A few weeks ago, I got the chance to interview Millionaire Teacher author Andrew Hallam for an episode of the Mo’ Money Podcast. You can listen to the episode below, or check it out on iTunes, SoundCloud and YouTube.
I was actually planning on pestering Andrew to chat with me about his book because Millionaire Teacher is always one of the top investing book recommendations I get from my personal finance pals. It must have been kismet, because around the time I was going to email him, he emailed me! Don’t you love when things happen like that?
You see, the first edition of Millionaire Teacher came out in 2011, but a lot has changed in the financial world that an update was necessary. Case in point, robo-advisors. Although the first robo-advisors started popping up in 2008, it’s only been in the past few years that they’ve become more popular and widespread (especially in Canada).
So, Andrew released the second edition of Millionaire Teacher in January 2017 with several updates, and it’s now one of my favourite investing books of all time. I mean it, I whipped through it in a weekend and have been bugging my husband to read it to ever since.
How Millionaire Teacher Came to Be
I had a feeling I’d love this book because of Andrew’s backstory. He’s not trying to sell the dream or tell you that with his tricks of the trade you can get rich fast too. Nope! He was able to become a millionaire on a teacher’s salary and didn’t sell his soul to do it. He just stuck by his nine rules of wealth building, invested in index funds like the wise Warren Buffet, and was patient.
His strategy for becoming a millionaire may not be exciting or sexy, but that’s because it works. It doesn’t sound to good to be true, because it’s not. It’s a simple strategy with many lessons we’ve heard before, but he’s the proof that if you follow through and stick to it, you can build your wealth into the seven digits on an average salary just like him.
And that’s why he wrote Millionaire Teacher. He was teaching his students and their parents about his strategies, but he wanted to let more people know that investing and building wealth doesn’t have to be complicated. This was a concept I struggled with in my early 20s, thinking that you had to have an MBA to understand how to invest properly. In Andrew’s book, he outlines exactly what he does to invest, giving you a thorough guide on how to follow in his footsteps.
If you’re looking for a book that doesn’t talk down to you, or above you, and gives you actionable steps to follow once you’ve finished, then I highly recommend this book.
How to Spend Like a Millionaire
Andrew shares nine steps to building wealth like he did, but I’m just going to share a few of my favourites to give you an idea of what you can expect from reading Millionaire Teacher.
The first chapter got me hooked, and it’s because he talked about the spending patterns of millionaires.
You may be surprised to hear this, but most millionaires live fairly frugally. They don’t spend more than they need, they don’t buy flashy cars, and they probably don’t look like the typical millionaire that’s portrayed on TV.
The reason being? The best way to continue to build your wealth (and maintain it), is to not spend that much of it. The best thing about being a millionaire is that you can afford a ton of stuff. You’ve got options and freedom like you never had before. But, that doesn’t mean you’re obligated to spend it.
How Time Is Your Biggest Ally
We’ve all heard this one before, when it comes to investing your biggest ally is time. Why? It’s simple — compound interest. In the book, Andrew shares a story about a girl who starts investing at 5 years old. She didn’t have a lot to invest, but because she started so young, time worked on her side and she was able to turn a $32,400 into $1 million after 25 years.
This may sound a bit crazy, since who invests at 5 years old, but if I knew the power of investing at 5 years old, you better believe I would have begged my parents to teach me the ways back then! I still feel like I’ve missed out by only starting to invest at 24 years old. If I’d just put away a little bit every month at 16 when I started working, it’s crazy to imagine the potential growth I could have seen in another 40 years.
So, if you’re reading this right now and haven’t started investing, do it today! There’s seriously no better time than the present to start investing. And you don’t need a lot of money to get started. I started with as little as $1,000 when I was 24, then contributed a few extra hundred bucks each month. And I was living in one of the most expensive cities in Canada (Vancouver), and making $30,000/year. If I can do it, so can you!
Fees, Fees, Everywhere Fees!
We’re all paying fees, but I think it’s fair to say most of us didn’t really understand this until CRM2 came into play.
I’ll be honest, when I first started investing in index funds through Tangerine (then ING Direct) in my early 20s, I didn’t know what fees I was paying. I knew I was paying something, but I had no idea what exactly.
Then, I switched all my investments to a different financial institution and invested in mutual funds. It definitely became more apparent that I was paying a lot more to hold those investments, and I was not loving it. And of course, whenever I brought up the high MER (management expense ratio) of my mutual funds with my financial advisor, he’d just say that’s the typical cost for an actively managed fund and let’s look at the history of the fund again to make me feel better.
Needless to say, I started doing a ton more research and took out a page of Andrew’s book even before reading it. After 3 years of dismal returns and high fees with my mutual funds, I moved all my investments into low-cost ETFs through two robo-advisors. One of the best decisions I’ve ever made.
We’re all paying fees on our investments, that’s just how it is. But, you do get a say in how much you want to pay. If you want to pay lower fees, say goodbye to mutual funds. Their MERs are usually between 2-2.5%. If you were to switch to index funds through Tangerine, you’d be paying about 1%. If you were to invest in ETFs through a robo-advisor, you’d be charged between 0.4-0.5%. And if you really want to slash those fees and aren’t afraid to DIY invest through a brokerage, you could be payin as low as 0.06%!
What all those percentages mean is thousands of dollars you could pay or save. That’s why it’s so important to find the best investments (index funds or ETFs as recommended in Andrew’s book) for the lowest fees. Because the less fees you have to pay, the more money you can save to grow.
Why I’m Finally Excited to Become a Millionaire One Day
Before reading this book, even though I’ve always felt like I had my financial house in order, I never really thought I could become a millionaire one day. I knew that’s probably how much I’d need to retire on at 65, but saving up that much seemed impossible. Especially since my husband and I are now both self-employed, and I’m in my first year of business. I’d just be happy if I can continue to earn enough not to go back to my old 9 to 5.
But after reading Millionaire Teacher, the biggest takeaway I got was how realistic it actually is to become a millionaire. You don’t have to earn a crazy salary, you just need to be smart with the money you do earn.
I’m only 30 years old now, so I’ve got several years to save and grow my money. But now, I’m definitely less worried and afraid that I won’t have enough to retire on. If anything, I’m more motivated and excited to continue on the path I’m on and to see how far I can go.
Have You Read Millionaire Teacher?
If you have, let me know your thoughts in the comments!