Millionaire Expat

How To Build Wealth Living Overseas

Andrew Hallam

• Publisher: Wiley
• Year: 2017
• ISBN:
  9781119411901
• Edition: 2
• Topic: Business
• Subtopic: Finance
• Index: Business

Build your strongest-ever portfolio from anywhere in the world

Millionaire Expat is a handbook for smart investing, saving for retirement, and building wealth while overseas. As a follow-up to The Global Expatriate's Guide to Investing, this book provides savvy investment advice for everyone—no matter where you're from—to help you achieve your financial goals. Whether you're looking for safety, strong growth, or a mix of both, index funds are the answer. Low-risk and reliable, these are the investments you won't hear about from most advisors. Most advisors would rather earn whopping commissions than follow sound financial principles, but Warren Buffett and Nobel Prize winners agree that index funds are the best way to achieve market success—so who are you ready to trust with your financial future?

If you want a better advisor, this book will show you how to find one; if you'd rather go it alone, this book gives you index fund strategies to help you invest in the best products for you.

• Learn how to invest for both safety and strong returns
• Discover just how much retirement will actually cost, and how much you should be saving every month
• Find out where to find a trustworthy advisor—or go it alone
• Take advantage of your offshore status to invest successfully and profitably

Author Andrew Hallam was a high school teacher who built a million-dollar portfolio—on a teacher's salary. He knows how everyday people can achieve success in the market. In Millionaire Expat, he tailors his best advice to the unique needs of those living overseas to give you the targeted, real-world guidance you need.

Chapter 1
Grow Big Profits without Any Effort

Once upon a time, in a land far away, there lived a young farmer. His name was Luke Skywalker. Don't get confused by his Star Wars namesake. That was just a movie.

Luke had a farming mentor, an awkward little guy with a massive green thumb. His name was Yoda. “Use the Force you must, young Skywalker,” he said. “Add new seeds to your crop fields every year. The Force will grow those seeds. They will flower and spread more seeds and those seeds will grow.”

“Which seeds should I plant?” asked Luke. “Buy the bags that contain every type of seed for every type of vegetable,” replied Yoda. “You'll never know which vegetables will grow the best in any given year,” he said. “Plant them all, you should. Let the Force look after the rest. But watch out for the dark side.”

Luke wasn't sure what Yoda meant by the dark side. He just knew that Yoda was a mysterious little dude. So Luke bought a bag that contained every seed. He planted every one, and his crops began to flourish. Some years, his carrots grew best. Other years, his lettuce, parsnips, or beets took center stage. Sometimes, droughts and a searing sun hurt his crops. But his crops always came back, stronger than ever.

This is how the stock market works. You can buy a single fund called a global stock market index fund. Like a bag of seeds representing multiple plants, it contains thousands of different stocks, representing dozens of different markets. It contains American stocks, British stocks, Canadian stocks, Australian stocks, and Chinese stocks. In fact, a global stock market index contains about 7,400 stocks from at least 49 different countries. Nobody trades those stocks. With a global stock market index, you own all of those stocks. You would also have access to that money, any time you want.

Some years (much like the garden during a drought), the proceeds recede. But just like that garden, the stock market always comes back stronger than before.

Imagine if someone had invested $100 a month from 1970 to 2020. That would have amounted to just $3.29 per day. Between January 1970 and January 2020, that person would have added a total of $60,000 (see Figure 1.1 and Table 1.1). If they equaled the return of the global stock market index during those 50 years, that investment would have grown to almost $1.6 million. Between 1970 and 2020, global stocks averaged a compound annual return of 10.10 percent per year.

Figure 1.1 Global Stock Market Growth Source

SOURCE: Morningstar Direct.

Table 1.1 Global Stock Market Growth

SOURCE: Morningstar Direct.

Year Ended Dec 31	Annual Return	Total Cost of Cumulative Investments	Total Value after Growth
1970	−2.25%	$1,200	$1,173
1971	18.52%	$2,400	$2,812
1972	28.21%	$3,600	$5,144
1973	−8.96%	$4,800	$5,776
1974	−21.09%	$6,000	$5,505
1975	32.44%	$7,200	$8,880
1976	8.97%	$8,400	$10,984
1977	3.32%	$9,600	$12,588
1978	24.22%	$10,800	$17,128
1979	12.33%	$12,000	$20,588
1980	21.85%	$13,200	$26,548
1981	−3.19%	$14,400	$26,863
1982	6.61%	$15,600	$29,918
1983	25.37%	$16,800	$39,013
1984	6.47%	$18,000	$42,815
1985	51.83%	$19,200	$66,827
1986	45.35%	$20,400	$98,878
1987	10.06%	$21,600	$110,146
1988	20.56%	$22,800	$134,238
1989	24.15%	$24,000	$168,147
1990	−12.00%	$25,200	$149,025
1991	18.42%	$26,400	$177,897
1992	−4.10%	$27,6...