Top Ten Tips For International School Teachers To Build A Solid Retirement

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Many international school teachers don’t think enough about retirement. 

And that’s understandable.  The whole concept can seem confusing. But it isn’t.  And those who fail to plan are planning to fail. That could mean eating dog food instead of gourmet, during your golden years.

So, what are the top 10 tips for international school teachers to build a solid retirement?

I share them at the following site:

Image courtesy of pixabay.com

InternationalSchoolCommunity.com

 

 







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andrew hallam

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 (Wiley 2011) 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.

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13 Responses

  1. Mike says:

    Hi Andrew,

    I happy to report that my spouse and I signed our first two year international teaching contracts for the 2015! We are soon to become US expats. My spouse gave me your new book for Christmas, and I also own Millionaire Teacher. We are current Vanguard users with two Roth IRA’s and two 529 plans. I understand that we can not fund our Roth’s after 2015. We are both 35 and plan to spilt our international saving between VSBSX, VTSAX, and VTIAX with 35% going to bonds. However, I spent some time on americansabroad.org and came across this information regarding using friends/families address to continue funding mutual funds from https://americansabroad.org/issues/banking/mutual-fund-restrictions/ (sorry for the length):

    “Using a family member or friend’s address to try and circumvent these rules could be dangerous. US Financial Institutions are going to great lengths to track their customers and to protect their businesses. They use software to log from where (which country) clients access their website and new software allows them to pinpoint within a very small area where a phone call is coming in from, regardless of what id the phone number is. They scour financial records, social media, and other public and not so public information to keep tabs on their customers. Luckily, with respect to the mutual fund issue, a reasonable work around that is generally legal from most countries is to buy ETFs (which trade like stocks; between individual investors) rather than mutual funds where subscriptions and redemptions generally happens between the investor and the investment/fund manager. In the case of Vanguard, many of their ETFs are in fact shares of their mutual funds, a process they have patented. ETFs can have other advantages over mutual funds too such as lower costs, redemption and purchases throughout the trading day and generally a lot fewer capital gains distributions.”

    After reading the above information, it kinda knocked the wind out of me. One thought I have had is to set everything to auto-pay from my US checking account before I leave and then do my once a year rebalance when I am stateside, and not log-in to my accounts while I am international. Any suggestions?

    • Hi Mike,

      I’m not aware of anyone who opened a Vanguard account while in the U.S. to actually have any troubles keeping it once they move abroad. And I am in touch, perhaps, with more expat Vanguard users than anyone..it’s the nature of what I’m doing, after all. Expat Vanguard investors who opened their accounts prior to 2006 actually get their statements mailed abroad–with foreign addresses. So much for them tapping phones..or even caring to.

      If you are worried, by all means open an account with Schwab and build a portfolio of ETFs, as I suggested on pages 212-213.

      Cheers,
      Andrew

  2. Mike says:

    That is good new! So, you don’t think I have to sweat if I log into my Vanguard account from Asia ones a month to add new money to maintain my portfolio aligned within my goal allocation? The new money would come from my US bank account, and I have a US address to go along with it.

    • Hi Mike,

      You don’t have to worry about logging in from Asia. My wife does it all the time. As do most of the American teachers at Singapore American School. And although you can’t contribute to your IRA, you can certainly rebalance it once a year.

  3. Mike says:

    Second question: Come August 2015 I will become a US expat, and I know that I can not contribute new money to my IRA after 2015. Can I continue rebalancing my IRA portfolio by sell high and buying low to maintaining my yearly goal allocation within the account, or should I convert my IRA to a Vanguard Target-Rieterment fund (35 years old so VTWNX 2020) in order to keep the account rebalanced year after year.

    Thanks again,

    Mike

  4. Dave says:

    Hi Andrew….

    Over the last year, I have read your book ‘The Millionaire Teacher’ a few times over…

    I must say, its a great book. A really great book… It got me thinking about my current approach to finance, which up until now has been trading/ speculating on the US markets… Although I have been successful, I suspect that alot of that is due to the overall direction of the market for the last few years…

    So, I recently decided that if I was going to trade/ speculate, it would be within rule #9 (not more than 10% of my account)…

    As a teacher myself, here in Australia, I recently got my feet wet and bought some 10K worth of shares in the ASX Vanguard Index…

    So at the moment my portfolio is 100% Vanguard ASX 300 Index… Certainly not balanced… In fact, the last few days I was considering my desired asset allocation… And while its very similar to yours in the book, you can see I added property…

