Imagine being a high school English teacher who saves and invests his way to being a millionaire by age 40.
Impossible! Can’t be done! Or, if it can, he must have some weird magic system for miraculous returns, a system that worked for him but won’t work for anyone else.
Wrong. It can be done. It was done. His method is simplicity itself. And anyone can do it. The teacher is real; his name is Andrew Hallam. He teaches at a high school in Singapore and has written a book to tell us about it, “The Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School” (John Wiley & Sons, $17).
His method is to save as much as possible and to invest it so that most of the return goes to you, the saver, not the financial services industry. Basically, he is a Couch Potato investor, putting every dime of his savings into low-cost index funds and avoiding the unending siren calls from the high-priced gurus of the financial services industry.
The hard part, of course, is actually saving money.
That’s where most people fail, usually because they are waiting to have money “left over” that will be easily invested.
Andrew Hallam never waited. He started from a different position. That position is his rule number 1: “Spend Like You Want to Grow Rich.”
Think about that for a moment. We live in a world that urges us to spend as though we were rich, as though we already had the means to buy all kinds of luxuries. That’s the world that sends us credit card offers in the mail. It’s the world that fostered a banking system that made gigantic mortgage loans to people with no capacity for paying them back. It’s the blandishments we hear on nightly television urging us to treat ourselves because we’re worth it.
Hey, don’t knock it. It works for them. They sell stuff. We spend money.
But it doesn’t work for you and me.
Hallam brings it home by telling stories about people who acted and spent rich but, in fact, regularly bounced checks. Then he reminds us of Thomas J. Stanley’s work in “The Millionaire Next Door” and “Stop Acting Rich…and Start Living Like a Real Millionaire” because it turns out that there are two kinds of rich.
There’s Phony Rich, marked by heavy-duty spending.
And then there is Real Rich, as marked by Warren Buffett when he spent the most he has ever spent on a car and bought a $55,000 Cadillac.
From there he lays out the other 8 rules, filled with stories of the many ways things go wrong when we don’t follow the rules. Here are the other eight rules:
- Rule 2: Use the greatest investment ally you have.
- Rule 3: Small percentages pack big punches.
- Rule 4: Conquer the enemy in the mirror.
- Rule 5: Build mountains of money with a responsible portfolio.
- Rule 6: Sample a “round-the-world” ticket to indexing.
- Rule 7: Peek inside a pilferer’s playbook.
- Rule 8: Avoid seduction.
- Rule 9: The 10 Percent Stock-Picking Solution… if you really can’t help yourself.
Trust me, telling you all nine rules will not spoil it for reading this book. It’s a quick 180 pages, filled with easy examples and explanations that will confuse no one. All of it is backed with a multitude of good research citations. And because Mr. Hallam lives in Singapore he adds something new to Couch Potato investing, an international perspective. He tells us how to ground our portfolio in index funds from the country we expect to retire to.
I hope you’ll excuse me if I sound a little gushy. I’ve been writing about personal finance and investing for more than 40 years. My first book on the subject was published nearly 40 years ago, in 1972. My library is filled with hundreds of books that have been interesting and helpful to me. But I would not subject most people to the vast majority of those books.
There are only a handful of books that are fundamental enough— and writers who are direct enough— that I wish everyone would read them. Andrew Tobias comes to mind. So do John Bogle, William Bernstein, and Daniel Solin.
And now, 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.”