“Millionaire Teacher” by Andrew Hallam - Book Review

I have been wanting to read this book for a while now and I so regret I didn't read it sooner. I am very curious when authors from a non-financial background write personal finance books. I wonder what possible secrets they have discovered that all the money gurus and financial planners haven't already come up with.

Andrew Hallam Is an English teacher who currently resides in Singapore. When he was a young man he met a millionaire that bestowed the wisdom of investing to him. The millionaire told him he needed to invest $100 a month in the markets. Andrew balked and said he couldn't afford that amount. The millionaire said it's only $3.33 per day, you spend that much on fries and Cokes every month. Andrew saw the light and 20 years later he is a millionaire.

Andrews Hallam's natural curiosity got the best of him, he caught the bug and learned the right and wrong ways to invest. He has earned that millionaire status not by sitting on his hands but by investing over and over again. A good lesson I wish I could of learned 20 years ago.

"Millionaire Teacher" is much more than a shopping list of things to do to grow wealth. It's a lesson in lifestyle. The lifestyle Andrew Hallam teaches, is what the millionaire's secret actually is. In his "Nine Rules" he lets the secret out. Rule 1 is "Spend Like You Want To Grow Rich. This one rule is the foundation to all that follows in his book. Without it all the fancy investing practices you come up with not get you where you want to be.

I found the book very easy to read with its casual and down to earth style. It's like your having a conversation with a friend. Andrew uses lots of charts and statistics to back up his ideas. What I can relate personally is his use of low expense index stock and bond funds. This investing style is growing more and more popular every day. I like his philosophy of it's hard to beat the market in the long term consistently, so why try to beat them when you can just join them.

His nine rules should be plastered to your wall so you don't forget them. 

Hallam’s 9 Rules of Wealth:

Rule 1 is to spend like you want to grow rich, wasting your money on today's wants postpones your potential wealth growth. So why do it.

Rule 2 is to take advantage of compound interest by starting investing as early in life as possible. Here is the another great rule that you only realize when your to old to do something about it.

Rule 3 he emphasizes the negative impact of high fees and makes the case for low fee index funds.

Rule 4 is to “Conquer the enemy in the mirror.” It looks at the problems of stock-picking and market timing, fear, greed and other emotions that can sabotage investing.

Rule 5 is to build a “responsible portfolio” that includes both stocks and bonds. Here Hallam introduces what he terms the Couch Potato Portfolio.

Rule 6 looks at indexing in the U.S, Canada,and worldwide.

Rule 7 is entitled “Peek inside a pilferer’s playbook.” It looks at common sales practices of financial advisors and brokers. He says to watch those advisors that want to nickel and dime your portfolio.

Rule 8 is “Avoid Seduction,” and looks at the various distractions that some term “financial pornography” — investment newsletters and magazines, junk bonds, gold and hedge funds, which Hallam describes as “the rich stealing from the rich.”

Rule 9 is for those who love to pick their own stocks if “they can’t help themselves.” Hallam’s solution is to stay 90% indexed but to allocate 10% to individual stocks if you find it enjoyable.

Overall I found the book keeping my interest and a lot of fun to read. Many things I read in the book are already well know practices for an old hand couch-potato investor like myself. I feel the main take away is the philosophy and foundational concepts that keep you on track during your investment process. We all know things we should be doing, concerning investing, but staying on track and not bailing out in the down markets takes a core understanding of knowing yourself and having a plan. Thats what separates the million teachers from everyone else. Read this book you'll learn something.

Get the book Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School


Visit Andrew Hallam's website at  AndrewHallam.com

Roth IRA vs. 529 plan - Which is Better for College Savings?

Roth IRA (Photo credit: Philip Taylor PT)

In USA Today they had a story that compared Roth IRAs to 529 Plans.  It said when it comes to saving for a child’s college education, a Roth IRA might be a better investment than a 529 Plan. I agree the column is right in suggesting that anybody who is thinking about saving for a child’s college expenses should consider a Roth IRA instead of, or in addition to, a 529 Plan.

The 529 Plan

A 529 Plan allows contributions to grow tax-free and distributions to be made without any taxes or penalty, if the distributions are for qualifying educational expenses.  So if you take $5,000 today, put it away in a 529 Plan for your child’s college, and it grows to $10,000 in 10 years, you can use that $10,000 for college and not owe any tax on your $5,000 in growth. But what if you need the money, or your kid decides not to go to college?  Well if you end up taking a withdrawal from the 529 Plan for something other than qualifying educational expenses, the earnings become taxable, and there’s a 10% penalty assessed on the earnings portion of a withdrawal.  

