The Best Way For Newbies To Invest For Retirement

We all know it’s important to save money for the future. 

But many people are afraid to invest. It looks complicated, and they don’t know who to trust.

That’s why some people stockpile money in savings accounts and CDs.

Others (the really quirky ones) stuff dollar bills into mattresses and empty jam jars.

But this is like trying to fill a bathtub without the drain plug.

Image by Pixabay

I explain here

 

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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17 Responses

  1. Jack N says:

    Hi Andrew

    Firstly thanks so much for all your articles, podcasts (listened to the one with Paula on Afford Anything – sounds like you had a tough shift in the early days!) and obviously the millionaire expat book. I’ve structured a European portfolio in the way you suggest. However, something has been playing on my mind and I couldn’t find the answer anywhere (apologies if you have previously covered it). So basically I’m wondering: why do you suggest having a home bias at all? The world and the companies in it seem so interconnected and profits are derived all over the globe that doesn’t the home bias really mean nothing? If the US market is the biggest by market capitalization then it deserves to be and why would a European then adjust this imbalance in their portfolios? I understand that if you live in Europe you might not want a US crash to smash your portfolio but it probably will be impacted anyway.

    Again sorry if you have already covered this but your help would be great.

    Thanks in advance
    Jack

    • Hi Jack,

      You don’t have to have a home country bias. But personally, I like doing so. I mentioned in Millionaire Expat that having a home country bias ensures that I have much of my money denominatated in a currency from which I’ll be paying my future bills. But it’s up to you.

      Cheers,
      Andrew

      • Jack N says:

        Hi Andrew

        Thanks so much for your speedy reply. Ok that’s great and noted. I don’t plan to draw on this money for another 30 years at least so guess it’s fine to have just global exposure in the meantime.

        Again, I really enjoy all your work so thanks again. Already recommended most of it to family and friends.

        Take care
        Jack

  2. Mike Lyons says:

    Hi Andrew, first, let me say thank you so much for your valuable advice! I have been reading your blog, and all your books! I especially love your anecdotes 🙂

    I was just wondering, do you still recommend WealthBar for Canadian expat investors? I’ve been following them since you discussed them a few years back. I am always hesitant with new companies, but I have a great deal of faith in what you recommend.

    Many thanks in advance! Take care,
    Michael

  3. Greg says:

    Andrew, always a pleasure to read your books and articles. What source’s do you use to research or backtest index mutual funds, or ETFs, against managed products? I’m not a professional financial person, nor did I work in the field, but always looking for low cost products, however, I feel like I’ve lost out on 100K’s by indexing, especially against mutual funds with ER’s below 1.00. When I back test my index holdings against what I used to hold, my heart sinks because I have lost a lot to indexing.

    I’ll use various sources for backtesting, but I don’t always know if fee’s are taken into account. When I speak to my brokerage, they say fee’s have been adjusted to reflect the true returns.

    Thanks,
    Greg

    • Greg,

      If you properly indexed your portfolio, it would have performed better than the active funds you were in, based on an equal risk allocation. If the markets don’t rise, no equity based portfolio will rise. If you are American, you can backtest your portfolios at portfoliovisualizer.com

      Cheers,
      Andrew

      • Greg says:

        Andrew,

        A key term you responded with “properly indexed.” Could you elaborate a little more what this means?

        I am American and one of the tools I do use is portfoliovisualizer.com. I sometimes wonder how accurate its data is.

        Thanks,
        Greg

        • Portfoliovisualizer is very accurate Greg.

          Cheers,
          Andrew

          • Greg says:

            Well, thanks Andrew! If Portfoliovisualizer is that accurate, then I should go back to managed funds with low fees, rather than straight “properly index” funds. Have always believed in the John Bogle philosophy, but Portfoliovisualizer is proving that isn’t the case.

            Have a great day!

            Greg

          • Greg,

            Remember that you will be investing over a lifetime, and not over just a handful of years.

            Cheers,
            Andrew

  4. Index says:

    Hi Andrew
    Is there a tool to back test Irish domiciled ETFs listed on the London Stock Exchange?
    Cheers – Index

    • Hi Index,

      You could use Morningstar UK. But if you have read my books, you will understand that seeing past returns won’t help you one bit. Just build a diversified portfolio of index funds, keep adding money, and rebalance once a year.

      Cheers,
      Andrew

  5. Max says:

    Dear Andrew, I read one of your books over the last weekend. Could not recall when this happened before :). So thanks for taking the time to share your knowledge and experience. For me it was just in time. Starting to invest and my portfolio would have full of active managed funds.
    For the time being I have one question. Once I have managed the amount of financial freedom, why only withdraw 4%? I understand that I should not take out more than the average portfolio performance. Why not 6%? Could you please explain the thoughts behind that.
    Thanks in advance

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