International Teaching: Perils to Beware

With no pensions to contribute to, International Teaching can be a hazardous occupation. 

zurich warningYou save your money in a school sponsored plan and trust that the money is fairly allocated.

 The administrators at most international schools have great intentions.  But most schools are plagued by visits from silver-tongued financial representatives, bleeding employees like leaches.  Products sold by reps for Zurich International, Friends Provident and Generali Vision ferment along the halls of shame. 

Sadly, they’re widely spread among international educators.

Understanding how much money you should have made on your investments is easy.  Just pick a simple benchmark.  Let me explain:

Assume that you bought a simple stock market index and a simple bond market index.   A stock index compiles a bunch of stocks; no trading takes place.  No experts would be trying to pick hot stocks or hot funds.  You’d just own a representative of every stock within the given market.  You would also have a bond allocation as well.  For the sake of this example, let’s assume you were a conservative investor, putting 50% of your money in a bond index and 50% in a U.S. stock index.

This would be a cheap, maintenance free, boring strategy.  But it has spanked the returns of most investment professionals.

Here are the historical results, to May 13, 2013, assuming $5000 was invested in the U.S. stock index and $5000 in the U.S. bond index.

  • After one year, you would have turned $10,000 into $11,344.
  • After three years, you would have turned $10,000 into $13,278.
  •  Buying 5 years ago, right before the market crash of 2008/2009, you would still have turned $10,000 into $13,086.
  •  Buying ten years ago would have turned $10,000 into $18,474.

 Back-tested to 1986, a 50/50 split between the stock and bond market indexes would have generated a portfolio of $85,360.

morningstar-graph

Source:  Morningstar.com

The portfolio above is conservative.  Increasing the stock allocation would have improved results, but only if the investment fees were low.

Expats can use this link to find examples of low cost platforms.

Above all, remember the three things an international teacher should never do:

  1. Never pay a sales commission to buy a fund
  2. Never enroll in a plan that penalizes you for withdrawing money
  3. Never fall for an insurance linked investment scheme through Zurich International, Friends Provident or Generali Vision (read all the posts here)

For more information, please check out my international bestselling book, Millionaire Teacher.

As an international teacher, you deserve a fighting chance.

Further Reading:

 Costs in the Mists of Time: South China Morning Post

Royal Skandia’s high commissioned Investment Linked Assurance Schemes are similar to those sold by Friends Provident and Zurich International

 Hong Kong Consumers Angry After Being Sold Complex Insurance Product ILAS:  South China Morning Post

 ILAS Products Under Scrutiny:  International Advisor

 

 

 





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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47 Responses

  1. Jesus says:

    Hi Andrew,

    I just started reading your blog, but I do find that your information is quite useful. I understand you are based at Singapore, right?I am a 26 year old Colombian that has been recently transfered to Singapore and am looking for a place in which I could buy a no-load index fund or ETF. I have looked around, but all I can see offered in the local brokerage are some actively managed funds with ridiculous expense ratios (above 1.5%). In your experience, is there any brokerage that actually offers low or no load funds? I was also thinking of maybe getting an online discount brokerage account (I know Think or Swim is currently present in Singapore) as an alternative. What do you think. The idea would be to make an initial investment of around $10,000 with the intention of investing a further $5000-$10,000 a year into builiding an all equity portfolio.

  2. Kassi Cowles says:

    Dear Andrew,

    Your blog is fascinating and I’ll definitely be spending some time reading your suggestions. I’m an international teacher in Shanghai so this is useful information.

    Thanks,
    Kassi

  3. Poe says:

    Hi Andrew!
    My hubby and I are moving to China next month to start our international teaching career. We are 30 and have no savings but do own a home we will be renting out in Australia.
    I don’t know much about stocks but I have read some of your book. I am planning on opening a Vanguard account before we leave Australia (a $5000 index funds account) as you suggest.
    My question is what next? How much should I invest in the account per year say over the next 25 years so we have a nice next egg for retirement? Any advice is much appreciated!
    Also, we should be able to save as a coupe about $50,000 a year in China. Should we out that amount on our mortgage, in our superannuation (govt retirement plan) or into Vanguard or all three?
    Thanks!

