The Millionaire Teacher As An Outlier—Part 2

Read The Millionaire Teacher As An Outlier—Part 1

 

Here’s how my book, The Millionaire Teacher, soon to be published by Wiley Publishing, opens with its introduction:

If you were considering a profession, and you wanted to become wealthy, certain lines of traditionally high-paying work might tempt you.   Would it be law, medicine, business or dentistry? Few, if any, would choose my profession if they aspired to be rich.  I ’m a high school English teacher—a middle class professional if there ever was one.  Yet, I became a debt free millionaire in my 30s.

I didn’t take exceptional risks with my money and I didn’t inherit a penny from anyone.  When I went to college, I paid the entire bill myself.

I’m planning to use this book as a teaching tool for others. 

Hypothetically speaking, a guy named Joe could invest 100% more money over his investment lifetime than a girl named Jane.  But if Joe invests with the average financial advisor, Jane will likely end up with a portfolio that’s twice as large as Joe’s–despite investing less.  Based on what I’ll show readers in my book, that’s a statistical reality—not some sales bunk. 

And it gets better.  Jane would be taking lower risks!  

Better yet, an entire slew of Nobel Economic Laureates can back my claim.  But let’s get back to my book’s introduction. 

Would a young person following my evidence- based, efficient model of investing, who becomes a school teacher, amass more than a million dollars before their 40th birthday?  

For convenience, we’ll assume that inflation won’t exist, and wages won’t increase, just for this example. Financial writers with a great story and a method of how they grew rich often claim that, “Yes, you too can accomplish the same thing.”  But that kind of promise, perhaps, smacks of irresponsibility.

There’s only one certainty for those who follow my book’s investment suggestions:  their investing will put them in the top 10-15% of all professional investors, over their investment lifetimes.

Earning investment performance that beats 85%-90% of the pros is actually a piece of cake.  But amassing a million dollars on a teacher’s salary before the age of 40 involves elements of luck too. 

Here are a few of them that were going my way:

1.  When I was in college, I met a mechanic who was a millionaire.  I was young, impressionable, and exposed to the right guy at the right time.  He showed me what was possible.  If I had not met him, there’s little chance I’d be where I am right now.  For better or for worse, for a number of years after meeting this guy, I was tighter than bark to a tree.  I saved money like a madman.

2.  When I first started investing with a financial planner from the Canadian mutual fund company, called Investors Group, a retired academic economist by the name of Philip White (who I landscaped for every Saturday morning while attending university) told me that the investment service industry was rigged against the retail investor.  He told me that I was investing inefficiently, and not long after, I started using the strategies I’ve defined in my book: evidence based (not sales based) methods of investing.

3.  Somehow, my parents raised 4 kids who are entirely non material.  I’m the oldest.  And I don’t care about “things”, so I was easily able to save money without battling materialistic urges.  I thank my parents for that.

4.  In 2002, I was on a bike ride with someone who spotted a piece of oceanfront property on Vancouver Island.  Property prices hadn’t moved in years and the price was slashed as a result of an acrimonious divorce the owners were going through.  I wasn’t the one who saw the land, so if I was cycling alone, I never would have purchased it.  Buying that land for $147,000 was a steal.  Selling it a few years later for $484,000 was even better.

5.  Dave Norcott, the former high school principal at GP Vanier  in Courtenay, B.C.,  jumped continents and got a job as a deputy principal at Singapore American School.  I had no intention of living in Singapore, but he convinced me.  I’ve now worked in the Lion City for 7 full years, and I’ve made almost twice the salary (after taxes and including bonuses) that I would have made as a school teacher in Canada.  If Dave didn’t get that job in Singapore, I’d probably be hundreds of thousands of dollars poorer.

6.  I’ve somehow been genetically wired not to fear stock market drops.  As an investor, I’ve always been excited to see falling prices, and I’ve benefited from buying low.  I’ve met mutual fund managers who have the highest academic certification there is, for money management.  But they’re afraid of falling markets.  Perhaps it’s a bit like seasickness.  No amount of learning can make you less  susceptible to losing your lunch on a boat.  There could always be a genetic component to stock market objectiveness.

7.  I was a born wimp (or a born opportunist!) who could never have my entire portfolio in the stock market, so I have always had a bond component, as an investor.  Then when markets have fallen drastically, I’ve sold portions of bonds to buy greedily into the cheaper stock markets.  The lower the stock markets fall, the safer they are for long term investors. I’m curious to know what you think. 

Which of these 7 lucky attributes contributed the most towards my “Outlier” status?  I don’t know, honestly.  Perhaps you can tell me.





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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18 Responses

  1. Think Dividends says:

    #1 and #2 definitely set you up on the right track…

  2. DIY Investor says:

    Being "tighter than bark" definitely helped but I think the genetic wiring to embrace falling markets is the bigger factor. Ask investors what return they expect going forward and it is always considerably higher after prices have gone up a lot! The average investor just doesn't get that higher returns are easier starting from low prices!

    I agree with "Think Dividends" , #2 was important. I believe that people who look for them find excellent mentors!

