I was lucky to receive a free review copy of Andrew Hallam’s new book titled Millionaire Teacher – The Nine Rules of Wealth You Should Have Learned in School. The subtitle immediately caught my eye as I’m all about building wealth, plus I’ve always believed the American school system does a rather poor job of teaching basic personal finance skills.
Hallam is a high school teacher who has used simple and time-tested methods to become a millionaire on a teacher’s salary. You can do the same if you follow his nine steps to building wealth. Below I’ve listed Hallam’s nine steps and a few of my own words about each.
Spend Like You Want to Grow Rich
This is a lesson I first learned while reading The Millionaire Next Door. If being wealthy is your goal, you can’t just sit back and wait for it to magically happen by itself. You need to actually take steps that will lead you closer to your goals. Millionaires allocate their time and resources to actions that are conducive to building wealth.
Use the Greatest Investment Ally You Have
The power of compound interest should not be underestimated. If I could send a message through time to my college-aged self, I would implore myself to start investing immediately. Starting early is one of the keys to building wealth, but most people don’t learn that lesson until years later which forces them to miss out on years of potential earnings.
Small Percentages Pack Big Punches
Investment fees and expenses silently erode your account balance and make you work much harder to reach your goals. Hallam suggests (and I agree with him) that most investors are better off putting their money into low cost index funds.
Conquer the Enemy in the Mirror
The steps for building wealth are pretty simple. Just spend less than you earn and invest the rest sensibly and over time you can build some serious wealth. But that’s only if you can learn to control your emotions and stick to the long term plan. Impulsively chasing one hot stock after another is just one example of how our emotions can get the best of us.
Build Mountains of Money with a Responsible Portfolio
Here Hallam discusses asset allocation and the importance of diversifying your investments. Instead of keeping all of your eggs in one basket, you’ll learn how to spread them out around the house and yard so that even if one gets crushed you can still fall back on the others.
Sample a “Round-the-World” Ticket to Index
In this section you’ll read about real people who live in different parts of the world and you’ll learn how they invest in index funds in their home country.
Peek Inside a Pilferer’s Playbook
Learn all about the tactics financial advisors use to separate you from your money and keep you coming back for more. You’ll also learn all the arguments that advisors will use if you try to ditch their services, and counter-arguments you can use to turn the tables on them.
There is a sucker born every minute and there is no shortage of scammers looking to take advantage of investors. If an investment opportunity sounds too good to be true it probably is. Stick to your plan and build wealth slowly rather than looking for shortcuts that will only derail your plans.
The 10% Stock Picking Solution…If You Really Can’t Help Yourself
I’ve seen a few people criticize this chapter about stock-picking because it goes against much of what Hallam preaches throughout the rest of the book. But I see where Hallam is coming from…he advocates index funds as a superior method to picking individual stocks, but he recognizes that humans are emotional beings. So if you’re the type who just can’t resist picking your own stocks (like me) then put aside 10 percent of your portfolio for stock picking and keep the rest in a diversified mix of index funds.
Millionaire Teacher is full of useful money lessons that you should have been taught in school, and I recommend it to anyone looking to manage their money better.