I’m pretty sure you can live on Coca Cola. 

Yes, it’s bad for you.  But I think you could stop drinking just about everything else and sustain your hydration on sweet, sugary syrup water.

You could even give it to your children.  They’ll still grow taller as they age.  And they might even end up performing pretty well in sports.

The Coca Cola Company would love that, of course.  They would point to the kids making Varsity baseball teams and say, “See, Coca-Cola helped them!”

But we’d know the truth.  If they performed well, they’d be doing it despite the Coca Cola, not because of it.

Stock market investments are no different.  When stock markets rise, investment accounts rise.  Investment accounts don’t generally rise because of an advisor’s savvy fund selections.  They often rise despite them.

Today, I’m going to throw down a challenge to three of the more common financial companies that service international school teachers overseas:

  1. Tie Care International
  2. Raymond James
  3. Zurich International

I want to show expatriate Americans that they could earn far better investment results with a different type of company.  Here we go:


I’ll start with the most important investment performance question: 

 “How has my total portfolio performed over the past five, ten, or fifteen year period compared to a portfolio of diversified, rebalanced total stock and bond indexes?”

Ask this question, and the advisors selling you actively managed mutual funds will likely feel like they’ve been kicked in the stomach…and for good reason.

As I explain in my book, Millionaire Teacher, there are two types of advisors:

1.  Those who build diversified accounts of index funds to give their clients the greatest likelihood of investment success


2.  Those who build investment accounts of actively managed mutual funds that will ensure great future holidays, retirements and material goods for the person selling you the funds

If you employ a financial advisor, you should choose the first type—those who build diversified accounts of index funds. 


A Simple Benchmark

On September 11, 2006, I built a diversified portfolio of stock market index funds for teachers at Singapore American School.  I knew what the overwhelming data suggested:

Diversified low cost accounts of index funds provide the greatest statistical chance of success compared to accounts of actively managed mutual funds.


Are index funds riskier?


Risks are taken when accounts aren’t diversified into alternative asset classes, and the account I volunteered to track only had a 66 percent exposure to the stock market.  Fully 33 percent of the money was allocated to bonds—a safer alternative asset class that would smooth the total account’s fluctuations.


Does a diversified account of indexes gain money every single year?


 But over long periods of time (you must be patient) it will work its long term magic.

I hypothetically invested $200,000 into this account on September 11, 2006.

Today (February 17, 2012) it would be worth $259,192.88.

Write down those dates and numbers.  If your investment portfolio hasn’t gained a total of 29.5 percent between September 2006 and February 2012, then you should be asking yourself some very serious questions.

The dates are very important:  September 2006 to February 2012.  Don’t let anyone trick you with a non parallel date.  Don’t let them try showing you that you have gained 80 percent, for example, since March of 2009.  Insist on a comparison of at least five years, and ensure that you use the exact same start and end dates.

Trust me, many an advisor will quiver at the request. 

Below, I’ve shown the account I created in September 2006.  It was split into three index funds:

  1. A total U.S. stock market index
  2. A total International stock market index
  3. A total bond market index

With this account, rebalanced, you would have turned $200,000 on September 11, 2006 into $259,192.88 with no money added.  That’s a profit of $59,192.88.

Indexed–Sept 06
Saturday February 18, 2012 01:02 AM EST


Company Name



% of Total

Current Value

Gain / Loss

Gain / Loss %





Overall Realized Gain/Loss










Vanguard Tot Bd;Inv








Vanguard Tot I Stk;Inv








Vanguard T StMk Idx;Inv








If you’re between 30 and 40 years of age, you could use this as a comparative benchmark.  Have your investments done this well since September 11, 2006?

Investors without pensions should have a percentage of bonds in their account that correlates roughly with their age.


But where can you find an advisor to do this for you?

If you’re an American, and you don’t want to bother buying index funds yourself, you could hire Assetbuilder to do it for you.

How would you have performed with Assetbuilder over the past five years?  Let me show you.

Because Assetbuilder constructs portfolios for clients and reveals the allocations on their website, you can see how an investor would have performed using their products.

They actually back-tested these portfolios to the year 2000, but initiated them officially when the company began in August, 2006:  roughly one month from the time I created the indexed portfolio for my colleagues at Singapore American School.

Using the suggestion of a bond component roughly equivalent to an investor’s age, I’ll show how a series of Assetbuilder portfolios actually performed from September 2006 to February 2012.


The big question is this:  Did your account keep up?

For a 30-40 year old without a defined benefit pension:

Assetbuilder Portfolio #10 has roughly 30% allocated to bonds.  As such, it would serve a 30-40 year old investor well.

If you invested $100,000 in this portfolio at the beginning of September 2006, it would be worth roughly $130,400 at the beginning of February 2012, for a total gain of +30.4%.


For a 40-50 year old without a defined benefit pension:

Assetbuilder Portfolio #9 has roughly 40% allocated to bonds.  As such, it would serve a 40-50 year old investor well.

If you invested $100,000 in this portfolio at the beginning of September 2006, it would be worth roughly $130,000 at the beginning of February 2012, for a total gain of +30%.


For a 50-60 year old without a defined benefit pension:

Assetbuilder Portfolio #8 has roughly 50% allocated to bonds.  You might consider it if you’re between the ages of 50 and 60.

If you invested $100,000 in this portfolio at the beginning of September 2006, it would be worth roughly $131,500 by the beginning of February, 2012 for a total gain of 31.5%.

Keep in mind that these returns are after all fees.


Your Advisor’s Success (as a salesperson) depends on how nice they are

It’s tough to fire an advisor with a nice personality.  But remember that the best salespeople are ALWAYS nice.  That’s the tool of their trade.

But their conflict of interest can come at a high price for you.

If you have lost to the above accounts by just 3 percent per year, you will likely be giving away half of your portfolio’s growth potential, or more.

Over an investment lifetime, a 3% annual investment lag could be the difference, when compounded, between a $500,000 portfolio and a $2 million portfolio upon retirement.

  • Save your money.
  • Hire an advisor who creates accounts of index funds.
  • Hire (by the hour) a tax accountant who can handle your tax needs. 
  • Buy insurance products that are independent to your investment products.

I won’t apologize to reps from Tie Care, Raymond James and Zurich International.

You have to make your living.  Besides, how dull would the world be if we all nodded our heads like drones and followed everyone else.


For Further Reading: