Singapore American Teacher Investment – Even Better Than It Looks


In September 2006, I created a hypothetical $200,000 portfolio for some expatriate American teachers at Singapore American School.

To build this portfolio at Vanguard, investors would have had:

  1. No sales charges to pay
  2. No account maintenance fees to pay
  3. No redemption fees to withdraw money, should they choose to

 The initial $200,000 went through one of history’s biggest tests: the 2008/2009 economic crisis.

 Despite this, the original $200,000 portfolio (which I rebalanced taking less than 10 minutes a year) would now be worth $267,088.81.

 The overall gain has been $67,088.81


Indexed Portfolio:  September 2006-October 2012



Company Name



% of Total

Current Value

Overall Gain:








Vanguard Tot Bd;Inv







Vanguard Tot I Stk;Inv







Vanguard T StMk Idx;Inv






Why is this even better than it looks?

 American expats can’t contribute much money to their IRA accounts, so most of what they invest is fully taxable.  Actively managed mutual funds are far less tax-efficient than indexes.  But most advisors will stuff your accounts with actively managed products instead.

 Why?  Advisors earn higher commissions on actively managed products;  they buy them at your expense (and their personal gain).

 I can’t afford to buy somebody else a Mercedes Benz.  Can you?

 Consider contacting a company that can help you build indexed portfolios.  Here are a few:

 But remember…these are for Americans only.


andrew hallam

andrew hallam

I'm a freelance finance writer, lucky enough to have been nominated as a finalist for two Canadian National Publishing Awards. I'm also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School, a book explaining how I became a millionaire on a teacher's salary, while still in my 30s. Working to empower people financially, I'm available to motivate and inspire people on basic retirement planning and index investing. I'm happy to comment on your questions, first, please read the Terms of Use.

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28 Responses

  1. squasher55 says:

    Hi Andrew,

    Long time no chat. I like this article…..partly because it makes a lot of common sense, but also because I am also invested with Vanguard in very similar funds……with equal success. So I just want to say to others that your success is not a one-time deal…anyone can participate if they wish.

  2. Kevin Kim says:

    Hello Mr.Hallam!

    Good to read all these posts about the index funds.

    It almost feels like yesterday I learned about the benefits of index funds.

    Just wanted to let you know I keep reading your posts!

    Best wishes,

    Kevin Kim

  3. Leonardo Pabroquez J says:

    but TOO BAD…

    "…these are for Americans only."


  4. sgibbs says:

    As usual Andrew good sage advice. I think the big caveat for most people in this article is that they can see the benefits of Index's.

    Best regards,


  5. Barry says:

    Hi Andrew

    Its an increase of roughly 33.5%, but that's with only an annual compound growth rate of 4.94% per year, to turn the $200,000.00 into $267,088.81 according to a CAGR calculator

    Though I worked it out a bit less to get..

    Value after 1 year : $209,876.74

    Value after 2 years : $220,241.24

    Value after 3 years : $231,117.57

    Value after 4 years : $242,531.01

    Value after 5 years : $254,508.10

    Value after 6 years : $267,076.65

    Interesting to break it down also


  6. Hi Barry,

    Of course, it's an outstanding return, considering the market conditions we went through in 2008/2009.

    The Dalbar study suggests that the average investor made 3.27% between 1990 and 2010, when the markets actually increased (U.S. markets) by 9.1% on average. It's hard to believe that a disciplined strategy of indexing between 2006 and today would have beaten what the average investor made during a period that nearly made 10% on average.



  7. Barry says:

    I was reading about Superannuation fund performance in Australia (mainly run by the insurance companies and banks) and to Nov 2011 the worst fund made just 1.5 per cent a year – around half the annual rate of inflation of 2.93 per cent a year over the seven years reviewed, which equates to compounded losses of 9.6 per cent after inflation is factored in.

    Over five years it was even worse, losing 2.43 per cent a year, or 5.36 per cent a year once inflation was taken into account.

    The Top ranked fund was 6.5% a year over the seven years to Nov 2011

    The target goal set by manyof these funds, is inflation plus 3 per cent over the 'long term'.

