Me and Andrew Hallam
During the last week of September 2019 famous expat financial journalist, Andrew Hallam visited Singapore to give 7 talks, of which I attended 3 (stalker alert!). I had never seen Andrew talk before but I’ve been a huge follower of his work for many years. Below are the key points I took away from my week with Andrew.
Firstly, who is Andrew Hallam?
For those of you who aren’t familiar with Andrew, here is a bit about him. Andrew was a teacher at the Singapore American School for 11 years, and over that time diligently saved money and invested it into low-cost tracker funds. His saving strategy and investment portfolio did so well that it allowed Andrew and his wife to quit work and they have been travelling the world for the last 5 years. He’s now 49 and has no intention of going back to full-time employment.
He has written 3 books outlining his approach so that other expats can follow his ‘DIY’ approach to investing and has a very active following around Asia and the Middle East.
In general, financial advisers in Asia very much dislike Andrew. Why? He often pulls apart the most common products sold to expats in Singapore, Dubai and Hong Kong and shows just how high the fees are. He also reveals how biased the investment ‘advice’ is and how much commission the salesperson gets.
However, I’m a massive fan of Andrew!
In May 2014 I was working at Barclays Investment Bank in Singapore and I signed up with one of the expat financial advisers. Let’s call them BBN. Later that year I read Andrew’s book and discovered his blog and realised my mistake. I had been put into everything that Andrew suggests you avoid – expensive, commission-based insurance wrappers, using expensive active funds.
I was mortified and embarrassed. I’m a Chartered Accountant, working in finance. It was my job to check contracts, sense check fees and understand complex transactions.
Then a miracle happened in 2015. The expensive insurance wrapper that ‘BBN’ had put me in was with Standard Life and they decided to exit Asia. So after 14 months of signing up with a salesperson, I got all my money returned, plus a bonus for the inconvenience caused!
By this time I had set up my own investment account with Saxo, as per Andrew’s advice, and made sure I didn’t give it to another expat salesperson.
Since that time I have coached dozens of expats around Asia to help them set up their own DIY accounts, given away 40+ copies of Andrew’s book The Global Expatriate’s Guide To Investing, and changed careers to join Providend, Singapore’s only ‘fee-only’ financial adviser to help those who don’t want to go down the DIY approach.
So yes, I’m a massive fan of Andrew Hallam and it is fair to say he has changed the course of my life.
Andrew Hallam shares his advice whilst on tour in Singapore
What did I learn at the talks?
Each of the 3 talks that I attended were on different topics but had the same core messages that avid readers of Andrew would be familiar with:
Any 30 year period since 1960 on the US stock market has had a remarkably consistent compound annual return of between 9.9% - 13.6%
Therefore ignoring short term noise in markets and the news, and viewing your portfolio as a long- term investment has been massively rewarding for patient investors
Why a 30-year period? Your money is likely to be invested for as long as you are alive. On that basis 5-year returns seem pretty useless.
Know your history. Every decade has its’s own ‘special’ circumstances that leads commentator’s to say ‘this time it’s different’, and deter you from investing in the stock market. Currently the news is full of Brexit and Trump, go back a decade it was GFC, 2000s was the dot com bubble, 1990’s Gulf War, 1980’s interest rates peaked at 20%, 1970’s Oil crisis. Go back further you have 2 World Wars and The Great Depression. Patient investors were rewarded across all of these time periods.
Track your spending. Market returns are not in your control, but what you spend your money on is. Therefore pick a few things that you are happy to spend money on, and try to reduce the rest.
Andrew shared some case studies. True expat millionaires are the ones that live below their means, save every month, and invest for the long term. There are plenty of people earning $500k-1m SGD that spend most of it, have lots of debt, drive nice cars, living in luxury condos, and go on eye-wateringly expense holidays…but are trapped working until they are 65. And if the husband or wife gets made redundant then their world comes crashing down very quickly. That’s how a teacher is able to retire at 44, but someone else earning $1m per year has to keep working until 65.
Invest your savings consistently every month, regardless of what the stock market is doing.
Keep costs low. According to Andrew the average expat investing with a financial adviser in Singapore is paying 4.5% in fees. If your portfolio returns 7%, but your fees are 4.5%, you are only making 2.5%...after inflation you’re probably making nothing. Either invest the time to educate yourself on the DIY path, or use a ‘low-cost’ financial adviser like me who aims to get your all in costs (fund fees + platform + management costs) at or below 1.5%.
Final Thoughts
Andrew Hallam sharing some market data for expat investors
If you are an expat in Asia then I highly recommend you buy and read his latest book – Millionaire Expat: How to build wealth living overseas. Whether you are interested in investing or not, everyone can benefit from improving their personal finance knowledge, as no-one is going to care more about your money than you do.