Introduction
The central theme of “The Global Expatriate’s Guide to Investing” revolves around empowering expatriates to take control of their financial futures by advocating for simple, low-cost, and globally diversified investment strategies. Hallam argues that expatriates are often vulnerable to high-fee financial products, particularly offshore pensions or investment-linked assurance schemes (ILASs), which can significantly erode their savings over time. The book meticulously exposes the often-hidden costs and disadvantages of these schemes, warning readers to be wary of “silver-tongued investment salespeople peddling dodgy products”.
Instead of relying on expensive advisors and complex financial instruments, Hallam champions a do-it-yourself approach based on evidence-backed principles. He introduces readers to the concept of index fund investing, emphasizing their low costs, diversification benefits, and historical outperformance compared to most actively managed funds after fees. The book presents several simple portfolio models that expatriates can easily implement, including the Couch Potato portfolio (a mix of stock and bond index funds), the Permanent Portfolio (allocating equally to stocks, bonds, gold, and cash), and variations incorporating Fundamental Indexing (weighting stocks by economic factors).
Throughout the book, Hallam uses real-life examples of expatriates to illustrate both the pitfalls to avoid and the successes achievable through adopting a disciplined, low-cost investment approach. He also provides country-specific information and guidance for expatriates from various nations, including Canada, the United States, Great Britain, Australia, New Zealand, South Africa, and South America, tailoring the advice to their potential tax situations and available investment options. The overarching message is one of financial self-reliance, encouraging expats to educate themselves and make informed decisions to secure a comfortable retirement, whether they aspire to “keep up with the Kardashians or live like a Buddhist monk”.
Ratings
Goodreads 4.2/5.0 (fewer than 1,000 ratings)
Amazon 4.4/5.0 (fewer than 1,000 ratings)
Top three themes
Understand Expat Financial Vulnerabilities. The book emphasizes that expatriates face unique financial challenges and are often easy targets for high-pressure sales tactics. The condition of “expatitis,” an inclination towards a lavish lifestyle, can lead to under-saving for retirement. Furthermore, expatriates may be less familiar with the financial regulations and investment options in their host countries, making them susceptible to “silver-tongued investment salespeople peddling dodgy products”. The book aims to arm expats with the knowledge to recognize these vulnerabilities and make informed financial decisions, moving away from potentially detrimental schemes.
Beware Costly Offshore Schemes. A central message of the book is a strong warning against many offshore investment schemes, particularly offshore pensions or investment-linked assurance schemes (ILASs). These products often come with egregious costs, including high hidden fees, kickbacks, and substantial commissions for advisors. The book quotes experts like Peggy Creveling who suggest that these layered fee structures can significantly erode investment earnings. Sales representatives may not fully disclose these costs or the heavy financial penalties for early surrender. The author, Andrew Hallam, based on his analysis and the experiences of others, strongly advises expatriates to be highly skeptical of these offerings.
Embrace Low-Cost Index Investing. The book champions simple, low-cost investment strategies centered around index funds as the most effective path to long-term wealth for expatriates. It introduces concepts like the Couch Potato portfolio, the Permanent Portfolio, and Fundamental Indexing as viable alternatives to actively managed funds and expensive offshore products. These strategies typically involve diversification across various asset classes and minimal management time. The book cites evidence and the opinions of investment luminaries who advocate for indexing due to its lower costs and historical outperformance compared to most actively managed funds after fees. The author encourages expats to become self-reliant investors by adopting these evidence-based approaches.
Key quotes
- “This book is a must-read for expatriates or anyone thinking of becoming one”.
- “Protecting your nest egg from both predators and yourself”.
- “Low cost index investment approach and pitfalls expats need to avoid”.
- “Hallam’s investment strategies are aligned with academic evidence”.
- “It’s a wonderful and breezy how-to book which will help Expats and homebodies alike”.
- “Andrew gleefully eviscerates sacred cows, whether widely accepted dogma or powerful interest blocs”.
