It’s all about Balance with Andrew Hallam

It’s all about Balance with Andrew Hallam

Balance.

In a word, balance is about an even distribution of weight enabling someone or something to remain upright and steady.

Or balance is keeping or putting (something) in a steady position so that it does not fall.

Maybe better still, balance is the stability of one’s mind or feelings.

Regardless of how much money you make or don’t make, Andrew Hallam suggests one of the keys to success and personal life fulfillment is balance.

It’s all about balance for most of us

In Balance, speaker and author Andrew Hallam describes what it means to be successful…and it’s probably less complicated than you expect. It’s also not just about money.

In Balance, we learn about what goes into personal fulfillment through a rich collection of stories, research and anecdotes. We learn how Andrew feels about his own balance and what might apply to finding yours as well.

I’ve had the good fortune of knowing Andrew for well over a decade now – even when he was a stock picker! – and it was great to catch up with him regarding his new book and how things have changed for him over the last few years.

If you haven’t already caught-up with Andrew’s work check out my previous interviews with him below as part of further reading.

Learn more from Millionaire Teacher and the 9 rules of wealth that should be taught in school.

It’s always fun to catch up with a successful digital nomad.

Check out my interview with Andrew below and of course, at the end of this post, a chance to win a copy of Balance to one lucky reader!

Welcome back to the site Andrew. Been a few years! Your Millionaire Teacher book I recall was a best-seller and rightly so. It was so well done. 

Before we get into the next/new book, I’m curious: anything you’d change about those 9 rules? Why or why not?

Thanks, Mark! Very happy to connect again with you!

I think those are timeless rules, so I wouldn’t change them. This makes me reflect, especially, on spending habits. We give ourselves the best odds of building wealth when we live below our means and copy the spending habits of real millionaires. That might sound crazy, but most millionaires are far more careful with their money than we might think. The most recent data in the U.S. suggests the median price that American millionaires paid for their latest car was $35,000 USD. And as I referenced in my book, Balance, 9 of the 17 richest people in the world drive cars worth less than $55,000 USD. I would guess that half of the people living in my condo complex in Victoria, B.C. paid more than that for their latest car.  And of course, none of them are billionaires. In fact, out of the 40 residents in that building, it’s entirely possible that none of them are millionaires, either. Today, more than ever, there are a lot of high-salaried people with expensive tastes, huge debts and low levels of wealth. There’s also a high number of middle-income salary earners who spend as if they’re loaded. More than ever, we need to ignore the spending habits of Mr. and Mrs. Jones.

Very fair Andrew, you speak of that “stealth wealth” concept here which I like – wealth and fulfilment far beyond material stuff that only makes you happy to a point.

What’s new with you – beyond the book? Where are you living now?

My wife, Pele, and I have been nomadic for the past eight years. We’re currently in the country of Panama, enjoying the weather, the culture and the geographic diversity. We’ll be here until April, and then after a quick visit to see family in the U.S. and Canada, we plan to spend the summer in the south of France. In 2018-2019, we attempted to drive a camper van from Canada to Argentina. We enjoyed 17 amazing months on the road, but we had to turn back after some civil skirmishes erupted in Nicaragua. With some luck, we’ll resume that adventure this fall.

South of France sounds lovely. OK, how are you investing? 

The account in my name comprises a diversified portfolio of Exchange Traded Funds (ETFs), with Canadian and global stock market exposure, as well as a Canadian bond ETF. Pele is an American. Her investments (a tax-advantaged IRA and a taxable portfolio) are in a Vanguard Target Retirement fund. In many ways, it’s like mine, without the Canadian exposure. But hers is simpler because Vanguard rebalances it to maintain a consistent allocation.

Yes, target funds can be a good tool for sure. Let’s go off the ETF topic. What do you make of Bitcoin, crypto and more of late – since the investing landscape has changed a bit since we last talked?

