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The Global Expatriate's Guide to Investing: From Millionaire Teacher to Millionaire Expat



"In a world full of finance books it is a pleasure to find one that (a) does not pull its punches and (b) is written with a sense of humor. Take it on your next long-haul flight. It is full of fascinating facts and gives unambiguous advice. The considerable knowledge and passion of the author makes this an easy read. The advice is clear and is supported with evidence. The book is written with expatriates in mind, but there is wisdom here that applies to all. I recommend this book—it has clear advice and will make you smile."
—Ben Sherwood, Principal, Hillier Hopkins LLP, Chartered Accountants and Tax Advisors, UK; author, The 7 Secrets of Money

"Expatriates everywhere should thank Andrew Hallam for his clear, smart, and entertaining guide to financial freedom. His book is aimed at a growing and often overlooked group—people who are working outside of their home countries, often drawing big paychecks, but baffled by a maze of unfamiliar investing options. If that's you, look no further for sound advice on how to see through the sales pitches and construct your own path to affluence."
—Ian McGugan, The Globe and Mail, Toronto

"I have purchased a copy of this book for every member of my staff. It should be mandatory reading for any expatriate corporate or educational wellness program!"
—James Dalziel, Ed.D, Head of East Campus, United World College of South East Asia

"Andrew Hallam has hit another home run with his second book, The Global Expatriate's Guide to Investing. His research is impressive and is made all the more believable by stories of the good and bad choices of real people. Peppered with common sense and plenty of humor, the Guide is a must read for expatriates looking to do the right thing regarding their retirement funds. Andrew Hallam shows us the money."
—Paul Chmelik, Director, The American Embassy School, New Delhi, India

"Andrew Hallam has filled a void for all those navigating the treacherous waters of expatriate saving and investing. This should be the first book read by the Aussie exec in Hong Kong, the British teacher in Saudi Arabia, or the French engineer in Malaysia. Witty, readable, and profitable; don't leave home without it!"
—William Bernstein, author, The Four Pillars of Investing and A Splendid Exchange

ANDREW HALLAM is a personal finance columnist, financial educator, and speaker. An expatriate since 2003, he is the author of Millionaire Teacher and writes columns for The Globe and Mail and for the U.S. based financial service company, AssetBuilder. He also contributes frequently to Canadian Business magazine, and was a nominated finalist for three national publishing awards for his articles in MoneySense magazine. Contact him at his website

