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$50,000 Per Year Could Cause Financial Misery

If you make $50,000 a year, or less, you could be utterly miserable – thanks to your salary. 

Seeing real poverty (like a Cambodian village without running water, or a New Deli slum) can evoke pity for others or appreciation for what we have. No, I’m not going to preach how lucky you are. You could be utterly miserable with $50,000 a year…because you don’t make enough money. To find out why, read this article:

The Money Mirage

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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31 Responses

  1. Marco says:


    The key is living within your means. If one can manage that then life becomes less stressful.

    Many people can and do survive on less then 50K and are happy. If one is not sucked into the consumer vortex and can separate their "wants" from their "needs" then it's a start.


    • Wisely said Marco. You're absolutely right. Those who stand in ankle deep water don't have to worry about drowning when the water level rises a foot. Those already treading water, however, have further to swim to their respective shore when the waters rise. Very stressful indeed!

  2. Daisy says:

    I couldn't agree more with your article Andrew. It is true that there is a positive correlation between money and happiness, but it is still heartwarming whenever I see that people living in small villages and towns look happier than those in urban, metropolitan cities. These villagers live a simple life, and they know to appreciate the simple little things in life.

    I lived in Paris until I was 5, so when I was little I was used to playing with modern, high quality toys like Barbie dolls, Barbie houses, toy cars, etc. Yet when my mother took me to her hometown which was a tiny village in West Sumatra (Indonesia), I still remember how ecstatic and happy I was when my grandfather made me a toy car that was handcrafted from watermelon skins and toothpicks!

  3. That's so true Daisy, especially with kids. My niece's favorite toy was a cardboard box. She's leave all the heavily marketed toys alone to play with the box!

    • adam says:

      Andrew, my name is Adam im 18 and just finished reading your book millionaire teacher. Loved the book, however my only question is where would i go to start my own investment portfolio?

      • Hi Adam,

        I've answered that question as thoroughly as I could in chapter 6 of my book, for a variety of different nationalities. Because I don't know where you are from, I can't point you to the specific page from here. There were a few nationalities I didn't cover, so please let me know where you are from.

        • adam says:

          Yes, i do recall that however i cant remember off hand (left it at home, at work)

          As far as my location goes I live in the U.S. houston, TX to be more specific.

          • Adam,

            If you were a student of mine, I'd tease you big time. There's an American company I wrote about on just about every single page. It's called Vanguard and that's where you'd open your account. http://www.vanguard.com



          • Adam says:


            I think i would deal with the teasing to be a student of yours! Also it appears the vanguard site doesnt like my computer at work so i will have to do it at home. The specialist listed on the open a account part will walk me through correct?

            Thanks for all your help, from the book to now. I just want to make sure i have a full understanding of everything and am making the best choices.


  4. Kevin says:

    Congrats, man. I bought your book last week, and was blown away at its simplicity and common sense (and the fact that there’s a published, legitimate book that agrees with what I had thought all along).

    I’m curious what you think about allocation into the Thrift Savings Plan (the US Government retirement plan). As a civilian government employee, they match 5% of my salary immediately, and the average expense ratio is .002% (not a typo). However, although there is an S&P index fund and an international index fund, the bond fund offered in the plan is composed of US Government bonds issued specifically for the plan. Does the same allocation strategy applied in your book still apply here? A good resource is http://www.tsp.gov

    Thanks, and congrats again!

  5. Great article Andrew! 🙂

    Hey, I LOVED my cardboard box when I was younger!

  6. Do you have video Mark? That would be priceless to watch.

  7. Kyle says:

    Hi Andrew,

    I am 18 years old living in New York and have been reading a lot about your investing techniques which I applaud. I want to start investing monthly like you did when you were my age. I have about $6,000 USD in individual stock (IBM, APPL, C, F) that iv been building up since I was 15. I want to diversify my portfolio 40% bonds 60% ETFs. I can afford to put about $150 in a month. I don't really have anyone I can go to to talk about stocks, I have always done my own research and invested most of the money that I'v made since I was 14. I am curious about what advise you can give about where to start. I'm not familiar with bonds and the only ETFs that stick out are Vanguards VTI and VDC. Any advice would be greatly appreciated!