  4. jbiersteker says:

    Hi Andrew,

    Seeing as you just gave a reference for someone in Shanghai, I was wondering if you had any useful information for Korea or an agent you could recommend. I am also Canadian.

    Thanks!!

  5. Tim Gascoigne says:

    What about in Malaysia ? Is there anyone that can be recommended? Anyone investing in Malaysia ? What bank ?

    Thanks
    Tim

  6. David says:

    Hi Andrew,
    I’m an expat Brit married to a Canadian, living in Beijing. I finished your book last week, sinking deeper into my seat as I read. Last year we (very unfortunately it seems) took out a Generali pension. We’re just over a year deep into it and roughly $10000. The initial period is 2 years would you suggest getting out now and cutting our losses? We’re putting in about $1000 a month and have about $15000 of UK bonds set aside to buy a rental property in Canada next year. We’re looking to retire in about 25 years….

    any info would be warmly received!

    thanks!

    David

  7. Jordan says:

    Hi Andrew,

    I recently came across your blog and have enjoyed reading your posts. I have been teaching abroad for a couple of years, first in Korea and now in China. My student loans are almost paid off, so I’ll be looking at doing some investing.

    After reviewing the Government of Canada’s website, the rules regarding non residents for tax purposes investing are a bit vague. I want to ensure I keep my non-resident status. From what I understand, expats can’t contribute to a RSP. Is this true? Perhaps you could provide some insight on this issue.

    Thanks Andrew- I’ll be sure to tell my teacher friends about this blog when I return to China in the Fall.

    • Hi Jordan,

      It’s true that, as an expat Canadian, you can’t invest in a RRSP.

      That said, you have even better opportunities. As a non resident, you would have to pay capital gains taxes on your investments. What’s more, unlike a RRSP, there’s no tax to pay when you withdraw.

      Cheers,
      Andrew

  8. UK Expat Teacher says:

    Hi Andrew,

    Firstly – thanks for a great book (and website) you have opened my eyes to what my financial ‘advisor’ has been up to – not only with my money but many of my friends who are also teaching overseas. We are all British expats working in the Middle East.

    I signed up to two Friends Provident policies almost 5 years ago (October 2008). I have been paying $2000 ia month nto my Premier Ultra plan (which is a 25 year plan) over this time and invested a lump sum of £33,000 into a Zenith plan.

    Last year he also encouraged me to sign up to a 25 year Quantum policy with Royal London 360. I won’t go into the details (as it will only highlight how very stupid I have been) but needless to say things have gone pearshaped for me and my friends and I’m now looking to manage my money your way!

    When the cracks appeared with his connection to Royal London three weeks ago, my financial ‘advisor’ went awol. I panicked and searched the net for hours (which is when I came across your site) and learned just how much of my money this guy must have pocketed in commission.

    I’ve tried since then to start to sort this and so my plan of action so far is this:

    I am going to surrender my Royal London policy with immediate effect (the funds that I’m paying into are all extremely high risk unbeknownst to me) as I stand to lose the least amount of money this way.

    I will be sacking my ‘advisor’ as my broker for Friends Provident. I have just discovered that this is easy to do – just write a letter to FP and it’s done. Letter is now written and ready to post!

    I am requesting a payment holiday with FP until October when I can then look into taking out funds from there and investing them in Index funds as you recommend. I cannot take all this money out though as I will stand to lose a lot so, should I change to paid up status and not contribute any more or should I continue to make the minimum payments?

    The next step I’m not so sure about as this is a massive learning curve and I would be really grateful for your advice.

    Following your strategy (I’m 42 by the way) I should look to invest:

    40% in Bond Market Index Funds
    30% in International Stock Market Index Funds
    30% in UK Stock Market Index Funds

    Can I do all this using Vanguard? Their website seems very clear with lots of information for someone starting out on managing their own portfolio. They have a UK website now – would I use this one as I’m a Brit – or would this affect my tax status / charges? Sorry if that’s a really stupid question but this is the point that I get lost! They seem to have a variety of services and I don’t know which one I should go for with my limited experience in this field …..