Benefits of the Roth IRA

Roth IRAs are designed for retirement savings, but are flexible because of the withdrawal rules.  At any time after the Roth IRA is established, an individual can withdraw contributions that were made to the Roth IRA for any reason without any penalty.  If an individual has had a Roth IRA for at least five years, contributions and earnings can be withdrawn without any penalty and without any taxes if the distribution is a qualified distribution (examples of qualified distributions include distributions after the individual has reached age 59 1/2, or a withdrawal to help the Roth IRA owner or a qualifying family member buy a first home for the individual or a family member).

Where they Differ

Distributions from a Roth IRA to pay for qualifying educational expenses aren’t treated quite the same as qualifying distributions, since the earnings portion of the distribution is subject to tax. This is a key difference between the Roth IRA and the 529 Plan, where earnings distributed for qualified educational expenses aren’t subject to income tax.

Which is Best?

Roth IRAs easily have 529 Plans beat if you want flexibility. 529 Plans are state-sponsored programs and come with limited investment options which typically include mutual funds, CDs, and bonds.  With Roth IRAs, investors can actively manage the account and have a much broader array of investment options.

In addition to earnings being subject to income tax when distributed for educational purposes, Roth IRAs have a few other shortcomings as compared to 529 Plans.  529 Plans allow for significantly greater annual contributions. Roth contributions are capped at $5,000 for individuals under 50, or $6,000 for individuals 50 and over. 

If you are considering setting up or continuing to fund a 529 Plan for a child, you should consider contacting a financial planner to discuss whether a Roth IRA might be a better option for you.  Not only can a financial planner help you determine whether a Roth IRA is appropriate, but he or she can also help you navigate the rules regarding contributions and withdrawals.

5 Ways To Save Money on Your Next Cruise

 (Photo credit: Wikipedia)

One of the great things about going on a cruise is that your room, meals, entertainment and daytime activities are included in your fare. But if your not careful you could be subject to many of the on board ways to overspend.

1. On thing for sure when you go on cruises, there always is plenty to drink. Whether it's alcohol, soda or bottled water, it's going to cost you extra. You are not allowed to bring your own booze but many cruise lines allow you to bring water and soda. It may not always be convenient to carry your bottles around but it sure makes sense in the cabin. You could also save money by using the ships unlimited drink package, if available. 

2. To make up for the great deal you paid for the cruise, on board amenities like spa treatments are going to cost you double than what they cost normally. It could be either massages or extra charges for select fitness classes, these extras services will dig deep into your pocket.  

3. While on board, you do get all your meals for free, including the midnight buffet. But you will be offered alternative meals such as gourmet specialties by the chef. There is nothing wrong with partaking of these incredible meals, just be sure to budget for them ahead of time.

4. When the cruise ship reaches a port there are always day excursions. Many cruise lines make a ton of money on these side trips. If you plan ahead you could contact local tours and transportation companies that will definitely give you a better price for the same trip. 

5. Of course tipping is the most misunderstood part of the entire vacation cruise experience. At bars and nightclubs on board be sure to check if your bar tab may already have the tip included in the total. This happens sometimes and you end up over tipping or tipping twice. Tips to the crew are sometimes automatically added to your shipboard bill. Again be sure when reviewing your bill to see if you don't double tip or over tip.

When you are prepared and know ahead of time what your expenses are it make the whole trip nicer and anxiety free. If you have any questions when on board, the ship's purser will be glad to explain and help with whatever your needs.

How to Get the Lowest Mortgage Interest Rates

Interest Rates (Photo credit: 401K)This week the average interest rate on a 30 year mortgage dipped below 4 percent. This is only the second time in history this has happened. With these kinds of interest rates your home refinance options just got a lot better

Mortgage lender Freddie Mac said the rate on the 30-year fixed loan has dropped to 3.87 percent. Six weeks ago, it dropped to a low of 3.93 percent, according to the National Bureau of Economic Research. The 15 year fixed rate mortgage fell to 3.04 percent. The National Association of Realtors reported a 3.4 percent increase in sales of existing homes in April and more homes on the market for potential homebuyers to see. The low rates also continue to support your home refinancing options.

What can be done to help you get the lowest mortgage interest rates?

Even though mortgage rates are at such a low interest rate it doesn't mean you will get these rates. It depends on your credit score among other things. You can get the best rate mortgages if you prepare.