    • Very interesting indeed, Barry. I was under the impression that Australian interest rates on bonds have been high (by global standards anything above 3% is high) and the Aussie market has done quite well recently, by global standards. I'm surprised that these plans have performed so poorly. Fascinating. Thanks for sharing.


      • Barry says:

        Hi Andrew

        Having a crack at Superannuation Fund Managers and the Banks/Insurance companies who run them seems to be a national pastime here.

        Industry Superfunds with less fees have moved in with a goal of benefiting members, however the returns are still woeful

        Many have turned to the option of Self Managed Super Funds (a DIY option), something we are doing and using "The Millionaire Teachers" strategy ;o)

        There's an interesting page here by an Aussie Commentator . There's a sales pitch within, but the facts and figures are accurate and make for an interesting read


  8. Chad Squires says:

    Good stuff. I got your name from Andy Donaghue, who knows you. We used to teach together and we met in Bellingham this summer.

    I guess you can no longer say that Personal Finance isn't taught in Public Schools. Our program had 1 semester long class of 32 students back in the early 2000's but now in 2012 we have 4 classes that are a year long and include a third year math credit. It is certainly becoming more popular as students see the need for financial literacy and a math curriculum centered around the topics they need to know!

    Thanks for bringing this information to others. I appreciate your passion.

    Chad Squires

  9. Joe George says:

    Hi Andrew,

    Thanks for your efforts, Andrew. Your site and book have been amazing resources for clueless investors like I was.

    As far as my situation, I am currently using Vanguard Admiral funds, broken up in a similar fashion to the ones listed here; however, I remember you covering something about shifting to ETFs when a portfolio surpasses a certain amount. Unfortunately, I cannot remember when, and I gave the book to a friend. What threshold do you recommend shifting to ETFs, and would that be per portfolio or per fund?

    Thank you,

    Joe George

  10. Anthony says:

    What is your opinion of the Alexander Beard Group Fund for Expat Teachers?

    • Hi Anthony,

      Alexander Beard is extremely expensive. They charge a 5% commission on every purchase. They charge platform costs of 1.75% per year. And their funds charge expense ratios of a further 1.5%. What’s more, you can’t withdraw without penalty (from what one of their reps told me via email) before the age of 55. All told, annual costs are 3.25% per year, not including the 5% sales commission. I recently profiled the firm in my upcoming book for expatriate investors, so the shocking data is fresh.


  11. Anthony says:

    Just want to thank you for your book and your website. I wish I had read the book 15 years ago. Better late than never, in any case. Now actively investing in indexed funds with a slightly higher risk of 70/30. “Buy the haystack instead of looking for the needle.”


  12. Dave says:

    My wife and I used Alexander Beard for four very sad years when we were working in Tanzania. Now our money seems to be hostage and like you have said, we incur ridiculous fees so our investment is just treading water at best. I have contacted them and they will transfer our balances to a registered ISRP but not to our Vanguard or Fidelity accounts. Do you know how I can set up another “International School Retirement Plan” that will satisfy them? I will do anything to get our money away from them. Any suggestions you have for getting our money is appreciated.

  13. Fred Richardson says:

    The trouble is that the only way for Americans living abroad to have a Vanguard account is to LIE to Vanguard about one’s address. Having bought “The Global Expatriate’s Guide to Investing” largely because there was a specific chapter on investing for American expats, imagine my dismay when the ONLY guidance other than a cursory definition of IRA’s REQUIRED one to lie to the financial services firm about address, leaving one open potentially to all sorts of problems later. Quite frankly, this is really SHODDY stuff, though not nearly at the level of the actively managed fund.

    • Thank you Fred,

      What you have pointed out is my lack of clarity in writing. Thank you for that. I didn’t think my words promoted the idea that you should lie to open an account. My goodness! My communication must have been very poor, in that respect. On page 207 I wrote, “If you’re thinking of moving overseas but have yet to take the plunge, open a Vanguard account online before leaving the United States.” On page 206, it says that the only investors overseas who have opened a Vanguard account after leaving the U.S. have lied on their application. But I clearly state in the very next line that this “isn’t cool.”

      So the Vanguard section is for those who have already opened a Vanguard account. In the event that some readers say, “Hey, but my friend opened an account with Vanguard last week from Berlin,” I wanted to clarify why they might encounter that.

