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Singapore American School – Saving and Retirement Planning for New Teachers

(Revised, Extended and Simplified)

Teachers at schools like Singapore American School enjoy financial benefits that our former Canadian, Australian, European or American colleagues in public school systems can’t capitalize on:

1.  Our salaries are higher

2.  Our taxes are lower

3.  We have wonderful opportunities to travel to exotic places in our own backyard.

But I would argue that most public school teachers in their 50s and 60s are far better off financially, compared to Singapore American School’s teachers of a similar age.

There’s one reason for that:

Most of us fail to plan.

When a 60 year old Canadian public school teaching couple, for instance, decides to hang up their chalk, what do their financial assets look like?

1.  Most will have a mortgage-free home

2.  They’ll also likely have between $100,000 to $200,000 in investments

3.  They’ll have a teacher’s pension

What should an international teacher’s goals be if he or she wants a comparable retirement?

1.  They’ll probably want a mortgage free home

2.  They’ll want to ensure that they have enough cash-flow to provide an income that’s similar to what a retired public school teaching couple would enjoy.  In essence, they’ll need to “create” their own pension, and perhaps even “create” their own social security payments (considering that they may not have contributed to social security—if they’re Americans)

How do you plan for this?
If, upon retirement, you want to enjoy the same lifestyle that most public school teachers will enjoy (financially) then you have to identify what you’re missing.

In British Columbia, Canada for instance, a teacher who begins their career at age 25, and who teaches until they’re 60, will have taught for 35 years.

When adding their age (60) with their number of years of service (35) you would end up with a sum of 95.  In British Columbia, when these two numbers combine to produce a sum of 90 or higher, the teacher is entitled to a pension that constitutes 70% of their average gross annual wage, when averaged over the previous 5 years (as long as the teacher is 60 years of age or older).

If a teacher’s pre-tax income over the previous 5 years averaged $68,000, then the teacher could enjoy a pension of $47,600 a year.  And in British Columbia, adjustments would be made to cover the increased costs of living, over time.

It’s entirely possible that a teaching couple in British Columbia could have combined pensionable income amounting to $100,000 a year or more.

If an international teaching couple wanted an “income” of $100,000 a year, how much money would they need to have socked away in investments, if they were retiring today?

Roughly $2.5 million.

If they planned to retire in 2020 (nine years from now) how much money would they need to provide them with the buying power of $100,000 in today’s dollars?  We can’t forget inflation.

That teaching couple, nine years from now, would require a portfolio of roughly $3.26 million.

Of course, these numbers are assuming that the international teachers want the upper range of what public school teaching couples in British Columbia, Canada could reap.  Every pension system is different.  And some international teachers would say, “I don’t need that kind of money to retire.”  Fair enough.  I don’t either.

But it’s important to see the big picture if you’re choosing to work overseas.

What’s your “number”? 

It’s important to have a goal in mind: something to shoot for.  We all teach with a “backward design” model and we understand the importance of having a “plan”.   Before we start teaching a particular group of students, each of us asks ourselves an important question:  “What do I want these kids to learn (or be able to do) by the end of the unit, or by the end of the year?”

Retirement planning is no different.  We have to know how much we’ll likely need to live comfortably and how much we need to invest each year, to attain that goal.

Just working away for an entire career, and saving willy nilly,  is like teaching an English class with a little bit of Spanish, a little bit of Science, Shakespeare tossed in whenever we feel like it, while sprinkling in some writing rules if we’ve read a nice, bedtime novel the night before.

A financial plan is like a teacher’s unit or yearly plan.  It requires a step by step program.

Step 1.  What amount would you like to earn as a pensionable “income”?
Step 2.  What does that dollar amount equate to by the year you plan to retire –  indexed to inflation?
Step 3.  To generate that “income” how large should your investment portfolio be when you’re ready to retire?
Step 4.  How much will you need to save annually to create a portfolio large enough to generate your desired annual income once you retire?

Here’s how the equation works.

Year:  2011  
Mr. and Mrs. Teacher want:    $100,000 a year upon retirement (in 2011 dollars)

But Mr. and Mrs. Teacher are only 40 years old.  By the time they’re 60 years old, that $100,000 won’t go very far, thanks to the ravages of inflation.

So they need to calculate the amount of income they’d need in the year 2031.

Nobody knows what levels of future inflation we’ll have.  We can only use the past rates to estimate the future.

Over the past 90 years, inflation in the developed world has averaged slightly more than 3% annually.  Let’s be safe, and assume that inflation will be 3.5% per year for the next 20 years.  Of course, it could end up being higher or lower, but for this purpose, we’ll calculate future inflation at 3.5% annually.

Now Mr. and Mrs. Teacher need to figure out how much “income” they would need in 2031 (when they retire) to give them the same buying power that they’d get with $100,000 today.

An online compounding interest calculator would do the trick.