1. Make sure you have a great credit history.

Being maxed out on your credit cards is a certain way to bring down your credit score. Paying down your debts will help in raising your score. Before applying for the new mortgage it is best to check your credit report. Occasionally errors can get into them. You have the ability to clean up the errors. You can dispute the errors and if the credit reporting agency can't prove the item, then by law they have 30 days to remove it. After you fix your credit report, be sure to wait a couple months so your score can return to a higher level.

2. Make sure to have cash in the bank.

Whenever you apply for a mortgage the lender always asks what your balances are in your checking, savings, and investing accounts. Having money in these accounts shows the lender that you are responsible; it shows you have the ability to save and hold on to your money. It tells the lender that you are a good risk and will get you a lower interest rate.

3. Be a smart consumer.

Being a smart consumer means shopping around for the best mortgage deal. Start on the Internet to locate the best mortgage companies. There you can compare many loans in a short period of time. Don't be afraid to call these companies on the phone and try to get a better deal. A lower interest rate or more favorable closing costs will save a lot of money.

Don't rush into getting a mortgage. If you do a little shopping around you could save yourself a lot of money. A lower interest rate or fewer points will save you money over the life of the loan, keeping more money in your pocket.

Should Sellers Be Present for House Showings?

If you ask any real estate agent that question, they will look at you like you're crazy. The last thing any agent wants around is the owners. They know the owners will just screw things up. 

It's just like the old saying goes "To many cooks spoil the soup". When you hire a real estate agent to sell your home, the owners need to get out of the way and let them do their jobs. 

If you have ever gone to an open house and walked through someones occupied home, would you like the owners watching you open their closets and cabinets? It's an uncomfortable situation and the potential buyers will feel odd about the entire experience and not be concentrating on your home.

Home buyers need to feel as comfortable as possible when looking at a potential new home. It’s a big investment, and they should feel welcome to open closets, look in cabinets, look behind the couch, or put their ears up the walls or windows. A serious buyer of a property needs to do whatever they can to learn about the home.

When buyers don’t feel completely comfortable to explore, they may miss the intricacies of a property. Or they might not give the home a fair chance. This means a missed opportunity for both the buyer and the seller.

Your real estate agent is an expert in sales. They know what to say to make a sale. Owners tend to talk to much about the wrong things. They may describe things about the neighborhood that to them are a plus but to the buyers could be a minus. The sales agent has already pre-qualified your potential buyers for compatibility and knows their needs. 

Homeowners are coming from an invested position. Buyers could say some derogatory things about the home to the owners and bring a lot of drama into the entire process. Your sales agent keeps the drama out and treats the sale as a business deal. 

An Exception to the Rule

The only exception to being present at an open house is if you are there undercover. If you are looking around your home and trying to blend in, it is a good idea to listen to what the visitors are saying. You can use your anonymity to learn what the buyers really think. Because you are just there as they are, you will be privy to honest criticism of your home. This criticism can be helpful to find out if there are any problems that are keeping your home from being sold.

In my business, I have had to be the salesman on homes that we have built. In the capacity of owner-seller I have to be there and I must say I do a good job. But when I sold my personal home, I was nowhere to be found. I left it up to the Realtor to do his job.  

Invoice Factoring Can Help Your Small Business

In the business world, opportunities can come from unexpected places. Being ready for these new chances to expand and grow is what separates a growing business from a stagnant one. Having the capital ready to invest allows you to quickly pursue new ideas. 


But sadly in todays economic environment cash is in short supply. But one thing many companies do have is an abundance of accounts receivables. Using invoice factoring, you can turn your receivables into cash, when time is precious.

Invoice factoring enables a small business to sell its accounts receivables to a third party at a discount. The small company receives almost immediate cash which it can use to fund new opportunities. When the invoice is paid in full the company receives the remaining balance less the factoring companies fee which is 3% or so.

In todays fast paced business world waiting for customers to pay an open invoice can take weeks or even months. When a business can't wait it uses invoice factoring. Factoring companies can advance up to 90 percent of an invoice total in under 24 hours. The reason it can be done so quickly is that factoring is not a loan, it's the purchase of receivables or financial assets. Bank loans usually are between two parties, while factoring involves 3 parties. Banks base their loan on credit worthiness but factoring bases its decision on the value of the receivables. There are no lengthy applications or long term commitments.

With invoice factoring a small company has access to quick money to expand, pay taxes, pay insurance, restock, or reestablish cash flow. For further invoice factoring information go to cbacfunding.com