Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School is the book that really encouraged me to start taking a greater interest in building my wealth and enter into the world of index fund investing. Before reading this book I had money just sitting in low interest savings accounts, losing money by the day to inflation. After reading it, I felt confident to start my investment portfolio, and understand the risks and mechanics behind it. There is a reason why the /r/PersonalFinanceCanada community often recommends this book.
Written by a Canadian school teacher, Millionaire Teacher uses evidence-based arguments to promote a combination of smart spending and index investing as a way to grow your wealth and become truly wealthy (whatever your definition of that may be).
Reader level: Beginner to moderate
Millionaire Teacher is primarily for Canadians (but does provide information for those in other countries) who are looking to enter the stock market for the first time, and are prepared to play the long game to build their wealth slowly but surely through compounding returns and portfolio’s of index funds.
This book is written for those with little to no knowledge about investing, but it doesn’t talk down to the reader – if you do already have a base knowledge on the subject, it won’t go too slow, and will most likely provide some valuable context on the subject.
There are ‘9 Rules’ that Andrew Hallam provides as part of his strategy, but they are more chapter headings than rules. Here is a breakdown of what Millionaire Teacher talks about in each section of the book:
Rule 1: Spend Like You Want to Grow Rich
This chapter covers what it actually means to be wealthy. Hallam defines his own definition of what it means to be ‘rich’ or ‘wealthy’, looking beyond houses and cars. This section also looks at how to buy a car as an appreciating asset (hint: DON’T BUY BRAND NEW) and how Hallam spends his money to be able to contribute as much as he can to his retirement investments.
Rule 2: Use the Greatest Investment Ally You Have
Rule 2 talks extensively about the benefits of compound interest, and the power of combining compound interest with long term investing. When asking when to get into investing, this chapter brings the point home of ‘the earlier the better’.
Rule 3: Small Percentages Pack Big Punches
Find out why actively managed mutual funds are bad for you! Hallam looks at how mutual fund managers aren’t any more likely than index funds to succeed, and that the fee you pay to invest in an actively managed fund immediately puts you behind when looking at growing your investment.
Rule 4: Conquer the Enemy in the Mirror
How do our natural own behaviors work against us as investors. This chapter highlights how to not get caught up in emotions and hype, and how to be calm and patient when investing in index funds.
Rule 5: Build Mountains of Money with a Responsible Portfolio
This chapter clearly explains the difference between stocks and bonds. Learn about level of safety or risk that comes along with investing in either, and the importance of diversifying your index portfolio between different markets.
Rule 6: Sample a “Round-the-World” Ticket to Indexing
Learn about specific examples of index portfolios from different countries and the variety of ways to build an index portfolio. This section provides helpful information by providing examples of specific index funds and how to start investing in them.
Rule 7: Peek Inside A Pilferer’s Playbook
Banks and financial advisors will likely try to guide you away from investing in index funds. They are often wrong and looking at their own self-interest. This chapter provides some good tips on how you can respond to a financial advisor who isn’t actively helping you in you quest into index funds.
Rule 8: Avoid Seduction
Everyone makes mistakes when investing, and that’s nothing to be ashamed about. Hallam details mistakes he’s made, and describes how easy it is to be seduced into seemingly ‘easy-money’ investments.
Rule 9: The 10% Stock-Picking Solution…If You Really Can’t Help Yourself
This chapter is for those people who can’t help themselves, and want to venture outside of index fund investing. Hallam provides basic information on how to make decisions when picking singular stocks, and indicators of a smart buy.
Millionaire Teacher does a fantastic job explaining how and why someone should choose index investing as their route to wealth. Hallam explains things very clearly, providing concrete numbers and examples to back-up his argument. Starting with a basic knowledge of investing, I never felt that Millionaire Teacher talked down to me, or over-simplified anything. The different topics provide something for everyone, and provide interesting insights that aren’t always obvious to those new to investing.
Would I recommend?
Whole heartedly! This is the book that allowed me to fully understand index funds. Overall, it covers both the pro’s and con’s to using them for your investment portfolio and it provided me enough knowledge to enter the stock market confidently, instead of having my money sit in low interest accounts. Anyone who is starting out trying to build their wealth should read this book!