- Table of Contents
- Title Page
The man stood naked. His back and butt were clean. But his arms and legs were caked with mud. He held a towel in his left hand as he stood behind his pickup truck. With his right hand, he held a running shoe.
A couple strolled behind him, along a grass trail beneath an overcast sky. The walkers looked furtively at the naked man. No, I wasn't one of the walkers. Nor was I (despite what many of my friends might think) the naked guy behind the truck. It was simply a full-page advertisement for Adidas in Runner's World magazine. It read, “Runners. Yeah, we're different.”
In 1999, Adidas published a slew of similar ads. They showed the eccentricity of the long-distance runner. Runners might be different. But expats are too. My friend, Catherine Parent, lives in Indonesia. She recently posted a picture of her toothbrush on Facebook. It was in a cup…with a cockroach. Her caption asked, “To brush or not to brush?”
My friend, Debbie Woodfield, lived in Asia for years. The New Zealander posted a photo of a drink menu at a café in Laos. They offered Lao Coffee, Espresso, and…silkworm poo tea.
Expats don't leave their home countries for giant bugs or poo tea. Most of us just want to experience something different. Some of our friends back home marvel at our bravery, or they think we've lost our marbles. But unless you're living and working in an active war zone, living overseas might be as safe, or safer, than the life you left behind. That said, there is one risk that many expats face. We risk running out of money during retirement.
You might wonder what I'm smoking if you're on a cushy expat package. After all, there's a large league of expats in Southeast Asia and the Middle East who make bucket loads of cash.
They left their home countries to teach at international schools or work abroad in industries such as banking, information technology, oil, cosmetics, pharmaceuticals, and shipping. Many work for firms like Coca-Cola, American Express, Johnson & Johnson, Google, Microsoft, and Exxon Mobil.
Not all expats (including millions in Europe) make massive sums money. But even those who do face financial risks.
In 2003, when I left Canada to teach in Singapore, I kissed goodbye to a defined benefit pension. Had I continued with my former job, I could have paid off a home, contributed modestly to investments, and received pensionable income for life.
By comparison, most expats run naked. Many don't realize they would need more than a million dollars in the stock market or multiple mortgage-free rental properties just to equal, for example, the retirement benefits earned by most public-sector workers in the United States, Britain, Australia, or Canada.
Such benefits are globally waning. But they're still a reality. Governments offer additional monthly cash: Social Security (for Americans), Canadian Pension Plan for Canadians. In fact, most developed world countries offer retirement benefits for their respective home-country workers. But it's different for expats. Few expats contribute to their home-country social programs once they've moved abroad. Without maximizing contributions to these plans, they can't fully open their mouths to such morsels once they've retired.
One of my former colleagues learned this the hard way. She's American. But she taught overseas for most of her career, so she contributed little to US Social Security. While working abroad, she earned a lot of money. She furnished her large apartment with fine carpets. She bought beautiful jewelry. She enjoyed flashy holidays—often flying business class to five-star resorts. Unfortunately, she didn't save much. Today, my friend is back in the United States, renting a room in somebody else's home. She's 70 years old and struggling far below the US poverty line. As Warren Buffett says, you only know who's swimming naked when the tide goes out.
In sharp contrast, I also taught with a couple who retired with about $5 million dollars in their investment account. That's a lot of money—especially for teachers. They paid for their two daughters to go to college. They own a mortgage-free home. They lived well as expats and retired fully clothed. But they were great planners.
My wife and I were similar. When I first started investing, I wanted to retire at 40. I was 19 years old and saving like a lunatic. I won't confess the screwy things I did to pinch pennies. Instead, I want to share what I did right: the part you'll find helpful. I planned how much money I wanted to save, and why. Such planning, even more than the hyperactive saving, made my life a heck of a lot easier.
In 2014, shortly after my 44th birthday, we retired from our Singapore-based teaching jobs. That doesn't mean we live like trust-funded hedonists. Nor does it mean we'll never work again. It does mean, however, that our private parts aren't sitting in somebody else's vise. A few years back, if our boss had gone on a firing spree, sacking skinny bald guys and bilingual blondes, we would have been fine. We had enough money to survive without working.
