Millionaire Teacher and my earnings for 2017
Financial planning is something that so few people actually think about, let alone do, hence why a lot of people are working into their old age through necessity. Well I would like to introduce a book to people that will literally change your life forever, it has completely changed mine and the future of my family.
It is called Millionaire Teacher by Andrew Hallam and teaches you a get rich slow scheme that will, through patience and simple planning, give you financial security. Andrew was an English teacher who after a chance encounter with a mechanic (yes, as in a car mechanic) was given some financial advice from him that allowed him to become a Millionaire. IT didn't happen overnight and took 20 yrs but he became a millionaire nonetheless.
His book is single-handedly the best investment I have made in my life. There is nothing sinister, fancy or complicated about the process, it just requires time, patience and about 30 minutes of work a year.
I stumbled across his book about this time last year and read it within a day (it's a short book) and was blown away but really sceptical. So, being the skeptic I am, I spent 2 months researching and trying to find the catch or the scam.... I didn't find it! In fact, quite the opposite, I found out that my last 20 yrs of financial planning had lost me SO much money using what I thought was sound investments.
So, how much have I made? Well in about 10 months I have made around 6.55% on my money... But that is nothing I hear you say! Indeed, 6.55% is not a huge return.... However, there is a little known concept to a lot of people known as Compound Interest that is where the long term power comes in. Compound interest is the concept of interest being paid on a sum of money say once a year. That means that the next year you gain interest on your original sum of money and the previous paid interest. If you fast forward this concept over several years you will make substantial gains. let me give an example
start with $100 and for easy figures an interest rate of 10% per year here is what you would have in total at the end of each year.
1 - $110
2 - $121
3 - $133
4 - $146
5 - $161
6 - $177
7 - $194
8 - $214
As you can see over you would double your money in 8 yrs (actually 7.3). If you continued the calculation for another 4 yrs then it would double you initial investment again to $313, and double your original investment again in another 3 yr to $416 and in another 2 yrs to $504..... And so it goes on! in 17 yrs you would have made 400% return on your investment!
Using my own growth over the last 10 months and allowing 2 months of the year still left, I will work on a conservative 7% I would double my money in 10yrs, triple it in 6 yrs, quadruple it in 4.5 yrs, so by the 20 yr point I would have $415 and so on....
Now add zero or two onto the end of those figures and you can quickly see how this can provide financial freedom over the longer term
I have put a link below to Amazon for the book, it is NOT an affiliate link and feel free to ignore the link and Google it yourself. Please, please, please invest the $6 it is currently costing for a copy of this book and secure your future and educate your children, family, friends and colleagues!
https://www.amazon.com/Million...
Recent Comments
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Yes, I totally agree. This compound interest concept is why I like DRIPs. I wrote about it in 2 separate articles:
What is the Average Retirement Income
https://howtobuyforeclosedhome.com/what-is-the-average-retirement-income/
Stock Market Today
https://howtobuyforeclosedhome.com/stock-market-today/
DRIPs come with risk though, Index Funds are the way ahead in order to diversify risk, minimise risk, simplify research, have a consistent return and much lower fees. If Warren Buffett and George Soros both advocate Index Funds for the layman and for the most consistent return then I will go with what they say :-)
However, each to their own.
Many Index Funds contain stocks that pay no dividends. Dividends are more stable and predictable than capital gains, which is Index Fund's objective. The fees for most DRIPs are less, often a lot less than for Index Funds as many fund managers churn stocks within the fund which can significantly affect long term gains. It is easy to diversify risk with DRIPs by simply buying 6 or 8 within different sectors such as utilities, insurance, real estate, etc.
All stock investments come with some risk, but I believe DRIPs if done correctly, to be among the lowest risk.
Ecomtom,
You are understandably trying to fight your own strategy but your arguments are unfortunately inaccurate and I hate to say it following the marketing hype and 'follow the sheep' strategy of investment houses which benefit only them! Please pay the $1.80 and buy the book Pillaged (by David Craig) and it will explain all of this. in great detail.
- Can I suggest you look into Vanguard and see what their fees are. I currently pay 0.06% , 0.08% and 0.24% for my funds.
- Warren Buffet and George Soros have both stated that if they wanted consistent, long term, above average growth and completely passive then they would in every case invest in index funds.
- The average growth of the S&P 500 has been 10% since 1928, the FT100 is similar! Are you consistently getting that return year on year?
- If you buy individuals equities then you will have transaction fees, you have to buy at least a single whole share which if its something like Amazon is currently around $1400. If the company goes bust then you lose 100% of you investment. If it makes money you get dividend. So lets say you put $1000 in 10 shares you can afford at $100 each and 1 of them goes bust, that means you lose $100.
- With index funds you invest an amount of money in a fund, such as the S&P 500 Index fund. This money, lets say it is $1000 again for easy calculations. This gives you a proportional equivalent of the entire 500 equities in the index fund.
- So what? Well if 1 company go bust then the shares from the other 499 companies can absorb it. So you would lose the proportional equivalent of 0.2% of your investment i.e. $2 vs $100 compared to your DRIP.
- Index funds also allow dividends, the beauty is that long term the dividends from an index fund are consistent and higher on average. If your 10 companies I mentioned before pay a 2% dividend then you would be paid $20. if 5 of your companies don't pay a dividend because there is a downturn within its sector or a change of management or it is performing badly then your $20 becomes $10.
- If we use the above scenario with an index fund then 5 companies not performing well and paying no dividend would mean the other 495 will. That means our $20 would become $19.80. A difference of 98% return on investment.
- The additional benefit of index funds is that you have the option of buying income or accumulation funds. This means that any dividend is either paid to you as income or is accumulated by reinvesting it within your index funds, this is where compound interest become your friend.
- Everything I have said is happening automatically whilst you sleep, eat, watch TV etc. You do not have to do anything!
- Once a year you can then spend approx 15 mins to rebalance you investment ratios and you are set for another year.
Absolutely everything I have said is 100% verifiable online so please feel free to do so if you want to check.
https://www.vanguardinvestor.co.uk/investments/vanguard-us-equity-index-fund-accumulation-shares
https://www.fool.co.uk/investing/2014/10/24/the-ftse-100-will-always-beat-you/
I thought you were an expert on DRIPs. As I mentioned previously most DRIPs come with no fees, that means transaction fees either for the intitial investment or for the reinvestment. DRIPs also allow for someone to take a portion in dividend payments, and keep the rest in the stock to keep the principal growing. These are huge benefits, at least from where I sit. If the dividend that is reinvested on stocks within the Index Fund has no fees, which I highly doubt, then that particular option may be viable, but you are so diversified in an Index Fund that it will not add up to a significant amount of reinvestment unless the total amount of the fund is very high. More likely is that you will pay transaction fees for the reinvestment which could greatly diminish your total returns. You keep your Index Funds, and I will keep my no fee DRIPs, and I will outperform you exponentially in the long run.
Not an expert by any means on DRIPs I just spent a lot of time researching what is available to me. DRIPs are an American thing, I am in the UK so don't have them or anything similar. However, my point about not being diversified enough and the cost of buying a single share stands.
Index Funds have been shown to outperform almost every single other investment vehicle in the long term, that is fact.
My latest dividend was 1.4%, 1.67%, 1.44% and 1.81% for my 4 index funds which is about the same as for any diversified portfolio. Ultimately, each to their own....
https://www.cnbc.com/2017/05/12/warren-buffett-says-index-funds-make-the-best-retirement-sense-practically-all-the-time.html
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Oh, this is interesting, thank you and I'll check it out on Amazon. Thanks!
No problem, let me know how you get on