on my gains.

Q: And your best?

My best investment to date is my investment in the ideology behind dispassionate rebalancing.

In 2001, 2003, 2009 and twice last year, I rebalanced my portfolio and netted hundreds of thousands of dollars in profit over the past decade as a result.

When the stock markets crashed after 9/11 and when George Bush went to war with Iraq in 2003 (and the markets crashed), the stock portion of my 30 per cent bonds and 70 per cent stocks portfolio all of a sudden dropped to 50 per cent because the market dropped.

So I sold some of my bonds and bought more stock index. ... lam#p20294
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Re: Millionaire Teacher by Andrew Hallam

Post by candy_chia »

Book review by Alvin:

Millionaire Teacher by Andrew Hallam
by ALVIN on MAY 12, 2012

This book talked about 9 Rules of Wealth.

Rule 1: Spend Like You Want to Grow Rich

Andrew defined wealth as having the financial ability to stop working; and having passive income that is twice the national median household income.

He believes that not having a car would give you a financial headstart in life. In fact, he researched that the median price paid for a car by U.S. millionaires in 2009 was US$31,367.

When buying a home, he suggests a rule of thumb is to double the interest rate to figure out if you could still afford the mortgage payments.

Do not spoil your kids! He quoted Thomas Stanley’s book, The Millionaire Next Door, that people who received stocks, cash, real estate or other forms of financial gifts tend to be in a lower level of wealth than those in the same income bracket who did not receive any help at all.

Rule 2: Use the Greatest Investment Ally You Have

Make COMPOUNDING Effect Work for you so Start to Invest as early as possible. “The odds are high that you’ll slowly grow very wealthy.”

“[T]he U.S. stock market has averaged 9.96 percent annually from 1920 to 2010.” With $10,000 growing at 9.96 percent annually, you will have $1.1 million in 50 years.

Rule 3: Small Percentages Pack Big Punches

He is a firm believer of index funds and he reckoned that by spreading your investment in three index funds, you can beat majority of the investment professionals.

Fund 1: Tracks your domestic stock index
Fund 2: Tracks an international stock index
Fund 3: Tracks a government bond index

There were many instances where actively managed funds cannot beat the stock index overtime.

“It was the top-ranked fund [44 Wall Street Fund] of the 1970s – outperforming every diversified fund in the industry and beating the S&P 500 index for 11 years in a row. Its success was temporary, however, and it went from being the best-performing fund in one decade to being the worst-performing fund in the next, losing 73 percent of its value in the 1980s.”

“Then there was the Lindner Large-Cap Fund, another stellar performer that attracted a huge following of investors as it beat the S&P 500 index for each of the 11 years from 1974 to 1984. But your won’t find it today. Over the next 18 years (from 1984 to 2002) it made its investors just 4.1% annually, compared with the 12.6% annual gain for investors in the S&P 500 index.”

There are five reasons why actively managed funds perform worse than the index

Expense Ratio Need to pay for the staff, office lease, etc. “A fund holding a collective $30 billion would cost its investors (the average Joe) about $450 million every year”.
12B1 Fees – Marketing expenses in a nutshell. “They can cost up to 0.25 percent, or a further $75 million a year for a $30 billion fund.”
Trading Costs – “… the average actively managed stock market mutual fund accrues trading costs of 0.2 percent annually, or $60 million a year on a $30 billion fund.”
Sales Commissions – Some funds charge fees when you buy or sell the fund. This goes to the pockets of the “investment advisors” or salesman in layman terms.
Taxes – Mutual funds in U.S. pay taxes for capital gains. Hence, the more they trade and make gains through buying and selling, the more taxes they incur.
Why investing in mutual funds or unit trusts may not be a good idea?

Rule 4: Conquer the Enemy in the Mirror

Although the path to investment success seems easy, it is very hard to put into practice. Humans have a tendency to buy when the stock market is rising and sell when the stock prices are crashing.

There is a price for missing out the great market movements when you do not stay invested. From 1982 to 2005, the stock market averaged 10.6 percent returns annually. “But if you missed the best 50 trading days, your average return would have been just 1.8 percent annually.”

90 Days Attribute to 95% of Profits

Contrary to many who fear stock market crashes, Andrew turns greedy. “After 9/11, I wanted the markets to stay down. I was hoping to keep buying into the stock markets for many years at a discounted rate.”

Rule 5: Build Mountains of Money with a Responsible Portfolio

Andrew suggests to own a percentage of bonds in your portfolio that is almost equivalent to your age. For example, if you are 30 years old, you should have 30% or less of your portfolio in bonds.

Comparing short term and long term bonds, Andrew prefers the former. “… buying bonds with shorter maturities (such as one- to three-year bonds) is wiser than buying longer term bonds (such as 10-year bonds). If inflation rears its head, you won’t be saddled with a 10-year commitment to a certain interest rate.”

The true value of bonds is not the interest payment. It is for the purpose of knowing when stocks are cheap or expensive. Over the long run, bond price and stock price are inversely related. Hence, when the percentage of bonds go up and percentage of stocks drop, you have to rebalance the portfolio by selling bonds dear and buying stocks cheap. It works vice versa. By rebalancing the portfolio, you will always buy low and sell high.

