Millionaire Teacher Summary And Review

Millionaire Teacher Summary by Andrew Hallam teaches you how you can build wealth on a teacher’s salary by investing wisely in index funds and bonds. And at the same time creating a responsible portfolio to avoid most risks.

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Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School
  • Wiley
  • Hallam, Andrew (Author)
  • English (Publication Language)
  • 256 Pages - 01/04/2017 (Publication Date) - Wiley (Publisher)

Last update on 2022-04-07 / Affiliate links / Images from Amazon


About the Author of Millionaire Teacher

The author writes a lot about Personal Finance.

He is the author of two bestseller books:

  • Balance
  • Millionaire Teacher

Learn more about the author here.


Millionaire Teacher By Andrew Hallam Book Summary [pdf]

What if a middle-class worker could make more money than a high-salaried person?

That sounds tough, doesn’t it?

If one can spend less and focus on the fundamentals of investing, it’s possible.

The problem is as soon as we hear about the ‘stock market,’ it induces a sense of risk.

We all have heard stories of people who lost their life savings in the stock market in the hope of getting rich.

The problem is:

Our school systems don’t bother teaching us all these intelligent investing techniques that the author has discussed in this book.

There is a misconception among many people that you need to have a high-paying job to be eligible for investing.

But the good news is: You can become wealthy even on a teacher’s salary according to the author if you read this book.

Even if you are a young person, you can invest wisely and build wealth in a few years.

This is why you must read this book summary (commentary) till the end.

Because in this book summary, I’ll share some of the best lessons that will help you build wealth over time without getting too technical.

Alrighty, without further ado, let’s dive right in!

Lesson #1: Avoid debt like a disease.

a man shackled by the chain of debt

If you want to become truly rich, you have to avoid debt as much as possible.

When you look at rich people, you see them driving throwing money on lavish cars, and buying expensive homes, and this gives us a false image.

But isn’t that how truly rich people behave? Not really.

The author talks about how many millionaires don’t drive expensive cars like Ferrari or Lamborghini. They hate buying vehicles on lease.

An intelligent person avoids debt traps and doesn’t buy anything if he doesn’t have enough money for it.

Banks love to sell their loans or credit cards through salespeople and charge high-interest rates. Whenever you take a loan from a bank, you end up paying more money in total.

The author suggests that one should rather drive a cycle if he doesn’t have money for a car.

Many people try to outclass their peers and purchase expensive cars. But if you think about it, the value of vehicles depreciates over time.

Let’s say you bought a Lamborghini, and now you want to sell it after 5 years, you would lose money in this case. And not to mention the extra amount you will pay for heavy interest rates that come with debts.

The intelligent approach is to never fall into a debt trap.

Cut your spending and save money if you have to buy something expensive. And if you can’t save money, then don’t buy it all.

When you owe someone money, even if it is a bank, you sacrifice the quality of your life.

You always keep thinking about the worst-case scenarios like “What if you fail to pay back?” or “What if you lose your only income source?”

Taking debt is like a disease. If you catch it, it’d bring you uneasiness.

The author suggests that instead of buying lavish cars, you should invest that same amount of money in real estate or stocks.

That way, the value of your money will appreciate with time.

Truly wealthy people buy only when it’s necessary. While an average person is always confused between needs and wants.

To an average person, ‘wants’ appears the same as ‘needs.’ But if you read a lot of books on Finance, you must know that they are not the same.

Saving is not an old fashion thing. You are not a miser if you don’t buy unnecessary stuff. It’s the opposite actually. You are a genius if you make deliberate choices.

Debts bring you a lot of stress. Sure, you will be able to show off to your friends by sitting inside an expensive car, but an intelligent person will instantly see how much it has cost you.

Our culture and society give us signals that we should buy more and consume more. You always see your friends hopping over every sale in the market.

This gives us a false impression of the affluent lifestyle.

Remember that whatever you save, you can invest, and it’ll help you grow your wealth with time.

Now don’t get the wrong idea here and become a miser. If you have loads of money to throw away, there is no problem with buying expensive liabilities.

But if you are an average person and want to get wealthy, this is the way to go.

It’s hard to avoid consumption when you can buy anything on a credit card or personal loan these days, but it’s not worth it especially if you get all that by sacrificing your sleep and hard-earned money.

Also read: The Automatic Millionaire Book Summary

Lesson #2: Compounding is magical if you know how to use it.

compounding money

If you just add $100 to your account every month and allow it to grow with an annual interest rate of 10% for 50 years, you will have $1,396,690.23

It’s unbelievable, right?

That’s the magical power of compound interest.

How does money grow so much in just a few years through compounding? It happens because every time the interest rate is applied it is applied to the total amount.

Let’s say you have $1200 in your account after 1 year. Next year, it’ll get an appreciation of 10%, so it’ll become $1320.

Gradually, it’ll compound your wealth will grow over time.