- “Extoling the need to be self-reliant in our investing for our retirement”.
- “This book will help you avoid many costly and risky pitfalls with your life savings”.
- “Saving is a critical part of the long-term wealth creation equation”.
- “Expats are easy targets” for silver-tongued investment salespeople.
Key points
Don’t Climb into Bed with a Silver-Tongued Player Featuring the Rip-Offers: This chapter serves as a stark warning against offshore pensions (ILASs) and the high-pressure sales tactics employed by some financial advisors targeting expatriates. Hallam presents compelling evidence and anecdotes detailing the “egregious costs of the offshore pension schemes” and how these fees can drastically reduce investment returns over the long term. He includes quotes from former financial advisors who reveal the commission-driven nature of this industry. This chapter is pivotal in alerting expats to a significant financial danger.
The Truth about Stocks and Bonds Halloween Grab Bag Treats Investors: This chapter lays the foundation for Hallam’s investment philosophy by explaining the historical performance and fundamental characteristics of stocks and bonds. It debunks common misconceptions about investing and highlights that “patience, diversification, and low investment costs are keys to large profits in the stock and bond markets”. The chapter uses data to illustrate how stocks have historically outpaced inflation and provides a basic understanding of how bonds function. This knowledge is essential for readers to grasp the rationale behind the recommended index investing strategies.
Couch Potato Investing Don’t Let Bonds Tie You Down: Here, Hallam introduces the Couch Potato portfolio as a simple yet effective investment strategy. He explains the basic principles of asset allocation and rebalancing, emphasizing its ease of implementation and historical success. The chapter addresses common concerns about bonds and explains how this “champion slacker” strategy can outperform most professionally managed portfolios with minimal effort. This provides a concrete, actionable investment plan for readers.
Author’s perspective
Andrew Hallam is a former high school teacher who taught personal finance and English at Singapore American School. He is also the author of the international bestseller “Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School”. Hallam’s background as an educator is evident in his clear, accessible writing style and his ability to explain complex financial concepts in a simple and understandable manner. His experience living and working abroad as an expatriate provides him with first-hand knowledge of the financial challenges and opportunities faced by this community. His perspective is strongly pro-investor and critical of the traditional financial services industry, particularly its high fees and potential conflicts of interest. Hallam’s writing is characterized by a wry sense of humor and a willingness to “gleefully eviscerate sacred cows” within the financial world, making his insights both informative and engaging. His dedication to low-cost, evidence-based investing is a consistent thread throughout his work, stemming from a desire to empower individuals to achieve financial independence without being taken advantage of by the industry.
Strengths
Well-Researched and Evidence-Based Advice: The book’s investment strategies are consistently “aligned with academic evidence” and historical market data. Hallam frequently cites financial research, expert opinions, and historical performance to support his recommendations.
Clear and Accessible Writing Style: As a former teacher, Hallam excels at explaining complex financial concepts in a way that is “easy to understand” even for those with limited prior investment knowledge. The book avoids overly technical jargon and uses relatable analogies and real-life stories to illustrate key points.
Practical and Actionable Guidance: The book doesn’t just present theory; it provides concrete steps and resources that expatriates can use to implement the recommended investment strategies. It offers guidance on choosing offshore brokerages, understanding different investment vehicles like ETFs and index funds, and even provides country-specific investment advice.
Strong Critique of Harmful Financial Products: The book’s unflinching exposure of the pitfalls of offshore pensions is a significant strength, potentially saving readers from costly mistakes. Hallam’s direct and critical approach to these schemes, supported by evidence and anecdotes, is particularly valuable for a demographic often targeted by their aggressive sales tactics.
Focus on Expatriate-Specific Needs: The book uniquely addresses the financial considerations relevant to expatriates, including potential tax implications (though it advises consulting a tax accountant), the complexities of navigating foreign financial systems, and the psychological factors influencing expat spending and saving habits.