If you woke me up one morning and said, “Andrew, I’ve just converted 10% of your portfolio to Bitcoin,” I would scream something starting with, “F,” wet my pants and beg you to help me find a way to sell it. In all seriousness, I prefer to invest in things that can be valued: entities with cashflow. Real estate and stocks (ETFs, in my case) fall under that category because they represent entities with cashflow (real estate tenants can pay rent and businesses earn corporate profits and pay dividends that we can reinvest).

So do you think along the same lines of Charlie Munger on crypto in that:

“Of course I hate the Bitcoin success,” he said. “I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air.”

Reference: https://fortune.com/2021/12/03/charlie-munger-criticizes-crypto-china/

Andrew: Charlie always makes me laugh…but there’s no doubt he’s brilliant.  Unlike him, I don’t have a moral position on cryptocurrencies, but I view them more as speculations than investments because we can’t assess an intrinsic, business valuation on a cryptocurrency. It doesn’t have a measurable intrinsic value or create cashflow. So…I guess my view is more in line with Warren Buffett’s than Charlie Munger’s.

OK, let’s dive into Balance: How to Invest and Spend for Happiness, Health and Wealth.

I know you’ve done very well financially, and you’ve also survived cancer. You’ve accomplished a lot and overcome quite a bit in your life. What compelled you to write this book?

I saw a need for a book that digs into the “why?” aspect of financial planning and success. Success should be defined as life satisfaction. That’s it. No more. No less. 

When we ask someone why they want to achieve anything, they will point to life satisfaction….if you keep digging with, “Why?” 

It doesn’t matter whether you’re asking them why they want to invest, earn a degree, run a marathon, raise their kids a specific way, give money to charity or pee behind a tree. If we keep digging with the question, “Why” everyone will respond with a derivative of life satisfaction.

I wanted my book to serve as a guide for anyone who wants to learn how to build wealth and live the best life they can, based on life satisfaction research. In most cases, what we think will make us happy and what behavioural research says will actually make us happy are often dramatically at odds. Other personal finance books (including my former books) talk about wealth creation. I wanted to write Balance to explain how to build wealth while also offering something wiser and more holistic.

I hope I’ve matured as a person and as an investor, in that, personal finance is way more psychology over math. Does Balance cover these concepts in any detail and if so, what can readers expect to learn? What might be different in Balance than other personal finance and investing books, including your own!

I think Balance is the world’s only personal finance book that explains how the stock market works by introducing an investor pooping in the bathroom. It explains asset allocation with a genuine ghost story (with a middle-schooler’s potty humour). To my knowledge, Balance is also the only book that explains which funds you should buy to harness your behaviour.  That might not sound important.  But how an allocation performs and how an investor performs with that allocation can be two very different things. Yes, low-cost index funds and low-cost ETFs are important. But which ETFs help improve investors’ behaviour, and as a result, investors’ returns? I list them in Balance, while also delving into specific suggestions of socially responsible investment funds. 

Chapter 5 probably grabbed my attention the most, since the premise is about spending money on things you value. Meaning, with enough savings you can afford most things in life, but you can’t afford everything. Can you talk about what you value and what you enjoy spending money on? Why is the concept of opportunity costs so important for happiness, health, and wealth?

Pele and I love spending money on travel, massages, amazing food, and bringing people together. For example, we helped my parents buy a motorhome in 2020, so they could join us on camping trips. Pre-pandemic, we enjoyed buying flights for friends and members of our family to meet us in cool parts of the world. Spending money on such things allows us to build memories and spend quality time with people. The eight-decade long Harvard Study of Adult Development suggests that nurturing our relationships is the single greatest attribute to a happy life. Most us don’t need a fancy study to realise that. We don’t necessarily need money to spend time with people we love, either. But we can use money to create novel experiences for ourselves, our friends, and our family. This is something I started to do long before I became financially independent. And that’s important. After all, none of us know how long we’re going to live.

As for opportunity costs, if we’re spending regular sums on something that doesn’t enhance our life satisfaction (gourmet coffee on the run is a great example) then the opportunity cost of spending that money, instead of investing it, could be worth several hundred thousand dollars. To expand on that, coffee lovers should enjoy their coffee during quiet solo moments, or with friends. But if they’re drinking expensive coffee while racing through rush hour traffic, that’s a waste of money, when a coffee made from home would serve the same purpose, at a far lower cost.  And yeah, over a working lifetime, the opportunity cost difference could be as much as a million dollars.