The trick here is not about how much you invest. It’s about how early you start to invest.

The sooner you start, the more magically your wealth will compound.

Warren Buffett bought his first stock at the age of 11 for the same reason. And by the time he reached his 90s, he had allowed his wealth to compound over 80 years.

Remember, if you start early and invest less, you are much better off than a person who has started late and invests a lot.

Also, you don’t have to touch your money while it compounds.

You can cut your spending by avoiding unnecessary things or expensive toys.

Had Warren Buffet used his money on showing off, he wouldn’t have amassed billions of dollars.

The author recommends that you write down your expenses and show some accountability.

Whatever you can save, you can invest.

People who have a lot of debt must get it clear before even thinking about investing. There is no point in using the power of compound interest if your bank is sucking your wealth at a high annual interest rate.

Also read: I Will Teach You To Be Rich Book Summary

Lesson #3: Index funds are better than actively managed mutual funds in the long term.

a man suggesting index funds

The author talks about how mutual funds are not a good investment in comparison to index funds.

He shares a lot of data in the book that prove that index funds indeed are more profitable for investors.

But most so-called friendly finance gurus won’t suggest you index funds because they don’t get any commission for it.

Whenever you invest in a mutual fund, there is a fund manager that does all the trading. And there are a lot of hidden fees involved.

Guess who pays for all that hidden fees? Yes, it’s the investor who invests in the actively managed mutual funds and bears the cost without even realizing it.

Try asking your friendly investment advisor, he would play a lot of cards and try his best to convince you that mutual funds outperform index funds any day.

Chances are, you will find yourself scratching your head and end up even more confused than before.

The author suggests that no matter what advisors say, never believe those who say that index funds are not great in comparison to mutual funds.

Sure there might be occasions where a mutual fund might outperform index funds, but be careful here. Savvy investors never base their decisions on coincidences or volatile shifts in the market.

Things change quickly in the market.

It’s tempting to time the market. But avoid that impulse.

Your friendly finance investment advisor may show you historical data and try to prove that some good mutual funds outperform index funds.

But don’t fall into that trap.

As we just discussed, nobody on earth can time the market and win every time.

Just because a few mutual funds performed better in the past, it doesn’t mean that they will continue to do so.

Those who don’t think long-term pay the price.

Index funds are better than actively managed mutual funds over the long term. This happens because there is no trading involved in index funds. That means there are fewer taxes and fees applied.

Most mutual fund managers charge heavy salaries as the trading process involves a lot of research. So to maintain profits mutual fund companies have to bring in more investors by doing a lot of marketing.

Again, those costs are covered by investors’ investments.

While this is not the case with market index funds. Index funds can be managed by a computer and thus usually do not require a big team.

They are easier to manage.

In short: Index funds are a clear winner in the long term counterintuitive to what most people think.

Lesson #4: Avoid buying more stocks when the market is hot.

purchasing stocks when the market is soaring high

Most investors have no mastery over their fear and greed.

They get afraid the stock market goes down and start selling their stocks. And they get greedy when the stock market rises. They start buying expensive stocks.

Well, that’s not how intelligent investors operate.

The best approach is to buy when others are selling and sell and when others are buying. Of course, always use your common sense. Overall it’s a handy thumb rule.

When the market is hot, the demand for stocks is also high. Consequently, the stocks become expensive. And when the market is down, the demand decreases, so the stocks become cheaper.

The difference between an average and a smart investor is that smart investors don’t try to time the market. They don’t immediately respond to the stock market graphs.

They stay patient and think in terms of 20 years.

They stay committed.

On the flip side, inexperienced investors seek immediate returns. They want high returns in less time.

As soon as they see the stock prices falling, they lose their cool and start selling their stocks.

This might look like a small thing. But these tiny decisions make a huge difference in your returns over a long period (like 15 to 20 years).

Bubbles form in the stock market again and again when stock prices rise due to heavy demand. People end up paying more for the same stocks.

That’s why it’s better to buy stocks when they are cheap (when most people are selling them).

The author recommends treating your stocks the same way you treat any other product.

If you can get a quality product at the lowest price, it’s worth purchasing, right?

The author found that index fund investors are comparatively more intelligent than those who invest in active funds.

Remember, active funds involve a lot of trading based on the fluctuations in the stock market. While in index funds, you buy an index and its value changes based on the market performance.

Put in simple words, index fund investors don’t operate on the basis of greed and fear. They don’t get mad when they see irrational fluctuations in the market.

But this doesn’t mean that index funds always perform well. If the total market falls, your index fund investment will also be affected.

Fortunately, there are ways to manage this. (Discussed later)

Over time, investors have realized that nobody can time the market.

Beginner investors believe that if they buy and sell at a perfect time, they will get great returns. Unfortunately, that dream never comes true.

