Book Review: Millionaire Teacher by Andrew Hallam

I have just finished the book “Millionaire Teacher” by Andrew Hallam. It is an interesting read on the how Andrew became a millionaire on the back of hard work, prudent savings and savvy investments, all on a teacher’s salary. The book talks about 9 rules of wealth which one should have learned in school. I will not cover all the rules in detail; you would have to read the book for that!

Here are some of the key takeaways I got from the book though. The first step to success is to live frugally and start investing as early as possible since the returns grow exponentially with time. From I read Andrew is not a big fan of debt or leveraged investments, so it is fair to assume that property investments are not his top choice for investing. The book stresses on the pros of investing in index funds as opposed to mutual funds/unit trusts or individual stock picking. It is no surprise that index funds returns are superior to actively managed mutual funds as there are no excessive expenses and commissions which come with mutual funds. Also, if one does not have the knowledge or time to analyze individual stocks, index investing through ETFs might be the best way to achieve high diversification with minimal capital.

The book also discusses building a diversified portfolio with indexes, such as bond indexes, foreign stock indexes and local stock indexes. This is indeed a good strategy which combines the low or negative correlations between the different indexes to create a well-rounded lower risk portfolio. Andrew also suggests rebalancing the portfolio once or twice a year to take advantage of current weaknesses in an asset class, i.e. sell bond indexes to buy stock indexes when bonds are up and stocks are undervalued. Personally, I rebalance my portfolio more frequently than once or twice a year, but that’s because I actively manage my investments and I perform intensive research on my individual stock holdings. Reading this book however, has reminded me that I should look at bond indexes as well.  Stocks and bonds are negatively correlated, usually when stocks go up, bonds go down and vice versa. Holding both stocks and property means that you can look forward to having a more stable portfolio versus an all stocks or all bonds portfolio.

Overall, the Millionaire Teacher is an entertaining read and a good book for those who are new to financial planning as well as investing. Andrew explains the basic concepts in an easy to understand language although it does not go into detail more technical aspects. It also serves as a great motivation to know that you don’t have to be a lawyer or doctor to become a millionaire, anybody who works hard and invests smartly can do it.

 

For further reading, you may be interested in:

My Journey to Financial Freedom

Five Steps To Financial Freedom Step 1 – Boost Your Active Income

Five Steps To Financial Freedom Step 2 – Get Rid of Unnecessary Debt Part 1

Book Review: Get Value From Your Life Insurance by Tan Kin Lian