Book Review: Millionaire Teacher

Do you think that an English teacher in the school can become a millionaire?

Andrew Hallam did. It is a teacher who was a self-made millionaire by age 38, and he says he can be one - even if you make a modest salary.

Hallam is the author of Millionaire Teacher: The Nine Rules of Wealth, you should have learned in school, it is a book with the title itself is a Professor Hallam sent the millionaire, and he also, by his writings, which teaches people to be millionaires ..

What are the nine rules of wealth?

Rule 1: to share, to be rich

Many people spend because they want to appear wealthy. They drive luxury cars, which are often financed or leased. They wear expensive handbags, designer clothes dress and a holiday out of 5 stars.

This can make them feel rich, but will not help you get rich. Indeed, the opposite effect.

When Hallam was about 20, he made his own mussels eat free proteins. He lived with roommates and often to get house-sat for holidaymakers to free income. Never turn off the heat. "I walked around the house wearing layers of shirts and sweaters, while snow accumulated outside," he said.

Sound like a millionaire in the making? Of course!

Rule 2: Use the biggest allies of the investment you have.

Legendary investor Warren Buffet bought his first share at age 11 and joke that he started too late.

This joke underscores the importance of time. Timing is important when it comes to building a portfolio of millions of dollars, because every year you can get worse or develop. And compound interest is the best ally of the investment.

Suppose you invest in the interest rate of 10 percent $ 50. After a year, you earn $ 5 interest for a total of $ 55.

At the beginning of the second year he invested $ 55 - the original $ 50 plus $ 5 more than they earned in interest. You earn 10 percent of this investment of $ 55, which corresponds to $ 5.50

Note that in a year, you earn $ 5 interest. But in the second year, you get $ 5.50 interest. The "compound interest" is that the extra 50 cents, which is the interest that you have earned interest.

The longer you let the interest compound itself, the most dramatic gains. Therefore, compound interest is your greatest ally in the investment.

Rule 3: small percentages greatest hits package.

When you invest in a mutual fund actively managed, it is likely to pay higher rates. Active fund higher fees require "relationship" (a fancy word for "cool"), the passively managed index funds. Some 12B1 also charge fees, transaction costs, distribution costs and a variety of other charges.

These rates may seem small, but they pack a big punch. Keep yourself. Against low-cost funds, such as index funds or Exchange Traded Funds market without high commissions

Rule 4: defeat the enemy in the mirror.

Quick question: would you rather pay full price for a pair of jeans, or get a discount of 20 percent for the exact same pair of jeans?

This is a simple question. Assuming all things are equal (sold in the same location eg jeans and has the same right of return, etc.) you prefer to buy at a discount.

So why not do the same when it comes to buying of shares?

That is the hard truth: If the stock market falls, people tend to buy less. In fact, they tend to sell. If the market goes up, people tend to buy more. You "buy high and sell it cheap" - the opposite of what they should do.

It is a natural human tendency. Also, you have to fight.

Rule 5: Make a lot of money with a superior portfolio.

Brussels sprouts are good for you. But when the only food you eat, you are found lacking protein, calcium and many other vitamins and minerals in other foods.

We need a balanced diet, and we need a balanced portfolio. It is recommended to diversify your money in a national fund in the stock market, an index fund shares fund international and domestic fixed income in the short term. It's easy - you only need to run three funds.

Keep your age in bonds and the remainder in shares, he said. At 30, in the USA, for example, 30 percent of the United States would hold government bonds and short-term, well split 70 percent of the shares between American actions and international equities. Then again compensate each year to maintain the same proportion as the markets develop.

Rule 6: Example of a ticket "Around the World" for indexing.

Much of the financial information, write here at About.com is, especially for the people in the United States

Retirement vehicles such as 401 (k) and Roth IRA plans, tax planning and social security benefits, after all, an important part of the budget. And these elements are specific to the USA Other countries have different laws, plans and investment instruments.

But if you live in Canada, Singapore or Australia, you will love this chapter in the book of Hallam. It shows how people around the world can create index funds.

Rule 7: Inside the Playbook a looter Peek.

In this chapter the tactics Hallam be a selling point used that directors use when they try to convince you to keep your money in actively managed funds rather than passive funds. It's arguments, the runners do lists - and it hits everyone. It also shows how brokers have a strong financial incentive to get you to buy into a higher fee funds.

Rule 8: Avoid the temptation.

In 1998 came to-be-true investment-too-well-a friend with Hallam, a company that paid a whopping 54 percent. Hallam was questionable, but saw his friend to pick up this interest for a period of five years. In 2003, convinced Hallam, so who invested $ 7,000 in the company and some of his friends joined him. The company later proved to be a Ponzi scheme, and investors lost everything.

Do not let money be tempted simply says Hallam. Stick to index funds.

Rule 9: The solution of 10 percent of the stock selection - if you really can not help you.

What should you do if you really, really invest in individual stocks? Limit to consider your risk by more than 10 percent of your portfolio and many actions.

More information about the book on the website of Andrew AndrewHallam.com

Disclaimer: A review copy was provided by the publisher.