The following online calculator MoneyChimp is a nifty, simple tool for this:

  1. In the current principal space, I typed in the amount of income that the teachers would want, if they were retiring today.
  2. I left the annual addition at 0 because we’re just trying to figure out how much income would be needed in 2031, to give us the buying power of $100,000 today.
  3. I used 20 years to grow, since the couple plans to be working for the next 20 years.
  4. The interest rate I used was 3.5%, as a rough guess of what inflation might be over the next 20 years.  As previously mentioned, this is very slightly higher than the 90 year historical average for developed countries, but we have had 20 year periods where inflation has been much higher.

The future value that you see ($198,978) represents the income you’d require in 2031, if you wanted the same buying power that $100,000 would give you today (assuming 3.5% inflation)

So how much money will Mr. and Mrs. Teacher need to provide $198,978 in annual income?

Studies show that if you want the highest chance of not running out of money as you age, the maximum amount that you should withdraw from your investments is 4% per year.

Keep in mind that if you do this, you will also likely be able to give yourself “raises” to cover inflation, and based on historical probabilities, you won’t likely run out of money.

  1. Since this number ($198,978) represents 4% of their total investment portfolio           – the amount they can draw down to live on – we now have to find out what the total size of their portfolio has to be.  To do that, take this number and multiply by 25. 

In this case, the couple would require an investment portfolio size of $4,974,450 in the year 2031.

By selling 4% of this portfolio, they would be selling $198,978 annually.  And each year, they could give themselves a 3.5% raise to cover inflation.  For example, in the first year they would sell $198,978 to live off.  And the second year, they would sell $205,942.23 to cover their living expenses.  The teachers’ pensions in Canada (as they are in many countries) are indexed to inflation, meaning that there are increments over time to allow for the increased costs of living.

That figure of $4,974,450 might look daunting.  And it is.  It testifies how valuable public school pensions really are. 

However, very few public school teaching couples would reap this kind of pensionable reward (earning $100,000 annually) because few teaching couples would have both partners each qualifying for the maximum benefit.  For example, if one partner took some time off to raise children, they wouldn’t likely end up working long enough to attain a full pension.  That said, the above example does accentuate how powerful public school pensions can be. 

To attain a retirement “income” that is even close to what a public school teacher can earn from their pension, private international school teachers must be very careful with their money.  Most importantly, they need a solid plan.

How much do you need to save annually?

Now that you have a financial goal, let’s see how much you’ll need to save to attain that goal. 

First, let me provide a more modest scenario.  Let’s assume that a 40 year old teaching couple at Singapore American School decides that they could retire well on a combined retirement income of $60,000 per year.  At 40 years old, let’s also assume that their current investments (their investment portfolio size) amount to $150,000 and let’s also assume that they are looking to retire in 20 years.

Here’s their profile:

  • Age:  40
  • Amount they would like to live on in 2011 dollars:  $60,000 annually
  • Number of years to retirement: 20 years
  • Assumed rate of inflation:  3.5%
  • Buying power required for $60,000 today = $119,387 in 2031 dollars

Considering that $119,387 is the yearly “income” they would like to live on, they must determine what their investment account value would need to be in 2031 to provide that kind of annual cash flow, while ensuring that they never run out of money.  Studies show that the maximum, safe withdrawal rate is 4%.  Therefore, $119,387 needs to be 4% of what sum?  To determine that sum, we multiply that number by 25. 

  • $119,387 x 25 = $2,984,675

This couple will need to acquire an investment portfolio of roughly $3 million by 2031. 

As daunting as it may seem, it’s a very attainable goal.  Let’s break it into small steps.  Using the same scenario from above, we’ll use the moneychimp calculator to “play” with some numbers. 

Monthly contribution:

Click this link to open the Financial Calculator

or go to the Moneychimp calculator:

  1. Current principal: 
    Type in the amount of money you presently have in investments.  If it’s zero, it’s zero.  You have to start somewhere.
  2. Annual addition: 
    This is where you’ll have to “play” and “manipulate” the numbers, once you have plugged in the other two variables below.  Throw in a few possibilities and look at the calculated dollar value, under “Future Value” on the MoneyChimp site.  Does it match the amount that you desire, upon retirement?  When it does, the number that you have plugged into the “Annual Addition” is what you should be saving on an annual basis. But of course, you will need to plug in the variables below, to view this number.
  3. Years to grow: 
    Estimate how many more years until you’ll retire.   
  4. Interest rate:
    Assumed rate of return:  8.5% annually

    This is less than the UK markets/US markets/Canadian stock markets have averaged over the past 20 years, and it’s less than they have averaged over the last 90 years as well.  So it might be a decent assumption, going forward.  And we can always play with lower probabilities in case it isn’t.

The teaching couple in our scenario currently have $150,000 in investments.  You can see, using the moneychimp calculator, that this couple would need to save between $42,000 – $43,000 per year in order to reach their desired portfolio value in 2031, of roughly $3 million. 

So what do you have to save annually?