    30% Bonds
    30% ASX index (Australia)
    20% International Index
    20% Property Index

    Andrew, with my current portfolio being 100% Vanguard ASX 300 Index, how do I best make a transition into the asset allocation which I have presented? Do I just go all out and buy the lot at once? Do I buy what ever has dropped at the end of each month? I am a bit stuck on how to best approach this…

    My current idea for adding fresh money (once I have the desired allocation in place) was to once a month purchase the asset that had dropped the most in its particular allocation %… Of course, I adopted this idea from your great book…

    BTW, Thanks Andrew on such a great book…

    All the best

    Dave, Australia

    • Hi Dave,

      The portfolio model (with property) looks great. I recommend allocating the money in a diversified manner all at once. Otherwise, you can get tempted to speculate.

      Cheers,
      Andrew

  5. Dave says:

    Thanks for the reply Andrew,

    Ok. So what you are saying is to avoid any speculation (of trying to buy the indexes at lower prices). Just get started by buying the desired allocation all at once…

    So, in my current situation of currently owning 10K in ASX Index that would mean an immediate purchase of the following:

    $10,000 of Bond Index…
    $6,666 worth of International Index
    $$6,666 worth of Property Index…

    In the case that I did Purchase the above I would have the desired allocation, which is…

    30% In ASX shares Index
    30% in Bond Index
    20% In International Shares Index
    20% In Property Index

    So, from there it would be a case of checking the allocation once a month, and what ever is lowest in its desiresed allocation, purchasing that particular asset…

    Say for instance at the end of Jan the allocation looks like the following:

    33% In ASX shares Index
    31% in Bond Index
    19% In International Shares Index
    17% In Property Index

    So, a few things are evident here…

    its clear that Property has dropped the lowest in its allocation with a drop of 3%

    Also, the International Index has dropped 1% in its allocation.

    So, a few questions arise at this points…

    1) Should fresh money be added to Property Index, and if so, how much? Is the goal with fresh money to ONLY get it back to the desired allocation, nothing more?

    Note: If I was to ass fresh money to the Property Index, it would be about $200 to get it back to the desired allocation of 20%… (I would have to keep in mind brokerage is $20, no matter how big or small a purchase)

    2) Should fresh money be added to the second loser for the month? (that being the International Index) Being only 1%, it would be about $66 worth of fresh money to get it back to 20%…

    How would you approach this scenario Andrew?

    Thanks Andrew

    Dave

    • Dave,

      You don’t have to be so exact with your purchased allocations. Your allocation isn’t a magic formula, so drifting from it slightly in the name of what’s practical isn’t such a big deal. Currently, your account size is likely small. So any new purchase will dramatically swing your allocation. Don’t worry about that. Just build your portfolio, piece by piece, one index at a time. As it grows larger, you may notice that you must buy the same index, month after month after month, just to maintain something close to your desired allocation. This is when, as an investor, you will be tested. That asset class may be in the dumps for years. The question this is: will you have the courage to try maintaining your allocation.? Few people can do this. But I hope you will be one of them who can.

      Cheers,
      Andrew

      • Dave says:

        Andrew,

        Wow, few people can keep an asset allocation?? I thought Indexing was a strategy uncle Bob could even do… How is the average investor ment to succeed at this thing called asset allocation? I thought it was a case of just rebalancing to get things back to alignment. But from what you are saying, its just not that easy…

        Thanks,
        Dave

        • Dave, it is that easy. But most people can’t handle it, emotionally. At some point, markets will crash hard again. Your money will be cut in half. The media will say that there is much further to drop. People on TV will be telling you to put money in gold and mattresses to hide from the markets. Will you be able to rebalance? Will you be able to sell bonds and buy stocks when the world fears them? Most people won’t have the emotional fortitude to do that. I won’t lie to you. Investing is simple. But it’s not emotionally easy. And you will only be tested when markets crash.

          Andrew

  6. Dave says:

    Hi Andrew

    Just checking that you saw the question’s within my previous post…
    \
    Thanks

    Dave

  7. Russell H says:

    Hi Andrew
    FYI – The Australian ASX official site has an education centre with free on-line tutorials for first time investors to come to grips with how the market works, experience trading etc. Useful stuff. Check it out.

    http://www.asx.com.au/education/shares-education.htm

    Cheers and thanks for the Workshop at WAB

    Russell

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