We saved and invested in the stock and bond markets—in a manner that I detail in this book. Fortunately, we dodged the armies of silver tongues who peddle horrible investment products. If we hadn't, we would still have to work for many more years.
Such investment schemes are sold most prolifically to British expats. Expats of every nationality, however, get sucked in. These schemes get pushed like Viagra. But they leave investors limp. Investors pay obscenely high fees. That's why they rarely make money when the gains (if they exist at all) are adjusted for inflation. The salespeople who sell these schemes make Everest-sized commissions—sometimes totaling more than $1 million a year. That's why some of these salespeople bribe their current clients. “I'll offer you a free iPad,” they might say, “if you give me the contact details for 10 of your friends.” Victims get locked into 10-, 20-, even 25-year schemes.
Once an investor catches on to the fee-burdened riptide, it's often too late. Those who scramble out of the water face redemption penalties. Some could lose everything if they try to sell early. What's worse, many overseas employers welcome financial sharks into their company seal pools. With the best of intentions, they endorse offshore pension sellers, most of whom have a single purpose: to reap the highest possible commissions from unwary workers.
But it doesn't have to be this way. Expats can enjoy the best of both worlds. They can live adventurous (even luxurious) lives and retire wealthy. But they need to save and invest effectively. I'll show you how to do that.
I'll show where you can open your investment account, while describing how to make investment purchases for different nationalities.
The strategy I describe beats the returns of most professional investors. Best of all, you won't have to watch the stock market, follow the economy, or read the dull business pages of The Wall Street Journal. This strategy takes about 60 minutes a year.
Don't believe me? Good. Don't believe anyone who talks to you about money. That goes double for a financial salesperson. Consider everyone a shark, until proven otherwise. Use the Internet as you read this book. Confirm all my sources.
Does 60 minutes a year sounds like too much time to spend on your investments? No problem. You could hire a scrupulous financial advisor. I list some in this book. They would build you a portfolio of low-cost index funds. Nobel Prize winners in economics recommend these products. Warren Buffett does too. In fact, Mr. Buffett says that when he dies, his estate will be invested in index funds.
I'll explain what index funds are and how they work. I'll also show you how to buy them.
Millionaire Expat outlines how to plan for your future. How much money should you invest, based on your future needs? How much of your investment portfolio can you afford to sell during each retirement year? The final two chapters provide these answers.
As an expatriate, you can live better, earn more, and provide for a generous retirement. You'll just need a plan. Fortunately, you're reading it.
- Chapter 1: Grow Big Profits without Any Effort
Why Average Returns Aren't Normal
Stocks Pound Inflation
What Has the Stock Market Done for You Lately?
Undressing Stocks with 50 Shades of Gray
The Stock Market Stars as the Great Humiliator
Fast‐Growing Economies Can Produce Weak Returns
Bonds Are Protective Nets for Jumpers
Can You Lose Money with Bonds?
- Chapter 2: Don't Start a Fight with an Escalator
Yes, the Financial District Loves You!
Global Investors Getting Fleeced
- Chapter 3: Where Are the Customers' Yachts?
Global Investors Bleed by the Same Sword
American Expatriates Run Naked
Why Brokers Want to Muzzle Warren Buffett
Financial Advisors Touting “The World Is Flat!”
Hedge Fund Money Spanked for Its Con
Why Most Investors Underperform Their Funds
Why Do Financial Advisors Lie?
- Chapter 4: Don't Let a Fool or a Psychopath Wreck Your Future
The deVere Group Faces Trouble
Expats Pay the World's Highest Investment Fees
A Canadian Investor Gets Bled
Investment Schemes That Cripple Like a Virus
British Expats: Can I Trade You That Diamond for a Big Lump of Coal?
Featuring the Rip‐Offers
The 10 Habits of Successful Financial Advisors…Really?