    Any help would be greatly appreciated – my friends and I feel that we’ve been royally done over and are determined not to be again!

    • UK Expat,

      Opening with Vanguard UK would likely affect your tax status. You could open an account in Singapore without having to visit Singapore. Then you could build a portfolio of low cost exchange traded funds through a firm like DBS Vickers. You would then wire money to the account when you need to make your investments. Here’s an example: https://andrewhallam.com/2013/05/an-expat-canadian-in-japan-finds-a-way-to-invest/

      Cheers,

      Andrew

      • Sasha says:

        Hi Andrew,

        If you are resident in the UK, you will need at least 100,000 pounds to invest directly with Vanguard. If you don’t have that much you can go through Hargreaves Lansdown which acts as a platform for Vanguard. There are other companies you can go through but HL is the cheapest.

        I sent your book to my father-in-law who lives in the UK and even though he has retired he opened an account with HL following your advise. He says he wished he had your book 30 years ago.

        http://www.hl.co.uk/

        Sasha

  9. Barb says:

    Hi Andrew, Just read your book today. Thanks so much for an understandable read! I’m also an international teacher. We have “finance guys” from Fidelity who come to our school. We pay 3% to get school contribution of 10%. I’m in my early 50’s (but will have a pension from US), I had been contributing 10% as a safety cushion. But, after reading your book and realizing I’m paying 5.7% commission, and I don’t even know what kind of fees as they are hidden in there, I think I need to cut my personal contribution back to the minimum 3% and invest the rest myself in some Vanguard funds. Do I have that right? Also, if I have to use these 5.7% commission guys, can I still get index funds through them? (oddly enough, they didn’t recommend them–wonder why?!!)

    • Hi Barb,

      I’m glad you liked the book! If you can scale back to the maximum matching contribution level, that would be great. And yes, it’s no wonder those guys didn’t recommend index funds. They don’t get paid to do so! Here’s something I didn’t mention in my book, which makes the need for you to go into indexes even more compelling. In taxable accounts (and as an expat American, all of your non-IRA investments are taxable) you will save tremendously on taxes with index funds versus the alternative. Here’s a great read from the New York Times, explaining it in full: http://www.nytimes.com/2009/02/22/your-money/stocks-and-bonds/22stra.html?_r=0

      If you can go with a firm like Vanguard or Assetbuilder (www.assetbuilder.com) with the rest of the money you are investing, that would be far more beneficial. Could you please tell me more about the finance guys that come to your school. Do they represent Fidelity directly, or do they represent a firm like Raymond James, and sell Fidelity products?

  10. Steve says:

    Hi Andrew…reading your blog is a great follow-up to your book! I am hoping that you can provide some advice.

    I am an American who has been teaching internationally for 10 years now and have worked hard to build up a good-sized portfolio, which I manage through Charles Schwab Bank. Prior to moving overseas, I spent a couple of years each teaching in Connecticut and Virginia. I made contributions to each state’s teacher retirement program during my tenure. Rather than have multiple accounts floating around out there, I decided in 2008 to roll those accounts over into IRAs that I also hold at Schwab. I now have 3 separate IRA accounts, and each account holds one index fund. It’s not a huge amount of money…about $45,000 total. I am fortunate that these funds are all up substantially since I opened them: one is up 40% and another is up 30%.

    Obviously, this growth is unsustainable, and the market will turn at some point. When the market drops, of course, it’s a great time to buy. However, I cannot make any additional contributions to these accounts, so I’m left with only what I originally contributed plus any growth I realize along the way. So, my specific question is this: Would it be wise for me to sell the funds I currently have and move the money into something safer, like a bond index fund? Would that allow me to better “capture” what I’ve earned and preserve it against future fluctuations? I do know that while I can’t contribute additional funds, I am allowed to trade within the accounts.

    Hope you have some words of wisdom…thanks!

    • Hi Steve,

      My book’s 6th chapter should serve as a reasonable guide for you. Don’t sell all your stocks, but build a diversified portfolio of stock and bond indexes. With the markets up, now would be a great time to do so. Then avoid speculating, and stick to your goal allocation, as mentioned in the book.