Important Questions to Consider:

  1. What would I want, in terms of annual income, if I were retiring today?______________________
  2. What does this equate to, considering 3.5% inflation, at the planned year of my retirement?______________________
  3. Considering that you’ll be selling 4% of your investment portfolio each year (while providing small raises for yourself to cover inflation) how much will your investment portfolio need to be worth when you retire?_______________________________
    [projected future desired monthly income multiplied by 25]
  4. Based on your current portfolio size, and assuming a rate of investment return of 8.5% annually, how much will you need to invest each year to reach your goal? __________________________
  5. Based on your current portfolio size, and assuming a rate of investment return of 6% annually, how much will you need to invest each year to reach your goal?__________________________
  6. Assuming a future return of 8.5% annually, are you currently investing enough to reach your goal?_________________________________
  7. Assuming a future return of 6% annually, are you currently investing enough to reach your goal?_________________________________

If you would like to generate a slightly higher amount of retirement income, you could also hand your retirement portfolio (after you have grown it) to an insurance annuity. Do not use an annuity as a savings vehicle (no matter how hard an investment salesperson tries to convince you).

And never buy a Variable Annuity.

If you’re interested to see how you can derive income from an annuity (once you have already built your portfolio through a different investment vehicle) I recommend that you read Robert Wasilewski’s blog post on the matter, titled “Create Your Own Pension” .  He’s a brilliant financial advisor with more than 30 years of experience—as an individual advisor, and as an institutional money manager.   He also advises you to always keep your investment costs low.

Small Percentages Pack a BIG Punch

The difference between an annual future return of 8.5% vs. 6% is huge, as you saw from answering the questions above.  That 1.5% lag may not sound like a lot, but over an investment lifetime it can decimate an account’s potential. Keep that in mind. 

The fairest investment advisors don’t tend to travel around from place to place picking up business.  Beware of traveling advisors, especially in the international teaching community.  They’re expensive and they’ll try selling you products that benefit themselves first, with you a distant afterthought. 

For an overall summary on saving and investing money, please read my article, The International Teacher’s Nine Steps to Financial Freedom.

And for a thorough, simple and far more entertaining read, there’s my book,  Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School.  You can order it through Amazon, at the above link, or buy it directly from me.  I’ll have copies available for Singapore American School teachers at the end of August, 2011.

My book will show you how to invest—while avoiding the expensive (detrimental) investment products sold by the majority of the world’s financial planners. 

I’m definitely not against financial planners.  If you read my book, I’ll guide you towards finding a good one.

Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School.


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 and Millionaire Expat: How To Build Wealth Living Overseas. 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.

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47 Responses

  1. And in case you're wondering:

    Few public school teaching couples would have each partner earning the maximum pension (having their age, plus years of service each equaling a sum of 90) so it's rare that a public school teaching couple would have retirement income of $100,000 annually. But it isn't impossible.

    My guess is that most retired public school teaching couples (in Canada, the U.S., the UK and Australia) would likely have combined retirement income of roughly $60,000 to $90,000 annually (in U.S. dollars)

    International private school teachers who think they're "well-off" with their higher salaries and lower taxes, might want to think twice.

    That said, if they plan accordingly, they can make up the difference. Teaching couples at Singapore American School, for instance, can save $50,000 a year, or more.

  2. woodes34 says:

    Superb post Andrew!

    I am going to ask my wife to read this with me this evening. I is helpful to have these examples to rally the cause of long term savings!

  3. Thanks Woodes34:

    I have to admit that I still feel guilt from a seminar of this nature that I gave 5 years ago. One of my international teaching colleagues (who I loved working with) virtually ran back from Singapore to California, after recognizing that she was living "large" over here, while not having a pension to look forward to.

    I honestly believe that teachers at my school could end up with more wealth when they retire than public school teachers in Canada/the U.S.. But only the rare teacher over here has the discipline and financial knowledge to do that. I'm hoping to change things for them, obviously….by teaching them to save and invest responsibly.

  4. Jean says:

    Andrew, knowledge is wealth, so I thank you for being my teacher and coach over the past five years. Your 'big picture' for those of us working outside of our home countries is invaluable, but you would have been just as appreciated twenty years ago when I began working in a private school in the US (where teachers had to set up their own 403b accounts, lacking the necessary knowledge to do so – the "big picture" with all the details). I wish I had heard you back then, but am so glad for the wake up call I finally received.

    Moving forward, it's great to know that I'm now on my way to the mortgage free home and wiser retirement funding, and, fortunately, I've got another 20+ years to go. I sat with the online calculators again last night and used the 3.5% compounding interest to see if my planned retirement savings for the coming year would be enough. It's been helpful to revisit our budget each summer with my husband to see if there's any way to do it even a little bit better. I must admit that it does require the discipline you refer to.

    Your message in this blog post is well worth reading and revisiting by all; time (and knowledge) is truly of the essence.

  5. John Gaskell says:

    I have a question for you: As we get paid this year, my initial thought was to build my liquid assets here and then invest at the end of the year; build myself a rainy day fund of sorts. Would it be smarter to start investing in indexed funds immediately, or to wait and drop a large amount (S$70k-S$85k) in at one time?