We all know by now that beyond a certain point, more money doesn’t necessarily make people happier – but it does provide many financial options in life. I know by around age 30, you had enough money to retire frugally but you certainly didn’t choose that path. You’ve continued to work, write books, teach overseas, do speaking engagements, write for AssetBuilder and here at home with Canada’s National newspaper, The Globe and Mail. My sense is you still work a lot. Is that your Balance and can you explain what that is for you?

I’ve probably worked a greater number of hours over the past year and a half than I worked in the previous eight years combined. Writing a book will do that! Generally, though, I don’t work a lot…or at least, it doesn’t feel like I do. I’ve been able to write my personal finance articles while traveling full-time in a camper van or cycling around Europe on our tandem. I give plenty of professional talks, but those are typically a lot of fun. Over the past four years, I’ve spoken about investing and financial wellness in more than 30 different countries. But after each talk, we always stick around to savour and explore each place. We made new friends and explored places that we otherwise never would have seen: the ancient ruins in Petra; the gorgeous, fresh water swimming canyons in Oman; the wildlife filled regions of Kenya and Tanzania; the unbelievable sites of Cappadocia, Turkey.

We also know that everyone has their own “enough” number. I’ve written about this a great deal on my site – it’s like a fingerprint – no two financial plans are the same but there can be similarities. 

Based on what you write about, speak about, hear from other aspiring retirees about – what themes exist? Do share!

Your retirement plans and financial freedom “number” is as unique as your fingerprint. I’ve spoken to happy expat retirees in Spain who spend about $12,000 CAD a year, while enjoying two annual vacations. I have retired friends on Vancouver Island who spend about $28,000 a year. I’ve met global nomads in Bali who work part-time, and live off that income and a $100,000 portfolio, withdrawing an inflation-adjusted 3-4 percent per year. When a journalist or “financial expert” claims you need “X amount” to retire, they aren’t revealing their knowledge or their sophistication. They are revealing their ignorance. And I mean that in a kind way. Ignorance refers to a lack of knowledge. And it’s tough to have a wise perspective on this after forming opinions based on “conventional wisdom” or what somebody else thinks is right.

Personal finance is personal – I know you say that often Mark. Some people retire in expensive cities, and they require much more money than most people who retire in rural communities. Yet, I’ve met retirees in expensive cities who find a way to live well on less than you might expect. I’ve also met people in rural communities who have $50,000 annual travel budgets, so they need (or want) much more money.

Having said this, I think most people should continue to work part-time at something they’re passionate about for as long as they can. This alleviates financial stress, ensuring that they don’t have to derive everything from their portfolios and/or pensions. Research suggests it also gives us a sense of purpose, keeping us healthier longer, keeping us happier and increasing our life expectancy. I reference such studies in my book, Balance.

You and I have known each other for over 10 years now – I knew you when you were a passionate stock investor! I’ve coined my journey as FIWOOT (Financial Independence, Work On Own Terms) vs. any Finance Independence, Retire Early plans. I just don’t think the RE part of FIRE makes any sense, at least to me and others since anyone that is FIRE, that I know, still works for income. 

Anyhow, are you living out your FIWOOT dreams and if so, what’s next for Andrew and Pele?

I just want to keep learning. The more I learn about the world, the more I realise I don’t know anything.  Writing and exploring helps with that. I love writing stories about people and places.

Much thanks Andrew, and best wishes. I’ll know we’ll be in touch again soon.

Well readers, what can I say. Andrew is a pleasure to interview and I’ve been happy to get to know him for the last 10+ years to learn more about investing but also verify the importance of balance and what that means to me.

If you want to win a copy of Balance, just enter the giveaway below and I will draw one (1) winning name at random in a few weeks. Good luck! Thanks for your readership.

Mark

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