Scott Burns xiii

Acknowledgments xvii

Introduction xix

Chapter 1: Setting Your Bull's-Eye 1

What's This Ailment Expatitis? 3

Cheating Conventional Retirement Rules 3

Cooking Up the Road Less Traveled 5

The Earthquake and the Epiphany 6

Jujitsu Junkie Taps Out for Home 8

Now It's Your Turn 9

Notes 10

Chapter 2: Building Your Pension 13

How to Never Run Out of Money 14

The Man with Nothing But a Backpack 16

The Couple with Swedish-American Dreams 18

A Front-End-Loaded Tale of Success 22

Notes 24

Chapter 3: The Truth about Stocks and Bonds 25

Halloween Grab Bag Treats Investors 26

Why Average Returns Aren't Normal 29

Stocks Pound Inflation 29

What Has the Stock Market Done for You Lately? 31

Undressing Stocks with 50 Shades of Gray 32

The Stock Market Stars as the Great Humiliator 35

Fast-Growing Economies Can Produce Weak Returns 37

Bonds Are Protective Nets for Jumpers 38

Can You Lose Money With Bonds? 41

Notes 43

Chapter 4: Don't Start a Fight with an Escalator 45

Yes, the Financial District Loves You! 46

Global Investors Getting Fleeced 47

Notes 50

Chapter 5: Where Are the Customers' Yachts? 51

Global Investors Bleed by the Same Sword 52

American Expatriates Run Naked 53

Why Brokers Want to Muzzle Warren Buff ett 54

Financial Advisors Touting "The World Is Flat!" 56

Hedge Fund Money Spanked for Its Con 58

Why Most Investors Underperform Their Funds 62

Notes 65

Chapter 6: Don't Climb into Bed with a Silver-Tongued Player 69

Featuring the Rip-Offers 71

The Ten Habits of Successful Financial Advisors . . . Really? 72

When Your Advisor Is a Sales Commando 73

Welcoming Sharks into the Seal Pool 74

Misled Investors Pay the Price 75

A Canadian Investor Gets Bled 75

Would You Like a Band-Aid for That Bleeding Gash? 77

Masters of the Insured Death Benefi t Illusion 77

Free Fund Switching Isn't a Perk 78

Making Millions off the General Public 79

Fooling the Masses with Numbers 79

Regulators Making an Effort 80

Can Squeaky Wheels Gain Redemption? 83

If Investors Can't Reclaim Their Losses 84

When High Fees Meet Gunslingers 86

A Son's Inheritance Gets Plundered 86

British Teacher Learns a Costly Lesson 90

Playing Soccer Like Wasps around Honey 90

Most Investors Are Crazy 92

Notes 93

Chapter 7: Self-Appointed Gurus and Neanderthal Brains 95

Why Most Investors Should Hope for Falling Markets 96

It's Not Timing the Market That Matters; It's Time in the Market 97

High Unemployment and High Stock Returns 98

What Can You Miss by Guessing Wrong? 100

When Investors and Advisors Sabotage Their Rides 102

Popular Stocks Underperform 104

How About the Next Big Thing? 105

When Genius Fails 107

Notes 107

Chapter 8: An Employer's Greatest Challenge 111

Fees—How Much Is Too Much? 113

So What's the Solution for Global Employers? 115

Notes 118

Chapter 9: Couch Potato Investing 119

Don't Bonds Tie You Down? 120

Is It More of a Fling Than a Real Relationship? 120

Potatoes Growing Globally 122

Bonds Relative to Age and Risk 124

What If You're Falling Behind? 125

Profi ting from Panic—Stock Market Crash 2008-2009 125

Owning the World 126

Where Do You Plan to Retire? 127

Are You Retiring in an Emerging Market Country? 129

Does This Sound Too Good to Be True? 130

Chapter 10: The Permanent Portfolio: Growth without Risk 131

Gold in Isolation Is a Total Loser 132

A Disco-Era Brainchild from a

Twentieth-Century Socrates 132

This Great Portfolio Will Never Be Popular (But It Should Be!) 133

Why Does It Work? 137

What Has It Done for Me Lately? 138

Notes 139

Chapter 11: Fundamental Indexing:

Can We Build a Better Index Portfolio? 141

Like Top Basketball Players Getting the Most Court Time 142

Index Funds That Appear to Beat the Market 144

Investment Legend Likens Them to Witchcraft 144

Global Fundamental Indexes Might Shelter Us from Bubbles 146

Emerging Markets Show the Greatest Diff erence 146

Aren't These Just Actively Managed Products? 147

Notes 148

Chapter 12: Capable Investment Advisors with a Conscience 149

Do You Have a Ninja's Discipline? 151

Qualities of a Great Financial Advisor 151

Investment Professionals worth Considering 153

Notes 170

Chapter 13: Choosing Your Off shore Brokerage—For Non?]Americans 173

DBS Vickers Securities Opens the Door to Everyone 174

Why You Should Avoid E*Trade Financial 176

TD Direct Investing International 176

Saxo Capital Markets—A Jewel with Distractions 177

Comparing Fees with International Brokerages 179

Is Interactive Brokers the Dark Horse Winner? 184

Notes 184

Chapter 14: The 16 Questions Do-It-Yourself Investors Ask 187

What's the Diff erence between an Exchange-Traded Index Fund (ETF) and an Index Fund? 187

