Millionaire Teacher Book – 2nd Edition

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School

  • Foreword Ian McGugan xix
  • Acknowledgments xxiii
  • Introduction 1

The first edition of my book, Millionaire Teacher, was published in 2011.

In the U.S., on November 2011, it hit #1 on Amazon.com in three different categories:  Personal Finance, Stock Market Investing and Business and Investing.

It was translated into languages that I certainly never expected, including Thai, Korean, Simplified Chinese and Traditional Chinese.

The lessons, I think, are timeless.  Set a savings goal, track your spending and invest the money like Warren Buffett’s wife.  I explain how to do that. A slew of Nobel Economic Prize winners recommend the same investment strategy.

It takes just a few minutes a year.  You don’t have to know anything about the stock market.  You don’t have to follow stock market news.  But you will beat most investment professionals.  Mountains of data say that’s true.

Does that sound silly?  It isn’t. If you read my book, have a computer handy.  Challenge what I write.  Check out my references.  Look up what peer-reviewed financial academic studies say.  Here’s what you’ll ask yourself:  Why didn’t anyone teach me this before?  Why isn’t this in school?

I ask myself those questions too–almost every single day.

The financial service industry wants you to buy certain types of products.  I ask you to avoid them.  Warren Buffett does too.  Leagues of Economic Nobel Prize winners say the same thing.   They recommend that you invest in low-cost index funds.  But such products are flies in the caviar for most financial advisors.

But people are getting smarter, so the industry is changing. New and better investment products are starting to kick tradition in the knee.  Some new firms are saying, “Hey, people are getting smarter.  They won’t get conned forever. Let’s offer something better.”

These firms are often called Robo-Advisors. All you need to do is send them your money.  They’ll build low cost portfolios of index funds, much as I describe in my book.  These investment firms exist in the United States, Canada, Asia and Europe.  My book’s new edition provides a ‘who’s who?’ list.

For those who would prefer to DIY, I explain how to do it.  Vanguard has spread beyond the United States.  That means investment options, for DIY investors, have also improved a lot.

Here are a few other things that the new book includes:

I show why some brokers lie. It’s more than a conflict of interest.  Something happens in their brains.

I answer the question, “If you receive a windfall, should you invest it all at once, or should you dollar-cost average the money over time?”

I show how to buy an ETF, including screen shots of the process.

I explain why you shouldn’t buy a currency-hedged ETF. These are really common.  But it’s better to avoid them.

I prove that Donald Trump would have been richer if he bought index funds with his $500 million back in 1982. He could have spent millions of dollars every year and done zero  And it would have made him billions of dollars richer than he is right now.

I explain why a family should never lease cars. Doing so is a $1 million decision.

I prove that young people should prefer to see their stock investments sag, instead of rising right away. The chart that I show is absolutely shocking.

I prove that investors in actively managed funds don’t get close to earning the posted returns of the funds they own. Index fund investors, in contrast, do far better.  This isn’t about the tyranny of fees.  There’s a psychological twist.

I also explored the topic of smart beta funds. If you decide to use them, can you really beat the market?

I’ve written for magazines.  But I want to show why you should never pay attention to their “Top Funds To Buy!” lists.  I had some fun with this!

 

  • Chapter 1: Grow Big Profits without Any Effort 5
    Why Average Returns Aren’t Normal 9
    Stocks Pound Inflation 11
    What Has the Stock Market Done for You Lately? 13
    Undressing Stocks with 50 Shades of Gray 14
    The Stock Market Stars as the Great Humiliator 17
    Fast-Growing Economies Can Produce Weak Returns 19
    Bonds Are Protective Nets for Jumpers 21
    Can You Lose Money with Bonds? 23

 

  • Chapter 2: Don’t Start a Fight with an Escalator 27
    Yes, the Financial District Loves You! 28
    Global Investors Getting Fleeced 29

 

  • Chapter 3: Where Are the Customers’ Yachts? 33
    Global Investors Bleed by the Same Sword 34
    American Expatriates Run Naked 37
    Why Brokers Want to Muzzle Warren Buffett 38
    Financial Advisors Touting “The World Is Flat!” 40
    Hedge Fund Money Spanked for Its Con 42
    Why Most Investors Underperform Their Funds 50
    Why Do Financial Advisors Lie? 54

 