Engaging and Humorous Tone: Hallam’s “wry sense of humor” and engaging writing style make what can often be a dry subject more palatable and enjoyable to read. This helps to keep readers engaged and absorb the important information being presented.
Inclusion of Expat Stories: The personal stories of expatriates who have both fallen victim to poor financial advice and achieved success through adopting sound strategies add a relatable and human element to the book. These anecdotes serve as powerful illustrations of the book’s key messages.
Weaknesses
Limited Coverage of Broader Financial Planning: While the book extensively covers investing, it touches less on other important aspects of personal finance, such as detailed tax planning specific to various expat situations (it generally advises seeking professional advice), estate planning, or in-depth budgeting strategies beyond tracking current spending.
Potential for Over-Simplification: While the simplicity of the recommended index investing strategies is a strength, some readers with more complex financial situations might find the advice somewhat oversimplified. The book primarily focuses on accumulation-phase investing and provides less detail on withdrawal strategies in retirement, particularly in diverse international contexts.
Geographic Focus in Examples: While the book aims to be global, some of the specific examples and discussed financial products might have a stronger emphasis on certain geographic regions (e.g., the detailed discussion of Canadian swap-based ETFs). Readers in less commonly featured countries might need to do additional research to find equivalent local investment options.
Not a Substitute for Personalized Financial Advice: The book provides general guidance, but it explicitly states that the advice and strategies may not be suitable for every individual’s situation and recommends consulting with a professional where appropriate. Readers with unique financial circumstances or complex cross-border tax issues will still benefit from personalized financial advice.
Target audience
The primary target audience for this book is individuals who are currently living and working abroad as expatriates, regardless of their home country or host country. It is particularly relevant for those who are concerned about securing their financial future and retirement and who are seeking a simple, low-cost, and effective way to invest their savings. The book is also highly beneficial for individuals who are considering becoming expatriates and want to understand the financial implications of living abroad. Furthermore, even “homebodies” who are new to investing or disillusioned with traditional high-fee financial advice could find value in the book’s clear explanations of index fund investing principles and its critique of the financial industry. The book’s accessible writing style makes it suitable for readers with varying levels of financial literacy, from those just starting to save to those with some investment experience but seeking a more efficient and cost-effective approach.
Similar works
“The Global Expatriate’s Guide to Investing” can be compared to other personal finance and investment books, particularly those focused on index investing and financial independence. Andrew Hallam’s own “Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School” shares a similar philosophy of low-cost, index-based investing but is geared towards a broader audience, not specifically expatriates. Other similar works might include “The Simple Path to Wealth” by JL Collins, “A Random Walk Down Wall Street” by Burton Malkiel, and “The Bogleheads’ Guide to Investing” by Larimore, Lindauer, and LeBoeuf, all of which advocate for similar low-cost, diversified investment strategies. Books focusing specifically on expat finance, while less common with the same investment focus, might cover broader financial planning topics like international taxation and relocation.
Differentiation
What sets “The Global Expatriate’s Guide to Investing” apart from other personal finance books is its specific and dedicated focus on the unique financial landscape faced by expatriates. While many books offer general investment advice, Hallam’s work directly addresses the vulnerabilities of expats to high-fee products, particularly offshore pensions, and provides tailored investment strategies applicable to individuals living in various countries. The inclusion of country-specific chapters, discussing relevant index funds and brokerage options for different nationalities (e.g., investing for Canadians, British, and New Zealand expats), makes this book a particularly practical resource for its target audience. Furthermore, the strong emphasis on avoiding costly offshore schemes and the detailed explanation of why these products are often detrimental differentiates it from more general investment guides that may not address this specific issue prevalent in the expat financial market.