    I know that the gains in the investments would be greater, but are there fees involved in doing monthly "buys" into an indexed fund. Also, are there minimums to get in to a fund like Vanguard?

    You should video tape a similar talk and put it up on YouTube or this site. It would be great for people's education, as well as great marketing for your book.


  6. george richey says:

    Hi Andrew

    I enjoy reading your blog and am looking forward to reading your book.

    Have you thought of doing retirement presentations to teacher's around the world when your retire?

    I noticed a mistake in your blog of today that you may wish to correct.

    When a teacher reaches a 90 factor as I have in BC you do not automatically get 70% of your last five years for a pension. You get to retire with no penalties.

    In the example you give the teacher would get his 33 years times 2% for each year giving him a pension of 66% of his salary.

    Still working at Roberts Creek Elem. on the Sunshine Coast.

    Yours truly,

    George Richey

    • Hey George,

      Thanks for the information! I was under the assumption that you could max out a pension at 70% of your previous average income, but are you suggesting that it's not 70%, but 66%? Has this changed since I was teaching in the Comox Valley District, in the late 90s? Or has the British Columbia cap always been 66%?

      I'm really glad you visited my blog George because I think my international teachers would enjoy hearing much more from you.

      Of course, I suppose I could look this information up, but I would much rather get it from a living, breathing person with a sense of humor and their feet in the trenches.

      1. What would a teacher's gross wage be in your district, with a masters degree, if they had been teaching for many years (and at the top of the salary grid)?

      2. Based on that assumption, if they earned 66% of that, as a pension, we could assume pensionable income of:_____________________

      3. Are there any other financial benefits to retiring as a public school teacher in B.C., relative to what international teachers (wouldn't) receive?

      Thanks again for your comments George! I look forward to hearing from you.

  7. Hey John,

    Those are great questions.

    For starters, I think it's a great idea that you want to create a large enough savings account to give you enough money for emergencies (or rainy days). There's a prudent rule of thumb suggesting that we should all have at least 3 months' worth of liquid living expense assets (ie. money we can access immediately in case we lose our jobs, or need cash from something unexpected)

    As for lumping a very large sum into the stock markets at a single time, you might want to compromise a little on that one. First of all, there's no guarantee that stock market assets invested today will be worth more a year from now, three years from now, or even five years from now. Over longer periods of time, yes, the odds are very good that the markets will be a lot higher than they are today, but over a handful of years, you never know. So you may not be losing anything at all by not having that fresh money (that you plan to save) getting deposited into the stock market over the next 12 months.

    Having said that, if the markets rise by 10% or 20% over the next 12 months, and you make a giant lump deposit 12 months from now, instead of making regular contributions earlier, you might end up kicking yourself.

    Unless the markets are at extremely low levels (you'll know it, because the metaphorical blood will be in the streets: ala 2008/2009; 1973/1974) then it's not generally a great idea to lump a large amount into the markets all at once.

    Here's a compromise:

    Perhaps you could save $15,000 in an easily accessible "emergency money" account first. Then once you have that financial cushion, you could start investing your money, monthly, into a diversified basket of stock and bond index funds.

    If the markets do end up a lot higher, 12 months from now, you would have enjoyed paying lower prices along the way each month, rather than lumping a large sum into the markets at a high point.

    And if the markets end up volatile over the next 12 months, you would likely end up paying a lower than average price for your indexed shares by dollar-cost averaging. For example, if you deposit an equal amount into your investments each month, you'll automatically be buying fewer units of your indexes when prices are high, and you'll end up automatically buying more of those unit shares when prices are low. This will ensure that you pay a price that's below the average price level during that duration.

    If, on the other hand, the markets collapse in the 11th month, falling by 20% or more, you should be able to really rub your hands together in greed–even if you have been depositing money in the markets every month. If you have money in a bond index (which you should) you can sell some of that (if your portfolio alignment is too far from the asset allocation model you set for yourself) and you can buy into the cheap stock indexes with the proceeds.

    In other words, if you have 40% in a bond index and 60% in a stock index, but a dropping stock market ensures that you end up with 60% in bonds and 40% in stocks, then you just sell some of the bonds until you're back to 60% stocks, 40% bonds.

    Or if you want a real "hands free" approach, you could buy a Vanguard Target Retirement fund, add money to that every month, and Vanguard will automatically rebalance it for you.

    I hope that answers your questions.



  8. WOW – epic post!

    Great stuff – so much information here to absorb. You made my head spin Andrew!

    I really liked the questions you asked in this post. I've tried to answer them and I get discouraged by the math. It seems like SO much money I need to save?

    I had a question about the annuity part of your post.

    Are you saying you're a fan of them, or not?

    Although I have some 30+ years left to collapse my RRSP, I'm leaning towards no annuity, ever, and moving my RRSP that will include mostly indexed ETFs to a RRIF instead.