    Thanks, Kyle

  8. Daniel Tynan says:

    Very good article! I've concluded it's more important how much money you can save than how much money you can make. Some people making 200K can't save as much as some people making 50K.

    As for people living in areas of huge wealth disparity becoming unhappy because they are constantly comparing themselves. I don't it's practical for them to move to a poorer country. Rather they have to focus on the greatest wealth. . which is your own personal health. Secondly they could benefit from really "knowing thyself" investigating who they are and the nature of desire, to the point of feeling complete and whole without desiring or obtaining "things".

  9. Mike Brown says:

    Hey Andrew – I have half way through your book, and I am finding your approach refreshingly straightforward, and after investing in property for a number of years I have finally decided to ditch the hassle and get involved with stocks and bonds….

    I am also considering sporting arbitrage.co.uk. HOWEVER I am concerned that as the saying goes if it is too good to be true it probably is. Have you come across this type of thing before?? I would be really interested in your take on it..

    Thanks for your time.


    • Hi Mike,

      Investing with arbitrage is far beyond anything I do. From my experience, the more simplified the investment process, the better.

      • Mike Brown says:

        Hi Andrew

        Thanks for your reply.

        On a different note I am about to embark on a UK teaching qualification in September and then head overseas. I am thinking Brunei or Malaysia.

        All the best and I just wanted to say what an effect your book has had on my future investing.

        One other query – your book addresses the accumulation of wealth for retirement, but how is retirement actually funded, assuming no corporate pension. Is it through the gradual sale of the investments that have been made through a lifetime. I want to pass on something to my baby daughter. What is your general advice for funding retirement?



        • Hi Mike,

          Please let me know if this article answers your question: http://www.canadianbusiness.com/article/83508–re

          You will need to sell off parts of your portfolio each year. I hope this article above does a decent job explaining it.



          • Mike Brown says:

            Hi Andew

            Thanks for the that. Yes, I understand what's involved – great stuff.

            I am trying to follow your advice in your book and I am looking at the Vanguard life strategy 60% equity fund, as follows:

            I am in my mid 30's and UK based.

            Allocation to underlying Vanguard funds

            Vanguard FTSE Developed World ex-U.K. Equity Index Fund 33.9%

            Vanguard FTSE U.K. Equity Index Fund 20.7

            Vanguard U.K. Government Bond Index Fund 19.3

            Vanguard U.K. Investment Grade Bond Index Fund 12.0

            Vanguard U.K. Inflation-Linked Gilt Index Fund 9.1

            Vanguard Emerging Markets Stock Index Fund 5.0

            Total 100.0%

            Do you think this is a good all round option??

            Am I right in thinking that this will balance itself?

            Thank you again for your time and comments.



  10. Robert Grant says:

    One thing I've never encountered in your book or blogs is prioritizing your investments? In Vancouver, (an overpriced housing market) should a first time home buyer consider buying property with a mortgage or continue to dump extra cash into the index funds/bonds? And if I do purchase property, then what's a safe strategy to allocate funds for both my mortgage payments and stock investments without becoming 'mortgage broke'? I guess what I'm asking is what should I be more focused on using disposable income on…

    • Hi Robert,

      You haven't seen it mentioned in books and blogs because (I presume) nobody is foolish enough to claim that they know the answer to your question, without looking into a crystal ball for future mortgage interest rates and stock market gains.

      I can tell you, personally, that I would rather rent if I lived in Vancouver. I often consider rental yields when making such a decision. Think of yourself as an owner, renting a property. If a home costs X and the rent for the year amounts to a yield that's less than that of a long term bond, then I would give it a miss. Currently, in Vancouver, those yields are pretty low, lower than a bond. That said, the decision is also a personal one, and financial considerations shouldn't cloud every personal decision you make. If you would rather have your own home, and it's important to you, then go for it. As for paying off a mortgage versus investing, I gave my 2 cents in my comment to Neil.