      I then went on to explain that investors could open an account with a brokerage like Schwab, even while living abroad. In case your copy of my book is missing those pages (you never know) here are the ETFs you could purchase to create a CouchPotato portfolio with Schwab:

      My apologies for the poorly written work. I can try to defend it all I want. But if your interpretation suggests that I was encouraging people to lie on an application, then I simply didn’t write clearly enough.

      Thanks Fred.


      • John says:


        I read the same pages that Fred is referring to this morning. However, your words did not at all leave me with the impression that you were encouraging people to lie on their applications.

        Regarding Horizon swap-based ETFs, you mentioned that you now own 3 of Horizon Canada’s swap-based ETFs – HXT, HXS and the Canadian Select Bond Universe. Does this mean that you no longer contribute to your Vanguard ETFs that cover the US and Canadian markets and Canadian short-term bonds? In other words, I am now also wondering if I should consider buying swap-based ETFs, also. As an expat, I don’t pay captial gains taxes with TD International, but I still have to pay the 15% taxes on dividends, which I would like to avoid.

        Finally, does one still receive dividends from the Horizon swap-based ETFs or are they automatically reinvested to purchase more shares?


        • Hi John,

          First of all, thank you.

          Secondly, as for my personal holdings, I do own Vanguard’s short term bond ETF (VSB) and the Horizon Canadian bond ETF. I own one of each, just to mitigate my risk (however small it may be) with the swap based products. I also own Vanguard’s international stock market ETF. And when Horizon offers a swap-based version, I’ll be staying put with Vanguard. Again, I’m just spreading out the possible risk.

          Let me explain how the dividends work with the swap based product. Assume you have a Vanguard Canadian stock ETF for the S&P 500 and another (tracking the exact same market) for Horizon. If they both track the S&P 500, they should earn identical returns, other than minor discrepancies with expense ratio costs and tracking errors. Assume the S&P 500 gains 10% next year. For the case of simplicity, assume that 8% came from capital gains, and 2% came from dividends. The price of the ETF would have risen 8%. But you would have received cash (dividends) amounting to the further 2%. You would pay 15% tax on that 2% cash payout.

          With the swap based ETF, the price of the ETF would increase by a full 10%. You wouldn’t receive a dividend. But the price would have increased by an amount that would fully reflect the dividend. No dividend taxes (for a non resident) would have to be paid, if that expat were living in a country where they don’t have to pay taxes on foreign income, and if that account were domiciled where capital gains taxes aren’t charged.


          • John says:


            That makes a more sense now. Thanks a lot for explaining that for me.

            Interesting about the comment on the Canadian Amazon website. Seems quite obvious, at least to me, that the book is directed at expat investors. Sure, I’d be happy to leave a positive review.


  14. Joseph Metz says:

    Andrew Hallam,

    I’m a current college student, and I will be attending Pharmacy School next fall. I have a few questions for you. I’m new to investing and I am trying to begin now investments now. I just read your book “Millionaire Teacher” and learned a lot! I really want to set up my portfolio with Vanguard as your book describes, however, I am confused on which of the Vanguard index funds to invest in. Would the ones you suggest on this article be solid ones to invest in? Also, could you explain on now to pick an Index worthy to invest in and how to determine if they are solid investments? These questions I’m sure are very elementary compared to what I’ve seen on this article, but I’m wanting to learn how to invest correctly and achieve a better future.

    Thanks for your time and effort.

    Joseph Metz

  15. jim says:

    I am an American who works at abroad at an international school. I have read your book over the summer. Thank you for writing it!

    I’ve recently opened up a Vanguard account and switched over my investments from my previous broker.

    I’ve been filing my taxes (using the foreign earned income exclusion) and investing $5,500 into a Roth IRA.

    From your book I found out that I can’t be doing this (because I haven’t been paying usa taxes) and I can pay the fees/taxes by asking Vanguard my IRA custodian to distribute the erroneously contributed amount however I can’t contact Vanguard about this become they don’t allow expats to open accounts with them.

    Any advice on how to get out of this catch 22?

    • Hi Jim,

      That’s a tough one. But you likely have plenty of company with this one. You may want to ask Tony Noto, one of the financial advisors I profiled in my book. If there’s an answer, he’ll know.


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