9 Rules of Wealth from Millionaire Teacher by Andrew Hallam: Free Business Book Summary

If you are looking for an easy to understand book on how to invest your money in financial instruments, such as stocks and bonds on your own, without using a financial adviser, Millionaire Teacher is probably the best book available. But it offers more than that. On a school teacher salary in Canada, the author was able to become a millionaire by age 38 by investing in index funds, and he shares how he did it here. 

 Most importantly, in Millionaire Teacher, The Nine Rules of Wealth You Should Have Learned in School, 2011, John Wiley & Sons, Andrew Hallam discloses if you want to use this get rich slowly approach to wealth building you must live below your means. Most people were never taught the very basics of financial literacy in high school or even at home. This book seeks to redress that. 

Here are the 9 rules the author used to become a millionaire.

(1) Spend like you want to grow rich.

If you want to grow rich, you must have a purposeful plan and watch what you spend carefully so that you have money you can invest. Your perceptions dictate your spending habits. 

Don’t try to create the illusion of being wealthy by buying expensive things. Instead, buy quality items at a discount. 

Don’t overspend on automobiles or large homes. 

Andrew Hallam thought of debt as a life-threatening disease and avoided debt at all costs. Initially, he  lived on 30 percent of his teacher salary and this allowed him to dedicate 70 percent of his salary to paying off student loans and other debts. Even though he lived in Canada, he never turned on the heat. Instead, he wore layers of clothing. He ate as inexpensively as possible, picking up free clams and mixing them with potatoes or pasta. He lowered his housing expenses by house sitting for others and renting a room in a house, rather than pay for a nice apartment. You dramatically increase your odds of being wealthy by being frugal, especially if you are young.

 (2) Use the greatest investment ally you have. 

Time is the greatest investment ally you have. Begin investing early. The earlier you invest, the more time you will have for compound interest to work in your favor. Financially efficient households know what their costs are each month and save and invest as much as practicable. Invest on the date you are paid, don’t wait until the end of the year or month. The only time you should not invest is if you are carrying high-interest credit card balances. Pay off the high-interest accounts first before investing.

 (3) Small percentages pack big punches. 

Warren Buffet has advised that the best way for an average investor to get a fair return on money is to invest in an index fund. The three main types of index funds are a home country index fund, an international index fund, and a bond index fund. Index funds have lower costs than managed funds. 

(4) Conquer the enemy in the mirror. 

Stocks are just like other items that you buy in the marketplace. Your goals should be to buy when prices are low and eventually sell when prices are high. But many investors sell when prices are low and buy when prices are high and so they fail to make money. Generally, it is difficult to time the market. Time in the market is what matters most for most investors. 

(5) Build a mountain of money with a responsible portfolio. 

A mix of a total stock market index fund and a bond index fund works well for many investors. Some recommend taking 100  and minus your age, and that is the percentage that should be in a stock index fund. But this may depend on how secure you are in your other investments. For example, a person with a secure government pension might be able to have a little more in stocks. Some like to add an international stock index fund that comprises all countries.

A couch potato approach that some recommend is to invest in stocks and bonds equally throughout the year and, once a year, re-balance the two so that they are equal again. 

(6) Sample a “round-the-world ticket” to indexing. 

For a 40-year old, one recommended mix of stock index funds consists of
35% Vanguard U.S. Bond Index (Symbol: VBMFX) 
35 % Vanguard Total U.S. Stock Market Index Fund (Symbol: VTSMX) 
30% Vanguard Total International Index Fund (Symbol: VGTSX) 

If rebalancing stock and index funds is more than a person wants to do, there are also Target Retirement Funds that are offered by Vanguard. Look for the mix of stocks and bonds that fit your age.  Ignore the target date of the fund. 

(7) Peek inside a pilferer’s playbook. 

If your money is already with a financial advisor, breaking free may be difficult because they will not want to lose you as a client. But if you consider that even pension fund managers do not do as well as having a mix of stock and bond index funds, this may strengthen your resolve.  

(8) Avoid seduction. 

Someone you know will always have a hot stock tip for you. If it sounds too good to be true, it likely is not true.

(9) The 10% stock-picking solution if you really can’t help yourself.

If you aren’t convinced that index funds are the right mix for you, set aside ten percent of your investment income and try your hand at picking individual stocks. Look for stocks with low debt levels. 

Rating: $$$$$ out of five.  Excellent book.    


Copyright @ 2016 Christine Esser

This book was purchased, not a gift.   

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