      Cheers,
      Andrew

      • Steve says:

        Hello again Andrew,

        I just wanted to clarify that these IRA accounts are separate from my portfolio, which is diversified between stock and bond indexes and to which I can continue to contribute. The IRA accounts, on the other hand, are closed to further contributions. It’s on that point that I wondered if you would approach those accounts a bit differently.

        Thanks again,
        Steve

  11. Vig Lacera says:

    My wife teaches at an international school in South Asia.

    The school has signed on to a retirement plan from ABG – Alexander Beard Group, which means that the teachers have no option but to deposit a minimum amount of their monthly salaries, matched by the school.

    Only briefly read the colorful brochure.

    Here is the one fee (of many) that stood out: ‘5% charge on premiums paid.’ That sounds so vague to me. I wish I could decipher that one.

    There are, of course, other fees but I haven’t had the time to really digest it all yet.

    Anybody familiar with ABG? Can they be filed with the likes of Skandia, Zurich, Friends Prov?

    Thanks everyone.

    • Vig,

      Alexander Beard represents a very similar structure. Ask the representative if you could pull money out a year after you make your contributions. The answer will be no. It will be locked into their “pension” for many years. I have contacted a rep from this company, servicing another international school. Platform fees as 1.5% per year, the actively managed funds cost a further (hidden) 1.5%. The commission for each purchase is a whopping 5%.

      At the Western Academy of Beijing, the school pays for half of the management fees. So there, they pay 1.5% fund costs, 0.75% management fees (the school pays half of the 1.5% charge) then investors pay 5% commission on every purchase.

      There are MUCH better options available. I pay 0.35% on my ETF commissions, and THAT irritates me. To pay 5%?! Yikes!

      Andrew

  12. Vig Lacera says:

    Andrew, I appreciate your quick response. Thanks. Bear with me, I’m slowly learning.

    So what you’re saying is: ABG takes a 5% cut from each and every contribution we make to the plan? And we’ll pay another 3% in fees if my wife’s school isn’t paying a share of platform/management/admin fees?

    The glaring problem is that teachers (like my wife) have no choice. They’re mandated to contribute. It’s part of their work contract. There’s no stopping the monthly gravy train (for the fund company, that is) until the work contract expires. The word ‘leech’ just came to mind. And ‘bleed’. And ‘forced feeding’.

    I’m learning of better options thanks to your materials and others’. It makes this forced shoveling of loot into some salesperson’s pocket all the more upsetting.

    From what it sounds like, many international schools are, unwittingly, doing their teachers a real disservice with these parasitic plans, no?

    • Vig, you are correct. If your wife deposits $30,000 this year, the company keeps 5% of that as a sales commission, amounting to $1,500. I am currently writing a book for expat investors, but it won’t be finished soon enough. Invest the bare minimum into this plan and build diversified portfolios of ETFs with the rest of your savings via the Luxembourg based arm of TD’s International brokerage. By doing so, sales commissions will be about 0.3% or less, and instead of paying 3% in annual fees, you could likely get it down to less than 0.3%. There’s a reason Alexander Beard, himself, is one of Britain’s richest men.

  13. Vig Lacera says:

    Andrew, really appreciate your feedback.

    TD Internat’l in Luxembourg or DBS Vickers in Singapore: does it really matter which brokerage? My wife & I are Canadian citizens, non-residents for income tax purposes.

    Thanks Andrew.

    • Vig,

      TD Waterhouse in Toronto would be cheaper. YOu would have to pay the cost of wiring money (about $40 per time, I think) but if you’re sending over reasonably large chunks (save up about $5000 each time) then you would pay a commission of $9.99 per ETF purchase and a $40 transfer charge. If you pay such costs (amounting to about $50 on $5000, you would be paying just 1% commission for the trade. Keep in mind, if the same transfer fee (wiring money) applied, you could invest $10,000 at pay just 0.5% in fees to send it and make the purchase. This is a far cry from 5%. And of course, the expense ratios (this is by far the most important part) would be roughly 0.2% per year, versus 3% per year with Alexander Beard. That expense ratio drag is massive. Have you ever played with a compound interest calculator, entering different rates of interest over time? Play with this calculator to see what I mean, using interest rates of 6% in one example, and 9% in another. You’ll see what a 3% annual cost can do over time. Note what it would do over a 25 year duration. http://www.moneychimp.com/calculator/compound_interest_calculator.htm

      By the way, which school is your wife at? Which country?