  3. 101 Centavos says:

    The way you describe, it certainly sounds like a fortuitous set of circumstances. But then again, if you're wired and act a certain way, things just happen to put you on the right path. I had the chance to save a more in my thirties, but didn't take it or learn properly. Now that I think different, opportunities are springing up almost on purpose.

  4. I'd say #1 & #3 are the backbone of your financial wealth. You did not fall victim to life style inflation. Nowadays, people often compare themselves to the joneses and try to keep up with others.

    Saving money is as important as investing it properly I would say. You need both to really make it work.

    I have to say that #4 is a really lucky draw early in life but taking the plunge to do it has nothing to do with luck.

    As always, thanks for sharing!

  5. lovely leverage says:

    Hi Andrew,

    #1 and #2 are definitely turning points in your life. I also like #3. A strong family foundation is important in shaping a person's life. However, the harder you work, the luckier you become. I believe in fate, but I also believe that we can control our destiny.

    "The outlier, in the end, is not an outlier at all"

  6. I'm with others above, #1, #2 and #3 were essential. The rest were definitely enablers. Great of you to acknowledge #3 Andrew.

    Really enjoyed this post.

  7. @Think Dividends

    Hey Think Dividends,

    There's no doubt that meeting a millionaire mechanic was life altering for me. I once mentioned him in an article I wrote for MoneySense Magazine, titled "How I got rich on a middle class salary". Needless to say, the guy was really surprised, considering that he hadn't heard from me for about a decade. I've also mentioned him in my book. It's going to be fun to give him a copy this summer!

  8. @DIY Investor

    Hey Robert,

    The really lucky thing is that the mentor found me when I wasn't looking. I had no idea that someone could become a millionaire on a mechanic's salary.

  9. @101 Centavos

    Hey Centavos,

    It's funny how that happens. My dad always says that we make our own luck. In some respects, he was probably right. What was the turning point for you, to put you on track?

  10. @The Passive Income Earner

    Thanks Passive,

    It's interesting what you say about people comparing themselves to others. I was in Delhi last night, and I picked up a copy of Fooled by Randomness. In the book, he gave an example of a woman whose husband made a huge salary, but they lived amongst rich people (or bigger spenders!) so she felt like a financial loser. In a normal neighbourhood, they'd be considered really high fliers.

    I don't think I'd be affected the same way, but you never know. What about you?

  11. @lovely leverage

    Hey LL,

    I think you're right. But I'm surprised that nobody mentioned my current salary. That has definitely helped. But at the same time, I have colleagues who make more than me, and they're broke. So it's not how much water flows into the bucket, but how much is kept there that matters.

  12. @My Own Advisor

    Thanks Mark,

    My parents didn't have money (dad worked as a mechanic and mom stayed at home raising 4 kids) but they gave me something far more valuable than money: love, perspective, and the ability to see the bright side of things.

  13. larry macdonald says:

    Andrew

    You are to be commended for the honesty of your list, which shows elements of good fortune also played a role along with your skill set in becoming a millionaire in your 30s. From what I understand, there there are no income taxes in Singapore?

  14. @larry macdonald

    Thanks Larry,

    I have definitely had some luck.

    I don't really believe that anyone excels based on hard work or skills alone. Especially in exceptional examples of good fortune, there are always those moments of luck that contribute to pushing the momentum forward.

    There are no capital gains taxes on equities in Singapore, but all residents here pay income tax. That said, it's a lot lower than it is in Canada.

    My marginal tax rate is 15% and the maximum tax rate over here is 20%, regardless of the income level.

    My salary, on paper, isn't much more than a Canadian teacher's salary but after taxes and bonuses, I make much more money than a teacher would at home.

  15. Yakezie says:

    A lot of it is luck combined with commonsense and courage imo.

    I didn't even realize I crossed that magical figure until a couple years after I did. I was around 27 after 5 years of investing and saving.

    The one thing for me is that I really enjoy keeping things hidden. I try to be as average and low key as possible.

  16. @Yakezie

    One million dollars at 27 does sound highly unusual. Now that's Outlier status Sam. Now what do you think your elements of luck were?

  17. Yakezie says:

    Andrew, it was a lot of luck. I bought a stock that was a 50 bagged that went to $165,000, sold, bought a 2/2 condo in a prime area in SF, and saved 50-70% of my income for the first 5 years.

    I think a lot of people made a boatload of money in the 1999-2000 boom, so I think my story is probably very common.

  18. @Yakezie

    That's amazing Sam! My guess, though, is that many people who had your good fortune would roll the dice again, and lose at some point (a 50 bagger stock at such a young age would likely ruin many young investors over the long term). I think that you're an exceptional case. And becoming a millionaire at 27 is certainly extraordinary. I think you might be really surprised at the numbers of high-salaried people in your area of SF who just leveraged their salaries and houses to buy flashy cars and more expensive status/decorative items—borrowing to do so. The folks in your neighbourhood might not be as wealthy as you think they are. The fact that you're an example of someone who has done really well is fantastic. And you're putting your head towards helping people out with the scholarships you've created, which is sincerely admirable and inspirational.

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