Millionaire Teacher Review: Part-1

After several months of waiting, I was excited I to have finally received Andrew’s new book – Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School.  Andrew Hallam is one of my favourite bloggers and finance writers. If you’re not familiar with Andrew’s writing he is indeed a Millionaire teacher residing in Singapore. I am certain he is a true inspiration to not only his students, but also to other investors. He has given investment seminars, appeared in financial magazines such as MoneySense, and has been nominated for national publishing awards.  I interviewed Andrew back in June 2011, just after he launched the Millionaire Teacher.

First of all, Millionaire Teacher is not your standard thick finance book that is going to take you two or three weeks to read. Let’s face it, mention to someone at work, they should read a finance book or an investment book, and they will cleverly begin to avoid you in the hallway or lunch room. The reason is simple. Most finance books are pretty boring to read, and aren’t written for ordinary people. When Andrew set out to write this book, he wanted something not only informative and educational, but also entertaining and written in a style readers can relate to- and it shows! You’ll find Andrew’s writing style both entertaining and fun to read, but also to the point and extensively researched.  Millionaire teacher is also written from a global perspective. I guarantee you will not be disappointed!

Andrew’s premise in Millionaire Teacher is that most of us lack the basic “financial literacy”, in large part due to our educational system. Andrew points out that we are thrown into the world as young adults without the foundation or knowledge of how to handle or invest our money. This is one reason why so many people end up with large consumer debts, underperforming mutual funds, and a lack of financial understanding.

Think like a Millionaire

The foundation of Andrew’s book in Rule 1, is if you want to be a millionaire, you have to think like one! Millionaires don’t drive fancy cars, wear expensive clothes. They don’t hold liabilities such as credit card balances. They understand the value of hard work, frugal living, saving, and investing wisely. Unfortunately our society inundates us with completely the opposite message. You may think the richest people in the world drive BMWs and Mercedes, but they don’t. “Most millionaires might surprise you with their taste in cars. When Thomas Stanley polled U.S. millionaires, the most popular brand of car was the humdrum Toyota.” Millionaire Teacher, page 7.

There are few people who understand this “financial education” early in life, but Andrew Hallam did. You don’t need to be as super-frugal as Andrew was, by eating clams on the beach to save on groceries (in fact he recommends you don’t). But if you can keep yourself out of debt, start investing early in life and think like a millionaire – then you are well on the way to becoming one. And starting early is what Rule 2 in Millionaire Teacher is all about.

Invest Like a Pro (Instead of Being Duped by One)

As working adults, most of us end up placing our hard earned money into the hands of “investment professionals” called “financial advisors”. We are told that investing is too complicated, and that we need a professional to manage our money for us. At least that is what the investment industry would like us to believe. But as most of us eventually learn down the road, most advisors are simply mutual fund and insurance salespeople; with their own interests at heart (mainly commissions).  At some point down the road, most of us realize we need to take investing into our own hands – and that is also what Millionaire Teacher is about.

Andrew provides an extensive review of the mutual fund and financial industry, and why it’s a loser’s game with compounding fees, commissions, and lacklustre performance. In Rule 2 and Rule 7, Andrew goes in depth into how mutual funds and financial advisors really work.  Andrew clearly demonstrates with extensive research throughout his book, how almost all actively managed mutual funds fail to beat the market and why. But Millionaire Teacher is more than a rant about actively managed mutual funds. It’s a step by step guide to help investors, with the tools to do so. These tools are low-cost Index Funds and Index ETFs that charge very low management fees, have no commissions, and simply track market performance.

Three Index Funds Is All You Need

Andrew Hallam is a multi-millionaire, and what does he hold in his portfolio? Believe it or not, he holds just three Index ETFs (exchange traded funds). Andrew suggests that investors hold a Bond Index Fund, a local Stock Index Fund (i.e. Canadian equity), and an International Equity Fund (international stocks). He also suggests holding a bond percentage matched to your age. For Canadian investors, Andrew suggests that if you have a small portfolio, then consider just holding three TD e-series Funds to avoid the ETF trading fees when you rebalance.

In Rule 5, Andrew covers in depth the reasons why investors should hold bonds, and how he profited from bond funds during market declines, by simply rebalancing an indexed portfolio. He makes a small fortune by rebalancing and sticking with a proven index investing strategy, selling bonds when stock prices are low, and buying bonds when stock prices are high.  Andrew covers this strategy in-depth in the book.  Rule 6 is the global component of the book, and as Andrew points out basic indexing strategies can be employed by anyone regardless of their home country.

Strategies from a Successful Stock Picker

Millionaire Teacher is indeed about index investing. But Andrew recognized that many investors still like to purchase stocks. In Part-2 of this review I am going to focus solely on Andrew’s Rule 9 - The 10% Stock-Picking Solution. Although Andrew sold some 700K of winning stocks to reinvest into Index ETF’s back in January, don’t let that fool you. Andrew is a seasoned dividend investor, who understands Buffett investing to a T, and knows how to read a balance sheet inside and out. He has a pretty impeccable record with his stock picks of nearly ten years in a row, better than the majority of mutual fund managers.  In Part-2 I’ll introduce his stock investing strategies from Millionaire Teacher.

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, is an excellent financial book for all investors, and especially for young people to get them on the right path. Millionaire Teacher is Ninja recommended!

12 Responses to “Millionaire Teacher Review: Part-1”

  1. DSO

    Nov 10. 2011

    Great review! My personal theory is that thinking like a millionaire is more about finding ways to increase you income and less about finding ways to spend less. I like to use my time to find ways to increase my income (build a business, invest in dividend stocks) vs cutting costs. A balance of both is certainly necessary to reach great wealth.

    I like the investment strategy Andrew presents. Thanks for covering the book.

  2. The Dividend Ninja

    Nov 10. 2011

    DSO Thanx for dropping by! :)

  3. Hank

    Nov 10. 2011

    Great review! I can’t wait to check this book out. I love the idea of thinking like a millionaire. I also totally agree with DSO. We focus so much of our time and energy in cutting expenses out of our budgets, when we should be working on increasing income.

  4. MoneyCone

    Nov 10. 2011

    Wow! That’s a very well written review DN! I keep hearing about this book, haven’t gotten a chance to read it yet.

    I agree. The real secret is not just buy and hold, but buy, hold and rebalance!

  5. Henry Le

    Nov 10. 2011

    Awesome review! My parents taught me that the path to financial freedom is to stop caring about what others think. It worked for them so I’m applying it to my life.

  6. The Dividend Ninja

    Nov 10. 2011

    Hank Thanx! Sure increasing income is a great idea (i.e. like the 70 cents per book order from Amazon). But I think people who are frugal don’t see themselves as cutting-back, its the way they enjoy living.

    MoneyCone You are bang on! this is where the profits are from indexing.

    Henry Le Cheers! Thanx for dropping by.

  7. My Own Advisor

    Nov 11. 2011

    Great review!!!

    I’ve been a fan of Andrew’s since finding his site a few years ago, and I can’t imagine where I’d be without his guidance and support on my personal finance journey.

    Andrew has really helped me out, and his book no doubt will help many, many others.

    I’m about half-way through his masterpiece and I’m looking forward to posting my review of it in another few weeks.

    Nice stuff Ninja.

  8. The Dividend Ninja

    Nov 11. 2011

    MOA Thanks! Stay tuned for Part-2 :)


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