When Your Advisor Is a Sales Commando
Welcoming Sharks into the Seal Pool
Misled Investors Pay the Price
Would You Like a Band‐Aid for That Bleeding Gash?
Masters of the Insured Death Benefit Illusion
Free Fund Switching Isn't a Perk
Making Millions off the General Public
Fooling the Masses with Numbers
Regulators Making an Effort
Record Complaints in the UAE Are Gaining Some Attention
Can Squeaky Wheels Gain Redemption?
Should You Ditch Your Offshore Pension?
When High Fees Meet Gunslingers
A Son's Inheritance Gets Plundered
Canadian Teacher Gets Scalped
Investor in Thailand Makes the Great Escape
Poor Performance Packs a Three‐Way Punch
Responsible Savers Often Pay a Big Price
- Chapter 5: Self‐Appointed Gurus and Neanderthal Brains
Why Most Investors Should Hope for Falling Markets
Are You Cheering for the Right Team?
If You're Just Starting Out, Pray for Stocks to Sputter
Should You Worry When Stocks Hit All‐Time Highs?
The Only Thing That Matters
It's Not Timing the Market That Matters; It's Time in the Market
High Unemployment and High Stock Returns
What Can You Miss by Guessing Wrong?
When Investors and Advisors Sabotage Their Rides
Popular Stocks Underperform
How About the Next Big Thing?
When Genius Fails
Are Index Fund Investors Smarter?
- Chapter 6: An Employer's Greatest Challenge
Keep the Foxes Out of the Henhouse
Is Your Devil Big or Small?
Don't Give a Climber a Flaming Rope
Would You Hire a Guy without a License to Drive Your Retirement?
Fees—How Much Is Too Much?
So What's the Solution for Global Employers?
When Employers Offer Carrots
Non‐American Teachers: If You Slash Your Bicycle Tire We'll Reward You With A Push
How School Administrators Could Really Boost Savings
- Chapter 7: Couch Potato Investing
Don't Bonds Tie You Down?
Is It More of a Fling than a Real Relationship?
Are You Worried That Bond Interest Rates Are Low?
Potatoes Growing Globally
Bonds Relative to Age and Risk
What If You're Falling Behind?
Profiting from Panic—Stock Market Crash 2008–2009
Owning the World
Where Do You Plan to Retire?
Are You Retiring in an Emerging‐Market Country?
Does This Sound Too Good to Be True?
- Chapter 8: Investment Advisors with a Conscience
Do You Have a Ninja's Discipline?
Qualities of a Great Financial Advisor
Investment Professionals Worth Considering
British Investors: You Ready for a Hybrid?
Crush Your “Sophisticated” Investment Friends
Why Many Global Expats Are Naming Their Newborns Mark
- Chapter 9: Choosing Your Offshore Brokerage—For Non‐Americans
DBS Vickers Securities Opens the Door to Everyone
Why You Should Avoid TD Ameritrade Singapore
TD Direct Investing International (Internaxx)
Saxo Capital Markets—A Jewel with Distractions
Swissquote Offers Options
Is Interactive Brokers the Dark Horse Winner?
- Chapter 10: The 30 Questions Do‐It‐Yourself Investors Ask
What's the Difference between an Exchange‐Traded Index Fund (ETF) and an Index Fund?
Do Non‐Americans Have to Pay US Estate Taxes upon Death if They Own US Index Shares?
What's a Sector‐Specific ETF?
Should I Buy an Index that's Currency Hedged?
What's the Scoop on Withholding Taxes? (For Non‐Americans)
Will You Have to Pay Currency Conversions?
Should I Be Concerned about Currency Risks?
Do the Unit Prices of ETFs Show Which are Expensive or Cheap?
If I Have a Lump Sum, Should I Invest It All at Once?
I'm in Some Expensive Products, but They're Currently Down in Value. Should I Sell Now or Wait?
How Do I Open a Brokerage Account and Make Purchases? (For Non‐Americans)
What If I Find a Higher‐Performing Bond Index?
What If I Find a Cheaper ETF?