    What are your thoughts on RRIFs vs. annuities?

  9. Hey Mark,

    My preference is to go without an annuity. I would prefer the added flexibility, and when I do the annuity calculation, the payout isn't any more than 4% for early retirees. Older folks might get a payout of 6% or so, but not young people.

    I really don't think you need to save as much as this post indicates. This gives an idea what you would need to be on par with a high paid pensioner as your competition (a teacher or government worker, for instance). Those deals are exceptional, and few people realize how great they really are.

  10. Ben says:


    My wife is a high school teacher in the U.S. She is currently contributing 10% of her gross income to the pension or 403(b) plan. I have always wondered if I could grow the money better than the pension plan like you said "create your own pension". Would this be risky? My wife has talked about going part-time or staying home with the kids so then I would suspect I would definitely create our own pension if she doesn't have a whole lot of years left.

    What are your thoughts about creating our own pension even if their is a 403(b) plan in place?


  11. Patrick says:

    HI Andrew,

    I read about your book in the Seattle times this Sunday. I'll be reading your book once I get through all the new reading material for my classes this school year.


    I have a question about the take home pay for teachers at schools like yours in Singapore. Perhaps you dont want to flat out state how much your paycheck is every month, but I'm curious what kind of take home pay a job like your usually merits.

    I ask because I like to compare it to what life is like for me in Seattle. I work in a public school and so far, haven't touched my paycheck this school year. My wife and I live off of her private school (much lower) salary.We will save roughly 35 – 40k by year's end.

    Once children come into the picture, this number will go waaay down because of the cost of childcare. This is when I suspect there will be a much larger difference in savings potential working at an international school.

    • Hi Patrick,

      I don't mind sharing exactly what my take home pay is, but it's irrelevant. I'm not saying that to be awkward. When comparing international packages, the relevant questions are these: "How much money can be saved….as a teaching couple….as a teaching single…as a teaching couple with two kids?….etc.

      If you get wrapped up in net earnings, you might get drawn to places where costs of living can be really high, and you may miss out on some gem-like locales where the salary is lower than yours, but the savings potential could be higher.

      Also, keep in mind that an international job (without a pension) would likely require a teacher to save about $25,000 a year just to keep pace with a public school teacher who doesn't save a penny (considering the value of the pension that the public school teacher would eventually earn and enjoy)

      • Patrick says:

        Thanks Andrew. I totally agree with you that the relevant question is “How much money can be saved….as a teaching couple….as a teaching single…as a teaching couple with two kids?….etc"

        Would you be so kind as to estimate these scenarios for me? Right now, we are the first category, a teaching couple with no kids, but we plan on becoming a teaching couple with two kids.

        I know there are many factors that come into play when trying to calculate potential savings (school, lifestyle, country, childcare), but I know my wife and I are most interested in Singapore. I also know that we live quite frugally. We live off approximately 35% of our take home pay, which is quite good for what I consider to be an expensive city.

        And I appreciate the reminder about the pension. Since my wife's school does not offer a pension, there is less we'd be giving up in that respect with a move to Singapore.

        • Hi Patrick,

          If a teaching couple can save "X number of dollars" in the U.S., then they could easily double or triple that figure at any number of the world's top paying schools. There are two in Singapore that would fit the bill: SAS and UWCSEA.

  12. Dubai teacher says:

    Hi Andrew,

    I'm a long time Canadian overseas teacher. I've read your book (I will review it on amazon) and have been looking around your website for some ideas. I'm currently with CIBC Wood Gundy which I set up before leaving for the great wild yonder. After reading your book I have realized just how high my fees are. (They might give Raymond James a run for their money. My last three trades cost me a total of $590cdn) I would like to get out of CIBC and get into low cost indexes but as a non-resident I am not sure how many options I have. I don't want to invest in Dubai as my tenure here will be fairly short.

    Any ideas?

  13. Susan says:

    Any advice for the British teachers wanting to invest in index funds?

  14. Leslie says:

    Hi Andrew!

    Thanks for your awesome blog and book. I only recently came across them both and have already made some drastic changes to my financial plan. 1- I opened up a Vanguard account. 2- No new car for me. 2.5- I'm looking at guys with a 10-year-old Toyota differently:) 3- You saved me from putting a bunch of money into a managed fund with TD Ameritrade. The salesman was pretty convincing and I was in the process of selling stocks to have enough to participate in their managed program. So glad I found you before I invested in that program.

    I do have a question, however, about paying off debt before saving or investing in retirement. I have no cc debt but I do have a Home Equity Line of Credit with a balance of almost $30,000. I am paying it off with an additional $500 principal every month but was thinking maybe I should put a big chunk (15-20) into paying that off first before starting to save more for retirement. The interest rate is 3.25. Oh, I'm 43, if that matters. Currently, I've only saved through my school's 401 K and a few stocks and mutual funds with TD Ameritrade.