  14. Vig Lacera says:

    And good luck w/ your book for expat investors. More than a few people I know are looking for a book like that.

    • And thanks for this Vig. I’m working really hard to make something highly readable, and highly instructive. I’ve also been hammering groups like Alexander Beard in my most recent chapter. I think you’ll like it.

      Cheers,
      Andrew

  15. Vig Lacera says:

    Andrew,

    Appreciate the advice but I’d prefer to avoid using a Canadian brokerage. We’re Canadian citizens BUT non-residents for tax purposes. I fear opening an account in Canada may jeopardise our tax status. So we’ll likely go with DBS V in Singa or TD in Lux.

    Wow. That ‘little’ 3% takes off a meaty chunk – esp. after 25 yrs. No wonder Mr Beard is rolling in it.

    Rather not say which school my wife is at, but we’re living in Bangladesh ; )

    Cheers

    • TD in Luxembourg is much easier to open. With DBS Vickers, you would have to take an online test. And you would also have to visit Singapore personally. With TD Internatational, in Luxembourg, you could open the account online. Service also seems to be excellent.

      • Vig Lacera says:

        Thanks Andrew. Will do.

        I had a quick glance at the website of TD Intern’l in Lux. Couldn’t find any index funds for sale, just ETFs. Perhaps I need to drill deeper…

        I just want to buy a CAD index, an international index, and a bond index. Seems so simple.

  16. Vig Lacera says:

    TD International in Lux won’t allow me to open an account.

    To recap, I’m a Canadian citizen living in Bangladesh. Bangladesh is a ‘non-sanctioned’ country according to TD.
    TD requires that I submit a non-Canadian residential address to open an account. The only non-Canadian residential address I can provide is the one in Bangladesh! Crazy.

    Really disappointing.

    Will try DBS Vickers in Singapore.

    • Vig, did you have any luck with DBS Vickers? Were you able to open an account.

      • Vig says:

        Andrew, thanks for asking.

        In short, not yet — and perhaps not ever ; (

        DBS Vickers requires that a person first open a regular bank account at DBS Bank.

        For this you must go to Singapore, apply in person. You’ll either be accepted or rejected on the spot. (DBS Bank is mum about whether you’ll be accepted or rejected based on the details you give them over the phone.)

        So — it’s not as easy as others have suggested on this blog. Especially if you don’t live in Singapore.

        Looks like we’ll go with Saxo in Singapore. I’ve read many positive comments about them. They don’t require a Singapore bank account. They will process applications through the post / email. And you can buy Vanguard ETFs via Saxo.

        • You’re right Vig, Saxo sounds like a very good option. You don’t need to travel anywhere either, as long as you get a notary to verify your identity for them. DBS definitely tightened things. And Saxo does have cheaper commissions.

  17. Kelly says:

    Hi Andrew,

    I flew to Singapore and opened an account with DBS Vickers in August. Since then, I have been trying to do the silly test you have to do to be able to trade. But I have had a lot of trouble actually being able to log into SGX learning portal – so far I haven’t been able to and they haven’t been very helpful.
    Anyway, so I am looking at setting up an account with TD International. This is probably a real rookie question, but I have to ask – what kind of account do I want to open up? The ‘requested products’ available to select are: investment funds, etfs, equities, equity with margin, savings account, contract for difference, forex, futures and warrants and covered warrants.

    I only want the etfs, correct?

