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IN THE SPOTLIGHT
Is Investing the Biggest Challenge that International Teachers Face?
By Andrew Hallam 11-Nov-15
My friend, Paula, had worked for years as an international teacher. The 65-year-old taught in the Middle East and in Singapore. Two years ago, she moved back to the States. But she was in for a shock. While working, Paula thought she had plenty of money. She could afford to travel. She enjoyed five star resorts. Her schools paid her accommodation. She had more money in the bank than most of her stateside friends. But she used the wrong kind of measuring stick. Today, Paula struggles. By comparison, her retired stateside friends ride on easy street. Many enjoy defined benefit pensions. That’s income for life. Teachers who worked at private stateside schools earn full Social Security benefits. Whether we’re from North America, Europe, or Australasia, the colleagues we left behind pay social program taxes from which they receive retirement benefits. Such benefits can elude expat teachers. If you aren’t paying into a social benefit plan, you can’t reap full retirement rewards. I’m not a financial advisor. I’m an international schoolteacher. But I’m also a personal finance writer, having contributed to MoneySense magazine and Canadian Business. I write a column for The Globe and Mail and am the author of an international bestselling book, Millionaire Teacher (Wiley 2011). Last year, I wrote my second book, The Global Expatriate’s Guide To Investing. I wanted to show teachers how to calculate how much money they should be saving. I also wanted to show which types of financial advisors you can trust, and which you shouldn’t touch with a 30-foot pole. The world of expatriate financial advisors represents wild-west capitalism gone completely bonkers. Too many expats buy horrific products. The worst of the bunch come from offshore tax havens, like those stationed on the Isle of Man. I once explained these products to my editor at MoneySense magazine. “Teachers actually buy these things?” he asked. Sadly, they are the most common investments they do buy. The worst of these reap Everest-sized commissions. Investors can’t sell their investments before a predetermined date. And high hidden fees sink most of the profits. In such cases, a portfolio that should grow to US$1 million limps to US$500,000 instead. These products are ubiquitous. Brokers pump them from job fair booths and advertise them in international teaching publications. And they make cold-calls to teachers, both at home and at work. Ethical financial advisors do exist, but they don’t have silver tongues. You’ll probably never see them at a job fair. Here’s how you’ll know when you’ve found one: 1. They’ll show you exactly how much money you should be saving each month and explain why, after doing an in-depth analysis of your future retirement needs. 2. They’ll build you a low-cost, diversified portfolio of index funds. 3. They’ll ensure that you can sell anytime, without paying a penalty. You don’t have to retire in poverty. If you save plenty of money and invest intelligently, you could earn a far better lifestyle than your homebound friends. And after learning about investments and advisors, do what you do best: teach others. Andrew Hallam teaches at Singapore American School.
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