    Lastly, I am planning to teach overseas for the next few years. You've made it very clear that many teachers don't have the knowledge or, probably more difficult to accomplish, the discipline to save. I'm moving to a very expensive city to teach and would like a few more tips in being one of those few teachers that get it right.

    I look forward to finishing your book. Thanks again, Leslie

    • Hi Leslie,

      You didn't mention if your employer matches your 401K contributions or to what extent. But once you have maxed out on those contributions, I would pay off the debt. Think of it this way: paying off a debt charging 3.5% interest is equivalent to an investment making 4.5% to 5%, before taxes. When you pay off a debt charging 3.5%, you are making a guaranteed tax free "gain" of 3.5% each year. In this case, the "gain" is an absolute certainty. In a non tax sheltered investment account, your bonds would make less than 3.5% and you would pay tax on the interest.

      This is why I would pay off the debt before investing. If you choose the right international school to work at, you'll be able to clear that debt in less than one year.

  15. Hi Susan,

    My apologies for taking so long to get back to you. I read your comment when you sent it, and then couldn't find it a few days later, despite looking all over my own site. Yikes! I'm actually going to publish this as a new article on my site (I was hoping you would see it!) Here's the link: http://andrewhallam.com/2012/04/great-option-for-

    The above article is for British teacher living in the UK. If you would like an article for British teachers in Singapore, this one should give you what you need: http://andrewhallam.com/2010/11/how-british-expat

    Again, my apologies for taking so long to respond to you Susan,


  16. Leslie says:

    Thanks, Andrew, for the information. I just put a chunk of $ on that debt and feel great about it. Thanks again!

    Well, I chose SAS and am pretty excited about it. I am, however, nervous about the cost of living in SG and some of the lack of savings figures I have seen posted around the web. Certainly not panicking, I'm trying to look differently at my housing options. Maybe I don't really need one of those fancy condos:) I also appreciated your post from last summer- The road less traveled towards saving a fortune. It has given me some insight (and hope) into another side of Singapore where I'm able to save AND enjoy the culture.

    Looking forward to meeting you in person!


  17. John Smith says:

    Andrew fantastic stuff. I have been offered a position at UWCSEA and am contemplating savings potential as a single expat. I've read through all your posts (fantastic) and would look to open an investor account through DBS (I'm Canadian and have no plans to ever return). I have the horribly tough and impossible question – but maybe you can estimate – how much in $US Dollars could an average single teacher at UWC or SAS save a year assuming the typical vacations and no mortgage back home?

  18. Tax Curious says:

    Hi Andrew,

    First, thank you for the wealth of investment information you provide for overseas teachers. My wife recently accepted a teaching position at Singapore American School — we can't wait to arrive!

    We are working very hard to develop a realistic Singapore budget that takes into account, among other things, a sound investment/savings strategy. That said, I am confused about Singapore taxes on my wife's income and benefits and would like to work that out in connection with our budget and savings strategy.

    From what I understand, she is taxed on EVERYTHING in Singapore: health benefits, SAS tuition for our two kids, etc. When I plug this into the IRAS tax calculator, it amounts to taxes of nearly S$30,000 per year on my wife's approximately S$250,000 in annual income, bonuses, and benefits, even though about S$80,000 of that amount comes from non-cash benefits (tuition, family insurance, etc.). So, much of our Singapore tax liability will be paid by taking cash from salary and bonuses to pay for tax liability on non-cash items, which is a tough pill to swallow. Am I looking at this correctly? Are there any Singapore tax breaks we should be looking at, such as the taxes my wife will pay in the U.S. after the relevant foreign earned income exclusions? Perhaps these issues are too detailed or complex for a quick or accurate response, which I respect and understand. Either way, thank you for taking the time to read this. We look forward to establishing a strong budget.



  19. Curious,

    I passed this question to an American friend. Here's his response:


    Welcome on board the SAS team. Let me jump in with my reply. re the tuition, housing tax question. The tuition will be a US write off for you folks, no cost via U.S. taxes; however, for housing you will get a bit of a hit on the singapore tax side, but it's not too bad. The housing piece is partially deducted on your U.S taxes as well. To try to put this in perspective, the first several years here neither my wife, nor myself incurred US taxes but we did have to pay Singapore tax. [Andrew's note* I pay an average of 7 cents on every dollar earned in Singapore] When you arrive look me up (high school psych) and we can talk more about this.


    Jeff Devens, Ph.D

    High School Psychologist

    Singapore American School

  20. Mark Holmes says:

    Hi Andrew

    I’m a Canadian and UK passport holder, my wife is Canadian. We work at an international school in Cairo and plan to move to somewhere in East or Southeast Asia in the next couple of years. We’re in our early 40s and plan to be working in international education until retirement, at which point we’ll probably split our time between Southeast Asia and Canada (BC).

    We currently don’t have a brokerage account and I believe, as we are non-residents, we cannot now open an account in the UK or Canada. How do expats open a brokerage account? We would like to buy Vanguard index funds or similar. Where can we open a brokerage account as expats?