Conclusion
Overall, “The Global Expatriate’s Guide to Investing: From Millionaire Teacher to Millionaire Expat” is a highly valuable and insightful resource for anyone living or planning to live abroad. Andrew Hallam effectively combines his expertise in personal finance with a deep understanding of the expat experience to deliver a clear, actionable, and often entertaining guide to building long-term wealth. The book’s strong advocacy for low-cost index investing and its critical examination of high-fee offshore products provide essential knowledge for expatriates seeking to secure their financial future and avoid common pitfalls. While it may not cover every aspect of expat financial planning in exhaustive detail, its focused and practical advice on investing makes it a cornerstone book for expatriates striving for financial independence and a comfortable retirement, wherever in the world they may be.
Frequently asked questions
How do I figure out how much money I will need to retire as an expatriate?
Determining your retirement needs as an expat requires careful consideration of your lifestyle and where you plan to live. The book suggests starting by estimating how much you would spend each year if you were retired today, ignoring inflation for now. To get a realistic figure, it’s recommended to track every penny you spend for at least six months using a phone app or a notebook. Once you have this baseline, you need to make adjustments for predicted retirement lifestyle changes. For example, you might no longer need a professional wardrobe or to save for your children’s education or your own retirement. Crucially, you should consider whether you plan to retire somewhere cheaper or more expensive than your current location and make corresponding adjustments, noting that resources like www.numbeo.com provide costs of living in major cities. The book also introduces the concept of “expatitis,” a tendency for expatriates to become accustomed to a more luxurious lifestyle, which can significantly increase their anticipated retirement expenses. Finally, to account for inflation, the book recommends using an online calculator like the one at www.moneychimp.com to estimate your post-inflation cost of living based on the number of years until your desired retirement.
Are offshore pension schemes a good way for expatriates to save for retirement?
The book strongly cautions against many offshore investment schemes, particularly offshore pensions also known as investment-linked assurance schemes (ILASs). These are often described as “slippery pitfalls” that reward financial advisors with massive commissions while potentially hemorrhaging clients’ profits through high hidden fees and kickbacks. The book points out that many expat advisors sell these products exclusively, locking unwary individuals into long-term schemes lasting 10, 20, or even 25 years. According to Peggy Creveling, a CFA and CFP based in Bangkok, these products often have a “layered fee structure that can lower your earnings significantly, perhaps by 30 to 40 percent per year”. The book cites William Sharpe’s “The Arithmetic of Active Management,” which suggests that the typical actively managed dollar will underperform the market in direct proportion to the fees charged. Furthermore, the book highlights instances where sales representatives flog these pensions without fully explaining the various costs involved, including annual management costs, establishment costs, and hidden mutual fund management fees. It also notes that investors are often not made aware of the heavy financial penalties for early surrender of these products.
What kind of investment strategies should expatriates consider for their retirement savings?
The book advocates for simple, low-cost, and diversified investment strategies based on index funds. It highlights the Couch Potato portfolio, which typically involves splitting investments between a stock market index and a bond market index. Variations of this include a Canadian version with Canadian bonds, a U.S. stock index, and a Canadian stock index, as well as a global version. The book also introduces the Permanent Portfolio, a strategy with equal allocations to four asset classes: stocks, long-term government bonds, gold, and cash. Finally, it discusses Fundamental Indexing, which weights index components based on fundamental economic factors rather than market capitalization. The book emphasizes that these strategies generally require minimal time to manage, often less than an hour per year, and can outperform most professional money managers over the long term. The key principles behind these recommendations are patience, diversification, and low investment costs. The book advises readers to choose one of these strategies and stick to it, rebalancing annually to maintain the original asset allocation.
About the author
Andrew Hallam is a former high school English teacher who taught personal finance and English at Singapore American School. He is also the author of multiple international bestsellers related to personal finance and investments. He became a debt-free millionaire by following a few simple rules. Aged 19, he met a mechanic who happened to be a millionaire. He was so inspired by his self-made story that I wanted to see if I could eventually do the same thing … on a school teacher’s salary. Using index funds, and following Warren Buffett’s mantra of embracing stock market drops, he built a million dollar investment portfolio by the time he was 38 years old.