  • Chapter 4: Don’t Let a Fool or a Psychopath Wreck Your Future 59
    The deVere Group Faces Trouble 62
    Expats Pay the World’s Highest Investment Fees 63
    A Canadian Investor Gets Bled 65
    Investment Schemes That Cripple Like a Virus 66
    British Expats: Can I Trade You That Diamond for a Big Lump of Coal? 68
    Featuring the Rip-Offers 69
    The 10 Habits of Successful Financial Advisors Really? 70
    When Your Advisor Is a Sales Commando 71
    Welcoming Sharks into the Seal Pool 72
    Misled Investors Pay the Price 76
    Would You Like a Band-Aid for That Bleeding Gash? 76
    Masters of the Insured Death Benefit Illusion 77
    Free Fund Switching Isn’t a Perk 77
    Making Millions off the General Public 78
    Fooling the Masses with Numbers 79
    Regulators Making an Effort 80
    Record Complaints in the UAE Are Gaining Some Attention 83
    Can Squeaky Wheels Gain Redemption? 83
    Should You Ditch Your Offshore Pension? 84
    When High Fees Meet Gunslingers 86
    A Son’s Inheritance Gets Plundered 87
    Canadian Teacher Gets Scalped 90
    Investor in Thailand Makes the Great Escape 97
    Poor Performance Packs a Three-Way Punch 101
    Responsible Savers Often Pay a Big Price 102

 

  • Chapter 5: Self-Appointed Gurus and Neanderthal Brains 109
    Why Most Investors Should Hope for Falling Markets 110
    Are You Cheering for the Right Team? 111
    If You’re Just Starting Out, Pray for Stocks to Sputter 113
    Should You Worry When Stocks Hit All-Time Highs? 115
    The Only Thing That Matters 117
    It’s Not Timing the Market That Matters; It’s Time in the Market 118
    High Unemployment and High Stock Returns 119
    What Can You Miss by Guessing Wrong? 121
    When Investors and Advisors Sabotage Their Rides 123
    Popular Stocks Underperform 124
    How About the Next Big Thing? 127
    When Genius Fails 128
    Are Index Fund Investors Smarter? 129

 

  • Chapter 6: An Employer’s Greatest Challenge 135
    Keep the Foxes Out of the Henhouse 136
    Is Your Devil Big or Small? 137
    Don’t Give a Climber a Flaming Rope 137
    Would You Hire a Guy without a License to Drive Your Retirement? 138
    Fees—How Much Is Too Much? 140
    So What’s the Solution for Global Employers? 141
    When Employers Offer Carrots 147
    Non-American Teachers: If You Slash Your Bicycle Tire We’ll Reward You With A Push 147
    How School Administrators Could Really Boost Savings 148

 

  • Chapter 7: Couch Potato Investing 153
    Don’t Bonds Tie You Down? 154
    Is It More of a Fling than a Real Relationship? 154
    Are You Worried That Bond Interest Rates Are Low? 156
    Potatoes Growing Globally 158
    Bonds Relative to Age and Risk 158
    What If You’re Falling Behind? 160
    Profiting from Panic—Stock Market Crash 2008–2009 160
    Owning the World 161
    Where Do You Plan to Retire? 162
    Are You Retiring in an Emerging-Market Country? 164
    Does This Sound Too Good to Be True? 164

 

  • Chapter 8: Investment Advisors with a Conscience 167
    Do You Have a Ninja’s Discipline? 168
    Qualities of a Great Financial Advisor 168
    Investment Professionals Worth Considering 172
    British Investors: You Ready for a Hybrid? 182
    Crush Your “Sophisticated” Investment Friends 183
    Why Many Global Expats Are Naming Their Newborns Mark 189
    Conclusion 190

 

  • Chapter 9: Choosing Your Offshore Brokerage—For Non-Americans 193
    DBS Vickers Securities Opens the Door to Everyone 197
    Why You Should Avoid TD Ameritrade Singapore 198
    TD Direct Investing International (Internaxx) 198
    Saxo Capital Markets—A Jewel with Distractions 199
    Swissquote Offers Options 200
    Is Interactive Brokers the Dark Horse Winner? 201

 

