Millionaire Teacher Book – 2nd Edition

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

2nd Edition Published January 2017


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

In the U.S., on November 2011, it hit #1 on 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:

  1. I show why some brokers lie. It’s more than a conflict of interest.  Something happens in their brains.
  2. 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?”
  3. I show how to buy an ETF, including screen shots of the process.
  4. I explain why you shouldn’t buy a currency-hedged ETF. These are really common.  But it’s better to avoid them.
  5. 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.
  6. I explain why a family should never lease cars. Doing so is a $1 million decision.
  7. 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.
  8. 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.
  9. I also explored the topic of smart beta funds. If you decide to use them, can you really beat the market?
  10. 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!

Foreword Ian McGugan xix

Acknowledgments xxiii

Introduction 1

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