9 RULES OF WEALTH YOU SHOULD HAVE LEARNED IN SCHOOL
Secrets from the Millionaire Teacher, Andrew Hallam
“Review or door stopper,” read the subject line of the email.
Now that is a book review request I enjoy. Make me laugh, and you have my attention.
But this is not going to be a book review. This article will give you actionable tips from inside the book. Suffice it to say, Millionaire Teacher is a comprehensive personal finance book for beginning or intermediate investors. And I recommend that you read it!
Read this article and come away with actions to implement to become a Millionaire. Some of these may not be completely new and that is because there are tried and true strategies to grow your resources.
First come the Quick Tips; next is the in depth information and motivation.
Nine Rules of Wealth Checklist
1. Spend like a Millionaire, if you want to become rich. That means don’t spend too much. In general, millionaires live conservatively, not extravagantly.
2. Start investing early to allow your funds to compound and grow over time.
3. Invest in low-cost index funds to maximize your future wealth.
4. Learn about stock market history, greed, and fear, so you don’t become a victim of buy high and sell low.
5. Learn to build a complete stock and bond portfolio using index funds. You will beat most professional investors.
6. Use index accounts, no matter where you live.
7. Don’t fall for an advisors “hard sell”.
8. Watch out for “too good to be true” scams that promise outsized results.
9. If you want to dabble in individual stocks, do so only with a small portion of your portfolio.
In Depth Advice for Wealth Building
More detail pilfered from Hallam, a high school English teacher who built a million dollar investment portfolio on a teachers salary.
Spend Like you Want to Grow Rich
You’ve heard it before, the millionaires are not the folks riding around in Cadillacs and Porches but are those living in the modest home driving an older car. Hallam’s path to millionaire status was peppered with a cheapskate lifestyle for many years. This guy rode his bike 70 miles per day to work through rain and sleet. He lived on clams salvaged from the beach accompanied with low cost pasta and potatoes. Free rent was the byproduct of house sitting gigs for those Canadians wintering in the south.
That’s how he can afford to live well today; travel, live in a condo with a pool and squash courts, and drive a classic Mercedes.
What’s the takeaway for you? I certainly don’t want to get my food from the beach or ride a bike to work. Yet there are other ways to live conservatively with an eye towards the future. Substitute low cost alternatives for life’s necessities. You need a place to stay, you don’t need a luxury apartment. Take in a roommate or two. You need food, but you can cook at home instead of eating out. Have a peanut butter sandwich (I have one at least three days a week) for lunch once in awhile and pasta for dinner.
The lesson is this, delay gratification for a while and understand that the wealthy “Look to the Future.” Spend responsibly, think creatively, save profusely, and you can become wealthy on a teacher’s salary.
Conquer the Enemy in the Mirror; Watch out for Fear and Greed
I tend to worry a lot, so anything to do with “mental money” strategies catches my interest. Hallam explained that mutual funds tout 10% average annual gain. Great, that means that all the investors in the fund earned 10% annually as well? Not quite.
Investors tend to be influenced by the bifurcated emotions of fear and greed. When the price of a mutual fund falls, many investors get scared and pull their funds out. Then after the fund goes up for awhile they get back in.
What just happened is that those investors missed the largest portion of the funds’ gains. Hallam underscores the importance of the classic statement;
It’s not timing the market, but time in the market, that leads to long term financial growth.
The stock market goes up and down. In the short term, these movements are completely random. In the long term the trend is upward. Jumping in and out of the market leads to buying high and selling low. Not a great way to make money!
Hallam disclosed that he put money into the stock market after 9/11, when the fearful were pulling out. He reasoned that businesses weren’t worth less because there had been a terrorist attack. And of course, taking advantage of bargains when fear is in the air is a wonderful method of buying low.
Fight the tendency to follow the crowd and your profits will grow.
In sum, for those just starting out, there are engrossing stories and time tested wealth building strategies showcased in Millionaire Teacher. There’s even a section on how to make money buying and selling your vehicle. It’s a fascinating approach that anyone can try.
Remember, live sensibly, spend smart, and invest regularly. You may not get rich overnight, but you will set yourself on a path to a wealthy future.
Can’t Get Enough Wealth Building?
- 10 Rules for Building Wealth; CNN Money and Fortune
- How Young Adults Can Build Wealth; Young Adult Finances
- Side Businesses You Can Start Today; Wise Bread by Ashley Jacobs
- 12 Tips to Build Wealth for Early Retirement; Financial Mentor
Tried any of these strategies? What additional wealth building advice can you offer?