Should I Be Most Concerned about Commissions, Annual Account Fees, Fund Costs, or Exchange Rate Fees?
How Little Can I Invest Each Month?
Stock Markets Are High. Should I Really Start Investing?
Should I Buy ETFs from Vanguard, iShares, Schwab or Another Low‐Cost Provider?
Can Muslims Build a Portfolio of Shariah‐Compliant Funds?
Could You Build a Portfolio of Socially Responsible Index Funds?
Why Doesn't My Brokerage Offer the Funds I Want?
Why Hasn't My Bond ETF Risen in Value?
What If My Bond ETF Is Priced in a Different Currency?
Are Cryptocurrencies, like Bitcoin, Good Investments?
Should I Buy a Real Estate Investment Trust (REIT) Index?
Should I Buy a Smart Beta ETF?
Should I Invest in Gold?
Don't Small‐Company Stocks Beat Larger‐Company Stocks?
What If You and Your Spouse Represent Different Nationalities?
Could Index Fund Investing Become Too Popular?
What If I Need Help Building My Portfolio?
- Chapter 11: Portfolio Models for American Expats
Do You Currently Invest with Vanguard?
Couch Potato Investing with Vanguard
Couch Potato Investing with a Vanguard Stick Shift
When Investors Binge on Speculation
Socially Responsible Investing
Interactive Brokers Offers a Great Deal
Doing the Couch Potato with Interactive Brokers
Socially Responsible Couch Potato Portfolio
Don't Contribute Illegally to Your IRA
What Exactly Is an IRA?
Roth IRAs Are Different
- Chapter 12: Portfolio Models for Canadian Expats
Canadian Funds Earn an “F” for Costs
Brokerage Options for Expatriate Canadians
Brokerages for Canadians in Capital Gains–Free Jurisdictions
Building a Canadian Couch Potato Portfolio
ETF Canadian Price War
What About RRSPs and TFSAs?
Swap‐Based ETFs—The Ultimate Legal Tax Dodge
- Chapter 13: Portfolio Models for British Expats
Expensive Firms Performing Like a Virgin
Couch Potato Investing for British Expatriates
How Do You Rebalance a Multicurrency Portfolio?
Socially Responsible Investing for British Expats
Shariah‐Compliant Investing for Muslims
Are You Really Ready to Do This?
- Chapter 14: Portfolio Models for Australian Expats
Fancy an Australian Couch Potato?
Socially Responsible Investing for Australians
Now Look Deeply into That Mirror
- Chapter 15: Portfolio Models for New Zealand Expats
Socially Responsible Investing (SRI)
Do You Have What It Takes?
- Chapter 16: Portfolio Models for South African and South American Expats
South African Investors
South Africans Fry Up the Couch Potato
South American Investors
Are You Having Troubles Selecting Your Portfolio?
- Chapter 17: Portfolio Models for Irish and European Expats
The European Cheapskate Couch Potato Portfolio
Socially Responsible Investing for Europeans
Don't Get Suckered by the Sirens
- Chapter 18: Portfolio Models for Asian Expats
- Chapter 19: Setting Your Bull's‐Eye
What's a Better Definition of Wealth?
What's This Ailment Expatitis?
Cheating Conventional Retirement Rules
Married Couple Lives Well on Just $20,000 a Year
Could You Retire on Less than $15,000 a Year?
The Home‐Country Retirement Plan
How Much Money Will You Need?
British Teacher in Japan Aims to Retire in Style
Single Canadian Woman Lights Her Investment Fire
Dubai‐Based Pilot Plans to See His Savings Soar
Now It's Your Turn
- Chapter 20: How Much Money Should You Be Saving?
How to Never Run Out of Money
Could You Cleverly Withdraw More than 4 Percent?
Third‐Culture Kid Sets Her Savings Goal
How Much Money Will Rosanna Need?
Where Can International Teachers Save a Lot of Money?
Robert and Yik Consider Thailand or New Zealand
Should This Couple Stress?
Couple Plans for a Two‐Country Retirement
Now It's Your Turn
- End User License Agreement