    Thanks in advance 🙂

  18. Ian says:

    Hi,
    I read your blog and learned a lot. I had a feeling that we had to do the investing ourselves but I was still curious about getting the services of a financial adviser (FA) that our friends recommended. I felt prepared for our meeting with this new FA from PMA Associates (UAE). One of the best things about your blog is that I was able to make some black and white observations like: index investing=good, actively managed mutual fund investing=bad, marrying life insurance with mutual fund investing (especially when the fine print reads (101% return upon death)= bad, load in and load out fees, wrap fees, sales fees , annual fees, 12b1 fees = all bad, a penalty upon trying to remove money early= bad….so I played dumb when we met our friends’ FA. He was a smooth and polite guy. He asked the usual questions during our interview and we discussed a questionnaire that we had filled out earlier so that he could get an idea on how to work with us and invest our money. One of the things he told us was that he would push us to save a lot of money each month to which I assumed that this helps him in the money department too. He had a few useful suggestions but as predicted, talked of actively managed mutual funds. I asked him if they had load in and load out fees etc. to which he replied, “yes” but he said he never heard of a wrap fee. I said, “What about index funds?”. The expression on his face changed and he became very serious and looked me right in the eye and said, “Look, we invest in very reputable world renowned companies like JP Morgan, Morgan and Chase…” and continued list off a number of big name multinational investment firms with billions of dollars of investments that have actively managed mutual fund products and implied that they are “safe” companies to invest with. That pretty much concluded the meeting for me. However, I was curious to see what he would advise us to do. Hansard actively managed mutual funds were the recommendation including the terrible life insurance. Again, I didn’t do the math but I followed the no-more-than-the-1% rule and from the looks of it, I would have been paying a helluva lot more.

    I am so happy I read your blog and book (it was on backlog in the UAE) and loved it. What I love about it is that finance is explained in very easy to understand terms and the content is broken down into easily to digestible chunks.

    To be honest, I was actually seriously considering the possibility of investing with Friends Provident and Zurich International so a huge “Thank you” to you Andrew, you saved us from a huge financial and personal upset.

    Cheers

  19. David McCready says:

    Hi Andrew,

    I’ve been put onto your page by a friend. I invested in a Generali plan 10months ago investing $1000 each month when someone informed me that it was a bad idea. I now need to know whether it’s better to get out now and cut my losses, or try to get out at a later point. I was under the impression that it was going to make me between 5-10% over time, on top of inflation, and that I can remove it easily, without charge if/when I repatriate. This is the largest amount of money I’ve saved and I’m pretty gutted that I’ve been sold something like this when it sounded so good and i thought I was being cautious. I now wish I had taken more time and read up on it more! Is there no way this can work?

    Many thanks in advance…I’m off to read some more of your docs,
    David

    • Hi David,

      When you were sold this policy, were you made aware of the heavy redemption penalty? What exactly did your advisor tell you, in this regard?

      Andrew

      • David says:

        Hi Andrew,

        Thank you for replying so promptly. In short, I wasn’t. I’ve been shown now that I did sign documentation that would have told me this, but he used vague terminology like “It will only be really beneficial if you invest long term” and “…if you reduce payments, it won’t be as beneficial for you” but I certainly wasn’t aware that I’d be charged each month for 25 years on a % of $1000, even if I reduced the premium. He also told me, he gets paid a small percentage, not the majority of my first 18 month investment which I now believe is the truth.

        I am, however, getting mixed feedback. Some say, to stick it out and some say that if I give up my $10000 now and invest in potentially similar packages (but not the mirror funds with the Zurich top-slicing) and shorter term plans, that it will benefit me much more in the long run.

        I am still learning but what I have promised myself is to educate myself now. I feel pretty embarrassed by it all and don’t want to make the same mistake twice.