  • Chapter 10: The 30 Questions Do-It-Yourself Investors Ask 205
    What’s the Difference between an Exchange-Traded Index Fund (ETF) and an Index Fund? 205
    Do Non-Americans Have to Pay US Estate Taxes upon Death if They Own US Index Shares? 206
    What’s a Sector-Specific ETF? 207
    Should I Buy an Index that’s Currency Hedged? 208
    What’s the Scoop on Withholding Taxes? (For Non-Americans) 209
    Will You Have to Pay Currency Conversions? 211
    Should I Be Concerned about Currency Risks? 212
    Do the Unit Prices of ETFs Show Which are Expensive or Cheap? 213
    If I Have a Lump Sum, Should I Invest It All at Once? 213
    I’m in Some Expensive Products, but They’re Currently
    Down in Value. Should I Sell Now or Wait? 214
    How Do I Open a Brokerage Account and Make Purchases? (For Non-Americans) 215
    What If I Find a Higher-Performing Bond Index? 219
    What If I Find a Cheaper ETF? 220
    Should I Be Most Concerned about Commissions, Annual Account Fees, Fund Costs, or Exchange Rate Fees? 220
    How Little Can I Invest Each Month? 221
    Stock Markets Are High. Should I Really Start Investing? 222
    Should I Buy ETFs from Vanguard, iShares, Schwab or Another Low-Cost Provider? 223
    Can Muslims Build a Portfolio of Shariah-Compliant Funds? 223
    Could You Build a Portfolio of Socially Responsible Index Funds? 225
    Why Doesn’t My Brokerage Offer the Funds I Want? 226
    Why Hasn’t My Bond ETF Risen in Value? 226
    What If My Bond ETF Is Priced in a Different Currency? 227
    Are Cryptocurrencies, like Bitcoin, Good Investments? 228
    Should I Buy a Real Estate Investment Trust (REIT) Index? 230
    Should I Buy a Smart Beta ETF? 231
    Should I Invest in Gold? 232
    Don’t Small-Company Stocks Beat Larger-Company Stocks? 233
    What If You and Your Spouse Represent Different Nationalities? 235
    Could Index Fund Investing Become Too Popular? 236
    What If I Need Help Building My Portfolio? 238
    Let’s Go! 239

 

  • Chapter 11: Portfolio Models for American Expats 243
    Do You Currently Invest with Vanguard? 244
    Couch Potato Investing with Vanguard 245
    Couch Potato Investing with a Vanguard Stick Shift 247
    When Investors Binge on Speculation 248
    Socially Responsible Investing 255
    Interactive Brokers Offers a Great Deal 255
    Doing the Couch Potato with Interactive Brokers 257
    Socially Responsible Couch Potato Portfolio 260
    Don’t Contribute Illegally to Your IRA 260
    What Exactly Is an IRA? 260
    Roth IRAs Are Different 262

 

  • Chapter 12: Portfolio Models for Canadian Expats 265
    Canadian Funds Earn an “F” for Costs 266
    Brokerage Options for Expatriate Canadians 269
    Brokerages for Canadians in Capital Gains–Free Jurisdictions 269
    Building a Canadian Couch Potato Portfolio 270
    ETF Canadian Price War 275
    What About RRSPs and TFSAs? 275
    Swap-Based ETFs—The Ultimate Legal Tax Dodge 276

 

  • Chapter 13: Portfolio Models for British Expats 281
    Expensive Firms Performing Like a Virgin 282
    Couch Potato Investing for British Expatriates 283
    How Do You Rebalance a Multicurrency Portfolio? 287
    Socially Responsible Investing for British Expats 290
    Shariah-Compliant Investing for Muslims 291
    Are You Really Ready to Do This? 294

 

  • Chapter 14: Portfolio Models for Australian Expats 297
    Fancy an Australian Couch Potato? 299
    Socially Responsible Investing for Australians 302
    Now Look Deeply into That Mirror 303

 

  • Chapter 15: Portfolio Models for New Zealand Expats 307
    Socially Responsible Investing (SRI) 308
    Do You Have What It Takes? 312

 

  • Chapter 16: Portfolio Models for South African and South American Expats 315
    South African Investors 315
    South Africans Fry Up the Couch Potato 316
    South American Investors 319
    Are You Having Troubles Selecting Your Portfolio? 320

 

  • Chapter 17: Portfolio Models for Irish and European Expats 323
    The European Cheapskate Couch Potato Portfolio 326
    Socially Responsible Investing for Europeans 329
    Don’t Get Suckered by the Sirens 329

 

  • Chapter 18: Portfolio Models for Asian Expats 333
    Speculators Suffer 336

 

  • Chapter 19: Setting Your Bull’s-Eye 339
    What’s a Better Definition of Wealth? 341
    What’s This Ailment Expatitis? 341
    Cheating Conventional Retirement Rules 342
    Married Couple Lives Well on Just $20,000 a Year 343
    Could You Retire on Less than $15,000 a Year? 345
    The Home-Country Retirement Plan 345
    How Much Money Will You Need? 348
    British Teacher in Japan Aims to Retire in Style 349
    Single Canadian Woman Lights Her Investment Fire 351
    Dubai-Based Pilot Plans to See His Savings Soar 353
    Now It’s Your Turn 354

 

  • Chapter 20: How Much Money Should You Be Saving? 357
    How to Never Run Out of Money 358
    Could You Cleverly Withdraw More than 4 Percent? 361
    Third-Culture Kid Sets Her Savings Goal 363
    How Much Money Will Rosanna Need? 365
    Where Can International Teachers Save a Lot of Money? 366
    Robert and Yik Consider Thailand or New Zealand 367
    Should This Couple Stress? 369
    Couple Plans for a Two-Country Retirement 370
    Now It’s Your Turn 376

 

  • Conclusion 379
  • Index 381