Short on time? Skip Millionaire Teacher and learn the one tip to build bucks here.
A book review should be a thorough investigation of the contents of a published book. This is not that. You can read that here. I don’t think you need to, though.
If I were a rich (wo)man…
I’m not one interested in getting rich. I really do not want to be a millionaire. It is a huge turnoff to hear the diatribes of various “get rich” schemes proffered by various overly-enthusiastic “rich” people posing at sunny beaches. My main goal (mission) is and will most probably always be to reduce suffering (human and non-human animal).
However, I am interested in maintaining a sufficient stream of income to support our life and “mission” through my remaining years (2062 if lucky. Kale, hello!) without myself or Rob working a traditional job.
So I picked up a copy of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned In School by Andrew Hallam, after reading something that shocked me in Decisive by Dan and Chip Heath.
Maybe “shocked” is too strong a word. This felt more like the time I learned that juice was just as bad for you as soda pop. Or that agave is worse than corn syrup. It’s Santa-bursting. That’s the adjective.
And what is this Santa-bursting information I learned?
The one tip to build bucks…(drumroll ellipses)
Mutual funds suck.
In addition to posing for the above photo, I’m sharing the one tip to build wealth, the key takeaway from reading the book. I’ll make this short and corn-syrupy: Stay far away from actively managed mutual funds and instead invest in index funds, choosing a mixture of stocks and bonds with the ratio based on your age. As a 30-year old, then, you’d choose 30% indexed bonds and 70% indexed stocks. Hallam also recommends diversifying your portfolio in a mix of US and international indexes.
There it is. (Really, that’s it.)
Of course the book gets more into details. Such as explaining the basics: what are index funds? They represent the entirety of the stock market – much like the back of a book represents its contents. Since they are not actively managed by 3rd parties like mutual funds, and they follow the entire market, the returns are shown to be greater. For a more thorough definition, see Investopedia (or read the book).
Though Hallam digresses quite a bit and possibly over-explains some of the concepts with overly detailed stories (the main point is the one I made above, carried throughout each chapter) he also does a fairly good job at covering all of the information you will need to get started, and why you shouldn’t bail out when the market tanks.
It’s comprehensible by someone like me who is not well-versed in investing. (That’s a really nice way of saying I don’t know a diddly-dang thing about investing.)
It was also nice to learn more about Vanguard, “one of the world’s largest investment management companies,” but also a non-profit who offer many options for investing in index funds.
On a personal level, Hallam seems to be genuinely interested in helping you (and me) succeed while avoiding the pitfalls of investing. He also mentions, just in passing as one would note a new haircut, that he happened to have bone cancer at one point (in fact he began writing this book during his recovery). Pretty remarkable, actually. His optimism is encouraging and carried throughout the text.
One concept I would have liked to see him cover is socially responsible investing, though my assumption is this is not possible through index funds since they include the entire market (Exxon, anyone?).*
What about you – do you invest in index funds, and if so, how has this gone for you? What is your strategy to build bucks?
*It appears there is a compromise here with Vanguard. This still represents a portion rather than entire market, though.