        Your advice will be greatly appreciated,
        David

  20. Emma says:

    Hi Andrew,
    Many thanks for all your advice. I am a bit torn on all of this, as there are so many complaints about Generali, but as I read in detail and try to decipher complaints, it appears to me that consumers were most often sold plans that were not right for them and their needs. Yes, people have lost money, but usually this is when they try to cash out the plans before their term etc etc.
    I have a generali vision plan. It’s a 25 year plan, and I’ve had it for 6 years now. I’ve paid a fair amount of money into it! So far it’s running at a loss, but my understanding is that it should start to break even and make money after 8 years.
    After reading all these horror stories, I’m starting to worry that my money is not in a safe place. But really, if I keep it in there for the 25 years and continue to make regular contributions, is it so bad? I know that the fees are high and it’s not the best place to have my money, but the money is there now!! I did make some inquiries about cashing out the plan, and at this stage I would lose almost half of my investment if I was to just cancel the plan. I feel as though my best option would be to stick with it, but I’m unsure if this is wise. If I cancel the generali account, then my employer will automatically set up a Royal Skandia plan, and it seems as though this is not much better!
    I am trying to find a more balanced opinion online. Although I now know that it was not wise of me to buy the plan in the first place, I’m finding very little information about what to do now that I have it! I would greatly appreciate any advice you have.

  21. Sara says:

    Hi Andrew,
    I am a teacher in Ukraine. I read your book and feel like I just learned so much! It led me to start looking closely at our investments. We had done some things right but we made a major mistake and had invested in the Generali Vision plan through our school. That was four years ago but when we signed up the advisor got us to take out a 30 year plan (we are young and didn’t have a prior pension plan). Essentially if we bail now we’ll get zero. When we signed up we were told we’d have complete freedom to remove our money after two years, etc. Basically everything we were told was a lie or at least deliberately misleading. I am trying to get our term of investment reduced and get out if possible, and am writing to Generali. My question is what kind of retirement plan would you recommend instead? We are American but it is my understanding that with no US earned income we can’t contribute to an IRA. Are there other tax-sheltered options or are we better off just putting that money into our Vanguard index funds and saving that way?

    Thank you for you suggestion! Looking forward to your next book
    Cheers!
    Sara

    • Hi Sara,

      As an American overseas making less than $97,500 USD, you can’t shelter your money from tax. However, if you invested with Vanguard or built a portfolio of exchange traded funds through Schwab (see my latest post http://assetbuilder.com/andrew_hallam/breaking_away_from_high_cost_investment_firms) your savings in fees would far outweigh any tax sheltered savings you might end up with. Indexes, even in taxable accounts, compound nearly tax free because there’s very little turnover (see my 3rd chapter for a full explanation of taxes and fund turnover)

      Your school administrators did their best. But they let you down if they invited this firm into your school and encouraged their teachers to invest with them.

      Andrew

  22. Abi says:

    I’m not an international teacher but I’m an African expat living in UAE. I’ve been investing with FPI since 2007 and apart from two breaks when I lost my job during the recession, I have contributed regularly for 7 years. I really wish I’d found this site before I signed up. The first time I realised I wasn’t getting much bang for my buck, I reduced the monthly installments to the absolute minimum. This year, I asked for a surrender value and it’s over $3,000 in penalties if I cancel the plan and withdraw all my money :(.

    I still haven’t decided if I should just take my losses and withdraw the rest or continue paying the absolute minimum and get whatever is there when I’m 50 which is when the plan terminates.

    I’m now trying to find better investment opportunities. I’m 36 years old. What would you recommend for an African expat? I’ve looked at some options but haven’t found anything servicing where I come from.

  23. Neil says:

    Unfortunately things are even worse (in my experience) for the inexperienced investor in International Schools. My wife and I ended up investing with Zurich International on the advice of someone who came into our International School in Singapore. Only after we signed up did I come across this site and realise it was probably a mistake. I didn’t worry as we had been assured by our ‘advisor’ that we could close down our ‘investment’ after a few years with no penalty. Now, nearly two years later we are informed that, actually, the term was for 16 years (for what turned out to be a Life Insurance plan), and any closing of the account now would incur ‘significant penalties’.
    I do not regard ourselves as particularly naive but we were blatantly lied to in our discussions of the contract – something that we didn’t expect as this ‘advisor’ was (and still is as far as we know) being invited into schools to speak to new expat teachers about how best to invest their money.
    So best advice is to avoid them like the plague – even if you think you are asking the right questions to protect yourself they can grossly mislead you and get away with it. We’re going to end up losing all of the money that we saved in our time in Singapore (about 20K SGD)…

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