The author compares the stock market with a dog on a leash. You can’t guess in which direction the dog will move. Stocks have a history of going crazy.

Imagine if it was easy to time the market. In that case, everybody could become wealthy by investing. Every single person would be equal to Warren Buffett.

You may ask, “if timing the market is impossible and not worth it, why do so many make the same mistake time and time again?”

This happens because the temptation that “This time it’ll be different” or “This time my prediction will be right” is hard to control.

Schools don’t teach us ‘how to become a great investor?’ or ‘how to become good at controlling our emotions?’

As a result, people do the same mistake repeatedly.

So don’t get emotional and attempt to time the market.

Watch patiently and don’t copy your neighbors who are mindlessly buying or selling stocks based on immediate fluctuations.

You might not see immediate growth and feel that you are losing out, but after 20 years, you will be happier and wealthier than your neighbors who acted on immediate gratification.

Lesson #5: Have a responsible portfolio to balance out all the possible risks.

a balanced portfolio

You shouldn’t be too much dependent on anything in life.

The same is with the index funds.

If your portfolio has only index funds, consider buying some government bonds as they are safe.

This will help you in the worst case when total market stocks fall.

You wouldn’t want to lose money, especially if you are old and preparing for retirement.

The author suggests buying bonds.

Bonds are a type of loan that you give to the government or any organization for a fixed number of years. And they return all the money plus the interest money after the maturity period ends.

The problem is that they don’t provide high returns like index funds.

You have to make sure that you are not buying such bonds for an extended period. Some bonds even fail to beat the inflation rate.

On the other hand, some bonds provide high returns, but they are risky to buy.

Typically, bonds aren’t as volatile as market index funds so they minimize the risks overall.

The author shares a formula: Minus 10 your age.

If you are 50 years old, you can have 30% of your portfolio with bonds and the rest percentage with other investments like stocks.

This way, you won’t have to watch economic news and follow all the trends. And worry about the drastic changes.

If stocks fall, bonds will provide you stability as the annual return on bonds is predictable and is often just enough to beat inflation.

Overall, your portfolio will remain healthy if you learn to diversify your investments.

Savvy investors or billionaires always keep variety in their portfolios to tackle unpredictable market shifts.

Recommended: The Intelligent Investor by Benjamin Graham


Everyday Millionaire Review

Sale
Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School
  • Wiley
  • Hallam, Andrew (Author)
  • English (Publication Language)
  • 256 Pages - 01/04/2017 (Publication Date) - Wiley (Publisher)

Last update on 2022-04-07 / Affiliate links / Images from Amazon

Great book! I’m impressed.

Before I started reading this book, I expected it to give basic advice like “Spend less” or “Pay yourself first,” but things became a bit challenging after three chapters.

I learned a lot of new things about investing from this.

I had heard about terms like “index funds,” “bonds,” “ETFs,” etc. But didn’t know much about how they operate.

I wish these things had been taught to me when I was in school. I could have amassed a lot more wealth by now.

Many people don’t know these things, and therefore they end up making bad investments or don’t invest at all and let inflation eat all their wealth.


FAQs about Millionaire Teacher

Who is Everyday Millionaires By Andrew Hallam For?

I highly recommend this book to anybody who wants to learn about investing. Especially if you are a middle-class person with an average not-so-high salary, you should read this book at least once. Again, intermediate investors can also read this book to revise fundamentals and check if they are doing everything right or not.

What do you like about this book?

The author dealt with boring topics with a touch of entertainment. I didn’t find the book boring at all simply because I loved the way the author talked in this book. Enough charts and data graphs are provided in the books to avoid confusion.

What you don’t like about this book?

There isn’t much to complain about. But still, I’d say that the later chapters of this book might be a bit complex for beginners who have no idea about personal finance. Such readers might get bored.

How much rating does this book deserve out of 10?

I think the book’s content is refreshing and provides excellent value to the reader. So I’d give this book a rating of 9/10.

Is this book worth the purchase?

Yes, definitely. At the current price point, this book is a rare gem worth the purchase. This book is even better than the classic “The Richest Man In Babylon” that I summarized last year.

Where to buy this book?

You can get this book here: Check the price on Amazon


Further Reading

If you loved reading this, you might also enjoy the following book summaries

Other Books Related to This Topic

Last update on 2022-04-07 / Affiliate links / Images from Amazon

Bonus Recommendation for People Interested in Mastering Personal Finance

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Now it’s your turn

I hope you enjoyed the Millionaire Teacher summary.

Now you tell me:

Have you tried investing money in the stock market?

If so, how was your experience?

Let me know in the comments below.

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Shami Manohar


The Brain Behind This Website

I'm Shami Manohar, the Founder of WizBuskOut. My obsession with non-fiction books fueled me with the energy to create this website. I read at least one book every week on business, critical thinking, mindset, psychology, and more. My mission is to educate and empower every individual through proper knowledge that works in real life.

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