      • Robert Grant says:

        I was leaning towards those assumptions myself, thanks for backing it up! Thanks and keep up the great advice, turned my entire financial situation around at 27 because of you!

  11. Neil Peart says:

    I have just finished reading your book. It is very well written and makes perfect sense to me. Paying off high interest credit card debt is obviously a no brainer but one question that did not appear to be properly addressed was the issue of (relatively) low interest debt, in particular mortgage debt.

    It is all well and good telling everyone that they should throw every penny they have into index funds from age 18, but what are you going to live in. We can’t all live in a tiny $350 a month apartments 35 miles from our place of work after all.

    What if we have 2 children and a wife and a mortgage with an interest rate of, say 6-6.5%. Is it still best to put any additional money into these index funds which, as you readily admit can go up and down in the short term, or take the surety of paying down the debt.

    • Hi Neil,

      Whether it's financially better to pay off your mortgage before investing, or split your extra money 50-50 (mortage and index funds) is something only a soothsayer could tell you. In my book, I didn't want to presume that I'd know where interest rates were going to go, nor did I want to presume where the markets were headed. That said, I did mention my personal preference, based on my personality, more than anything. I stated in my book that I don't like debt of any kind. As mentioned in the book, when I bought my oceanfront property, I chose not to invest another dime until the mortgage was paid off. This, of course, is just a personal thing. And I felt that giving an opinion on the "best course of action" would have been ignorant on my part.



  12. Joe says:

    Hi Andrew, I was giving some Singaporean relatives a tour of San Fran and we went into a Crate and Barrel store. I was struck by how expert America is at providing such an abundance of things to spend our money on. Even a visit to the Safeway store is an adventure among 1000's of types of cereals. As they drooled over all the possibilities I took the kids for a walk in a nearby park. It caused me to reflect that one way to increase ones happiness, and a great way to save money, is to avoid even entering such places. You walk in and suddenly you NEED a new set of matching plates and napkin rings. I wonder what those Himalayan villagers would think of a 10,000 square foot building dedicated just to plates.

  13. Neil Peart says:

    Great. Thanks for the prompt response. I remember that part of the book now. Obviously being debt adverse has done you and Buffett no harm at all. I'd rather the miracle of compounding work with me than against me.

  14. Skyler says:

    Hi Andrew, just read your book and think its awesome? I just have some questions /concerns.

    To start I'm 22 living with my parents in california. I have around $1200 dollars in debt that obviously needs to be taken care of first, as well as around $30000 in student loans which comes to about $300 dollar payments every month. I currently have a job making about 1k to 1.5k a month depending on how many paydays there are. Anyways I love to be able to start in vesting (after the initial 1200 gone). Anyways I don't think I really make enough to invest in index's, because don't they usually run for more than a thousand dollars a share. In the book though you talk about adding $100 dollars a month to your investments, and that i could probably do. So I am I just missunderstanding the way that investments for index's are done or am i right and basically i have to either save u the one for a share or invest in particular stocks I can afford or even should I just not worry about it now and pay off all my debts as soon as I can and just wait till i make a sizeable income?

    • Skyler says:

      nvm think i figured it out so basically you have to invest a minimum originally and then you can invest smaller amount or thats at least how I'm understanding it

  15. Hi Andrew,

    Good post! I've done some thinking on this too lately, and I think it's really relative. You're quite right that people in other countries don't necessarily need as much, though the cost of living might be lower, too. I think one has to keep everything in balance; once you have enough for the basics, what's the best way to go after your dreams? Probably not by living paycheck to paycheck or getting yourself in too much debt, whether you're at $50,000 or $500,000 a year.

    • Your statement is true to the adverb in your blog name Kevin. Wisely said. Scott Burns has a great recent post on the Assetbuilder site that you might want to check out as well: http://www.assetbuilder.com I like to think he grabbed my idea and then thoroughly perfected it. But he has been writing about this stuff far longer than I have!

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