The other advantage is that bonds cushion your portfolio during stock market crash. If your drawdown is too big, you may end up in fear and sell your stock holding. A full stock portfolio would have dropped 20.15 percent in a 31-year period (1973-2004) while a 40 percent bond and 60 percent stocks would have a drawdown of only 9.15%. The difference in performance was just 0.7% (average annual return of 11.19% vs 10.49%).

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

In this chapter, Andrew talks about people practising index investing in different countries. Read this chapter for the detailed accounts of the portfolio performance.

A couple had families in Singapore and Canada and they set up a portfolio comprising securities form both countries:

20% – ABF Singapore Bond Index Fund
20% – Canada’s Short-Term Bond Index
20% – Canada’s Stock Market Index
20% Vanguard World Stock Market Index

Rule 7: Peek Inside A Pilferer’s Playbook

This chapter exposes the agenda and motivation in the fund industry to grow their business.

For example, instead of taking care of the client’s interest first, one Canadian bank trained her staff to sell the highest fee fund if the client does not know much about investing.

Even large pension funds are moving away from active management and onto the index bandwagon. “… the Washington state pension fund, for example, has 100 percent of its stock market assets in indexes, California has 86 percent indexed, New York has 75 percent indexed, and Connecticut has 84 percent of its stock market money in indexes.”

Rule 8: Avoid Seduction

~~ There are many investment scams out there and we have to resist the temptation of easy money.

~~~ Also, he also suggest avoiding things like investment newsletters, high-yielding bonds, fast growing markets, gold, investment, investment magazines, and hedge funds.

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

He suggests that if you are not able to resist picking stocks,
~~ limit it to no more than 10% of your portfolio. This would not affect your overall financial success as long as you are disciplined by
~~~ indexing 90% of your portfolio. ... ew-hallam/
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Re: Millionaire Teacher by Andrew Hallam

Post by candy_chia »

"If you missed the BEST 50 TRADING DAYS, your Average Return would have been just 1.8 percent annually."

Markets can move so unpredictably and so quickly.

If you take money out of the stock market for a day, a week, a month or a year, you could miss the best trading days of the decade. You'll never see them coming. They just Happen.
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Re: Millionaire Teacher by Andrew Hallam

Post by candy_chia »

Gold isn't an investment

Gold is for
~~ hoarders expecting to trade glittering bars for stale bread after a financial Armageddon or
~~~ people Trying to "Time" gold's movements
by Purchasing it on an upward bounce, with the Hopes of selling before it drops.

===> That's NOT Investing. It's SPECULATING.

$1 dollar invested in gold in 1801 would only be worth about $73 by 2011.

How about $1 invested in the U.S. stock market?

$1 invested in the U.S. stock market in 1801 would be worth $10,150,000 ($10.15 million) by 2011.
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Re: Millionaire Teacher by Andrew Hallam

Post by candy_chia »

Simple Businesses Can Ensure More Predictable Profits

Peter Lynch, the famous U.S. stock picker, who led Fidelity's Magellan Fund to superb return in the 1980s, once suggested that you should Buy a Business that ANY IDIOT CAN RUN, because one day an idiot will be running it.

This is the way it works in business.

You won't always have fabulous leaders at the helm of your favourite companies.

~~ Businesses that change rapidly are complicated, and
~~~ they're tough for outside investors to analyze.
~~~~ What's more, they're usually more expensive than other businesses.

Microsoft's Bill Gates suggests that tech companies should actually be cheaper than old economy businesses, because of their unpredictability.
(Old economy refers to older blue-chip industries.)

But they aren't.

Speaking to business students at the University of Washington in 1998, he said:

"I think the [price to earnings] multiples of technology stocks should be quite a bit Lower than the multiples of stocks such as Coke and Gillette because we [those running technology companies] are subject to complete changes in the rules."

What will a technology business be doing in the future? Will it be bigger? Smaller? Or will it be extinct?

Peter Lynch was named head of the then obscure Magellan Fund which had $18 million in assets in 1977. By the time Lynch resigned as a fund manager in 1990, the fund had grown to more than $14 billion in assets with more than 1,000 individual stock positions. From 1977 until 1990, the Magellan fund averaged a 29.2% return and as of 2003 had the best 20-year return of any mutual fund ever.
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Re: Millionaire Teacher by Andrew Hallam

Post by candy_chia »

Excerpt of the interview with Andrew Hallam by Alvin:

Alvin : I understand that you are a runner. Are there similarities between running a marathon and investing for the long run?

Andrew Hallam: Definite similarities.

There are runners who just hope to run a marathon someday and they may train whenever they feel like it.

What are their odds of actually being prepared to complete a marathon on any given day?

It may be a dream, but unless they write it down, set a plan, have an objective and work towards their goal, they’re not going to do it.

Many investors actually invest like that.

~~ They have NO Idea what they want at the end of the day,
~~~ they have no idea how much money they actually need when they retire
, and
~~~~ how much money they actually need to invest on a monthly basis to reach those goals.


So running and investing require very similar traits in terms of the planning process.

Now I am sitting on this couch after pulling an Achilles tendon, and in about ten days time, there is a really big race that I have trained for six or seven months. But I will probably just enjoy a jog instead of running as hard as I can.

Life is very unpredictable and I think you cannot rush it.

In investing, when people have set backs like losing their jobs, rather than rushing to take extra risks with their investments,


==> people just need to Step Back, Analyze the Situation and then logically Get Back on Track without rushing the process. ... e-teacher/

How much will I need to save for retirement? ... calculator
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