Do Non-Americans Have to Pay U.S. Estate Taxes upon Death If They Own U.S. Index Shares? 188

What's a Sector-Specific ETF? 188

Should I Buy an Index That's Currency Hedged? 189

What's the Scoop on Withholding Taxes? (For Non-Americans) 191

Will You Have to Pay Currency Conversions? 192

Should I Be Concerned about Currency Risks? 193

Do the Unit Prices of ETFs Show Which Are Expensive or Cheap? 194

If I Have a Lump Sum, Should I Invest It All at Once? 194

I'm in Some Expensive Products, but They're Currently Down in Value. Should I Sell Now or Wait? 195

How Do I Open a Brokerage Account and Make Purchases? (For Non-Americans) 195

What If I Find a Higher-Performing Bond Index? 200

What If I Find a Cheaper ETF? 201

Should I Be Most Concerned about Commissions, Annual Account Fees, Fund Costs or Exchange Rate Fees? 201

How Little Can I Invest Each Month? 201

Stock Markets Are High. Should I Really Start Investing? 202

Let's Go! 203

Notes 203

Chapter 15: Investing for American Expats* 205

Do You Currently Invest with Vanguard? 206

Couch Potato Investing with Vanguard 207

Couch Potato Investing with a Vanguard Stick Shift 209

When Investors Binge on Speculation 210

Charles Schwab Off ers a Great Deal 212

Doing the Couch Potato with Schwab 212

Permanent Portfolio Investing with Schwab 214

Fundamental Indexing Magic in the Works 214

Don't Contribute Illegally to Your IRA 215

What Exactly Is an IRA? 216

Roth IRAs Are Diff erent 216

Notes 217

Chapter 16: Investing for Canadian Expats 219

Canadian Funds Earn an "F" for Costs 220

Brokerage Options for Expatriate Canadians 221

Brokerages for Canadians in Capital-Gains-Free Jurisdictions 222

Building a Canadian Couch Potato Portfolio 223

ETF Canadian Price War 227

The Permanent Portfolio, Canadian Style 227

Fundamental Indexing Portfolios 229

What About RRSPs and TFSAs? 230

Swap-Based ETFs, the Ultimate Legal Tax Dodge 231

Notes 232

Chapter 17: Investing for British Expats 235

Expensive Firms Performing Like a Virgin 236

Couch Potato Investing for British Expatriates 237

British Investors and the Permanent Portfolio 240

Fundamental Indexing for the British 241

Notes 243

Chapter 18: Investing for Australian Expats 245

Fancy an Australian Couch Potato? 247

How About an Australian Permanent Portfolio? 248

Fundamental Indexing for Australians 249

Notes 251

Chapter 19: Investing for New Zealand Expats 253

Kiwis Chilling Out With The Couch Potato 254

Permanent Portfolio for Kiwis 255

Fundamental Indexing for New Zealanders 255

Notes 257

Chapter 20: Investing for South African and South American Expats 259

South African Investors 259

South Africans Fry Up the Couch Potato 260

South African Writer Likes the Permanent Portfolio 261

South Africans Preferring Fundamental Platforms 263

South American Investors 263

Brazilian Investing Models 264

Notes 267

Chapter 21: Investing for European Expats 269

Country-Specifi c European ETFs 269

European Indexes That Investors Will Like 271

Why Not Choose the Simpler Option? 274

Calling Italians and the Swiss 275

The European's Permanent Portfolio 276

Fundamental Indexing for Europeans 277

So What's It Going to Be—Couch Potato, Permanent, or Fundamentally Indexed? 279

Notes 279

Chapter 22: Investing for Asian Expats 281

An Indian National Divulges Her Plan 282

Asians Embracing the Couch Potato 284

Asians Choosing the Permanent Portfolio 287

Fundamental Portfolio for Asians 288

Notes 289

Conclusion 291

About the Author 293

Index 295