    Thanks in advance. Your book was great, by the way. I’ve read it twice, so far!!

  21. Mark Holmes says:

    Sorry, just to follow up, I was looking at TD Investments in Luxembourg. Would this be an option?


    Thanks again

    • Mark,

      The short answer is yes. Commissions aren’t cheap for small invested sums (but cheaper than Singapore if investing very large sums at a time). You could open such an account online, then follow up with mailed paperwork. I am going to open an account with them myself and transfer a relatively small sum so I can speak firsthand about the experience.

      Until you asked the question, I didn’t even know this was a possibility. I’m setting up interviews with reps from the firm and will be able to share more later. So thank you Mark.


      • Toby says:

        Hi Mark and Andrew…..

        Here are some of my experiences with TD Direct International which may answer some of your questions. I have an account with TD direct. I have had it for a few years now. I follow the same basic strategy as you Andrew. My account is in US dollars. It is possible to convert to multiple currencies through the website. You can carry out transactions on many different stock exchanges directly (see their website for the definitive list but basically it covers the US and European exchanges including some in the Far East). The transaction fee for a $4000 USD transaction is approximately $35 USD (it does get cheaper if your transaction is a larger amount).

        I also have to pay the transfer fee from here in Korea to Luxembourg which is $15 from memory. So it costs $50 each time I invest. I guess it is expensive by standards in the USA. I only ever do one transaction when I send money to my account by purchasing the lagging index. They also charge custody fees which are 15 Euro or 0.05% (whichever is higher with a 150 Euro max cap) per quarter. The fees add up but the adverse effects of not investing are a far greater problem. Being an international worker leaves me few options. I did not know about DBS Vickers until I read about them on this website. I may open an account with them one day.

        I find TD Direct to be very helpful and responsive when I need help. When I phone they answer straight away. They reply to my secure emails quickly and politely. Opening the account t was relatively easy. I cannot remember all the details now but I remember that they did not require me to sit an online exam. From reading this website it seems that to open a DBS Vickers account you need to sit an online exam. This is the only brokerage account that I have ever owned so I can’t compare it to another. At this point in my life this account works well for my situation and I will continue to use TD Direct International.
        If DBS Vickers is much better please let me know and I will look into opening an account. At this point I plan to stay with TD Direct because their fees aren’t much more than DBS Vickers. The thought of changing brokerages sounds like a real hassle.

        Let me know if you have any questions

        • Thanks Toby,

          I don’t actually think DBS is better, and I’m pleased to learn about this option. If you’re Canadian, there’s also an option of opening a non resident account with TD where commissions are $9.99. I will likely open up trial accounts with each, so I can comment on them for my upcoming book (on expat investing) with some firsthand experience. Where are you from Toby, and what do you do for a living overseas?


          • Toby says:

            When I opened the account with TD Direct International they phoned me and asked me about my attitude to risk. The conversation was short and the account was opened straight away. Basically you need to confirm that you understand there is risk of loss of capital. There was nothing specific to learn. Their service is very good, polite and efficient. From my understanding the fees at DBS Vickers are lower for smaller accounts but TD Direct International gets more competitive with larger accounts. I will stay with them until my account gets big!

            Ok, I have done a lot of research and what I have found out follows. I hope it helps anyone to move towards the type of indexed investment that Andrew Hallam is outlining rather than signing on one of those high fee products from Zurich or Friends Provident and such. I am from New Zealand and live and work as a teacher in South Korea. Is anyone else based in Korea?

            Boom securities based in Hong Kong offer trading on the US exchanges:
            Their fees are similar to DBS Vickers. I have not opened an account with them but they sent me an email saying they were willing to open one for me.

            Both E*Trade Hong Kong and E*Trade Korea offer trading on the US exchanges. The accounts will be classed as being based in the US so you have that estate tax issue. I emailed them bothE*Trade Hong Kong and they were willing to open an account for me (even though I am not from Hong Kong and do not live there).E*Trade Korea will open accounts for foreigners based in Korea (I am not from Korea but live here).

            Choice Trade, Zecco and MB Trading based in the US confirmed by email to me they would open an account for me. Again you have that estate tax issue.

            Interactive Brokers will open an account for me. The account would be based in the USA so again is subject to that estate tax. They are more aimed at active traders rather than index investors. They were keen to open an account for me.

            I am sure there are more choices and if you feel like sharing I would be keen to read more and I am sure others will too.


          • Toby says:

            The ‘funds’ at TD Direct International should be avoided. They have a search screen for finding funds and most of the funds are actively managed and have high expense ratios. TD Direct promote zero percent entry fees to these funds. I prefer to pay the $35 (this is equivalent to 28 euro) stock trading fee to buy the low cost ETFs. My portfolio is:

            30% Vanguard Total USA Stock Market ETF, VTI. Expense ratio 0.05%
            30% Vanguard Developed Markets ETF, VEA. Expense ratio 0.1%
            40% Vanguard Short Term Bond Index, BSV. Expense ratio 0.1%

            Compare the low expense ratios of these ETFs to the expense ratios of the funds which range around the 2% mark with some going over 3%. In the long run these fees will be far higher than paying a one time $35. The expense ratio fees will be taken out every year. Year after year. Think about if the stock market goes up 7% one year and the expense ratio is 3% your return will be 7% minus 3% which is 4%. The best bet is to pay the one time $35 fee and then buy a low expense ratio ETFs from Vanguard or similar.

