A couple of years into living and working in the UAE, I had met and married my husband and was pregnant with my first baby. The original plan to ‘work for 2 years, save enough money for a house deposit and move back to the UK’ was clearly evolving rapidly. I had a lot going on – I was newly married, studying for my master’s degree, working full time as a teacher and pregnant with my first baby. So, money, and saving for retirement especially, was not at the forefront of my mind.
However, I did have a niggling voice in the back of my mind telling me that I was missing out on paying into a pension by not working in the UK. The benefits of earning a tax-free salary come at a cost – you don’t get to pay into a pension. Around this time, I was discussing this very issue with a friend over coffee, and she explained that she put money into a savings plan, the equivalent of contributing to a pension in the UK. She just transferred in automatically every month for 25 years and boom, sipping cocktails on the beach, here we come.
I was introduced to her advisor and after a quick meeting, signed up relatively quickly. I didn’t bother asking too many questions – I had a baby on the way, and work, and life. I was busy. This was a financial advisor and they’re qualified so they know what they’re doing, right? WRONG! Looking back at my actions and priorities then, I could be talking about a different person.
I willingly handed my money over to someone without really doing research into the fees, the investments, none of it. I was told that the fees were 1% (lies!) and I thought, 1%, that’s hardly anything. WRONG AGAIN! A small investment of money and time in ‘Millionaire Expat’ would have informed me that the fees on my portfolio, upwards of 4-6%, would cost me hundreds of thousands of dollars; but alas, I was distracted. I was such an easy customer; the advisor must have been on cloud nine. She barely had to convince me into this money heist.
Fast-forward a couple of years and I did do a Google search, and read books, and listened to podcasts, and read blogs. And cried. But I didn’t dwell too long – I got out (incurring a huge penalty and losing most of the money I had contributed) and started investing intelligently. I’m now on the path to financial independence – investing regularly, making smart choices with my money and learning continuously.
One of the books that had a massive impact on my journey was ‘Millionaire Expat’ by Andrew Hallam. The book appealed to me as Andrew Hallam built his investment portfolio on a teacher’s salary. As a teacher myself, I know that, even in a tax-free country, a teacher’s salary is by no means Lamborghini territory; its barely even ‘new car’ worthy. Hallam proves that anyone can build an investment portfolio, even people on relatively small salaries. Wow. Hope for the little guy.
The world of investing and the stock market can be daunting and confusing for a ‘regular’ person, whose job has nothing to do with the finance industry. I just thought of investing as an extremely risky business, and the stock market as a place where people like me went to lose their money. It was only the bigwigs on Wall Street that earned money from the stock market, right? WRONG AGAIN! Andrew Hallam expertly explains this potentially confusing topic in easily digestible and relatable terms so that you and I, the ‘regular’ people, have a chance of understanding it.
The humorous analogies to Star Wars, fighting escalators, roast beef and many others are underpinned with facts gleaned from studies and research. As well as setting out a clear plan for different nationalities (there are sections in the book dedicated to British, American, Canadian, Asian, Irish, Australian, South African and South American expats as well as investors from New Zealand), Hallam answers all the burning questions you may have about this all-important topic in an informative yet entertaining way.
Here are 3 key lessons I took from the book:
- Don’t time the market. When people get a taste of the stock market, especially if they earn returns on their money, their ego can take control and they may think they can outsmart the market to earn more. Quoting from experts like John Bogle and Warren Buffett and providing helpful visual charts showing investors’ returns in comparison to the stock market returns (3.98% to 10.16% from 1986-2016), Hallam sets about proving that nobody can successfully predict the future. A *boring* strategy of investing every single month (or as often as one can) no matter the circumstances or price, is your best shot at building a successful investment portfolio.
- It’s important to invest in government bonds (loans to governments rather than to companies) as well as stocks. Now bonds can be less exciting than stocks. They don’t tend to earn huge rates of return and interest rates are fixed (usually around 3% so you barely beat inflation). The less bonds you have in your portfolio, in theory, the faster it will grow. But it will be exposed to higher volatility. Bonds are not likely to drop 50% if the stock market does, so if you have some in your portfolio, your investments aren’t going to drop by 50% either. In case you aren’t convinced, Hallam proves through factual data that a portfolio of purely stocks doesn’t necessarily beat a portfolio comprising stocks and bonds.
- Decide on your long-term strategy and stick to it. Using practical examples and figures, Hallam explains why leaning in to ‘the next big thing’ is more likely to be a disaster than a dazzler. Stock pickers and people trading regularly were found to underperform the overall market by 4%-13%.
Buying this book might be one of the greatest things you can do for your future self and your family. Having met and listened to Andrew Hallam speak several times (as well as having him sign my book – pictured above), I can honestly say that this is a book review close to my heart. Investing less than a hundred dirhams in this book could (or should I say WILL if you take action) result in you saving hundreds of thousands and making hundreds of thousands of dollars (millions over your investing lifetime). Now that’s a return on investment that I can get onboard with!
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