            You don’t need to open a forex or derivative trading account so when you fill out the forms make sure you don’t apply for these. To implement a simple ETF indexed strategy similar to Andrew Hallam and like I have (see mine above), you just want to open a simple stock trading account. Ask for an account with no Margin but I think you don’t get the choice. They give you a small amount of margin with only three ETFs because they think a three ETF account does not have enough stocks in it to qualify for more margin. IGNORE this. They are wrong about this and you don’t want the margin anyway so just don’t use it when you trade.

            To sum up the above: don’t buy the funds, buy low cost ETFs. Don’t open a derivatives account. Ignore the margin. If you do all these TD Direct is a good brokerage and works well for me.

            Let me know if you have any questions. Happy investing!



          • Mark Holmes says:

            What are the capital gains in Luxembourg for an expat Canadian living in Egypt (or anywhere else for that matter)? TD sounds like a good deal, but I don’t want to end up with a big bill at the end. My understanding is, when I move back to Canada, I need to cash in all my stocks before I arrive back there. But what implications does that hold in Luxembourg.

            Also, on a slightly different subject (and possibly an entirely different thread), we talk about diversifying stocks to cover a wide spectrum, but should we diversifying brokerages and investment companies as well?

            What are the implications of holding stocks bought through a brokerage that goes bust? What exactly is the role of brokerage? Is it simply a middleman whose role is complete once the transaction is complete?

            What are the implications of holding stocks in only one investment company (e.g. Vanguard) that goes bust? What exactly is the role of the investment company? Legally, is my money invested with the individual stocks within an ETF or is it invested in the investment company who purchase stocks in the investment companies name?
            My question is, is the investment company goes out of business do I lose my money, or will my money continue to be held in the stocks that make up the ETFs?

            Should I be opening a DBS Vickers account and a TD Investment account?

            Should I be buying ETFs in Vanguard and another company to reduce potential losses?

            Sorry, I guess this should have been another thread.

          • Mark,

            The shares would be yours, even if the business went bust. It could, however, take time to recover the money from a firm that went belly up.

            As for Luxembourg, capital gains for you would be taxed as they would for Luxembourg-based residents. Alternatively, as a Canadian, you could open a non-resident investment account with TD’s brokerage Canada. It would be cheaper–and you wouldn’t pay capital gains taxes. I have spoken to some non resident tax specialists on this matter, and given the green light. As for Luxembourg:

            “A considerable advantage of
            Luxembourg investment companies with a
            variable share capital is offered to
            Luxembourg individual investors who are
            not subject to tax on capital gains realised
            upon the sale or redemption of the shares
            of a SICAV if (i) they hold less than 10% of
            such shares, and (ii) they have held the
            shares for at least 6 months.”

          • Mark Holmes says:

            Now that’s interesting. I was slightly put off by your last comment about the TD Canada offshore account. Thank you for investigating and clarifying. I actually have a TD brokerage account, which I used once several years ago. I meant to pop in and ask about this when I was in Vancouver (just got back to Cairo). Will definitely look into it when we get back again.

            I know you have recommended a couple of financial advisors in the past. Any recommendations on tax advisors? I watched a brief Canadian tax presentation on Youtube a couple of weeks ago (I think the link was posted on here). I found it quite enlightening. I had worked most of it out for myself, but having someone clarify it for me really felt good.

          • Toby says:

            Fascinating! I would like to see more discussion on this topic as it is one of the major obstacles to getting an indexing account going.

  22. Adam says:

    Hi Mark and Andrew,
    I opened a non resident brokerage account with TD Waterhouse on a visit to Canada last year. I don’t pay capital gains and the fees are 9.99 a trade. There is a withholding tax on dividends/distributions. I’m also canadian citizen teaching in china.
    I think it was in 2009 that the rules changed to allow and encourage non residents to invest in Canada.
    This might be a cheaper and more efficient option than Luxembourg.

  23. Mark Holmes says:

    Thanks Andrew

    Perhaps, I’ll hold off until your review. I’ve just seen your info on DBS VIckers too. We won’t be investing until the beginning of 2014, so we have time to look around.

    Adam, I might check into that, but as Andrew has implied as a non-resident, I’m slightly nervous about investing anything in Canada.

  24. Mark Holmes says:

    I’ve been using


    to do savings calculations as it allows me to adjust my savings upwards by a rate of inflation each year (I usually put in a 3% increase per annum).

    Also, does anyone know if there is such a thing as a pension or reverse calculator, which will show how long an investment will last once you start drawing a pension from it? Now that would be useful!!

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