Somebody sets the tone

Somebody does set the tone. A meeting can range from productive to friendly to creative to dead boring. A team’s culture can be one of warmth, care, or pure attrition. Friends could share a culture built around nicotine, baseball, or valuable conversations. Families can do tight hugs or awkward hugs.

Somebody, consciously or unconsciously sets the tone. It’s tempting to look to the boss or the inadvertent ‘alpha’ character to set the “right” tone. But, it isn’t always the boss or leader who sets the tone. They could probably consciously set a few aspects of the culture in place but they can’t do everything. And if they don’t it, somebody does.

And that somebody could very well be you.

Andrew Hallam – The Millionaire Teacher on teaching investing, investing, and living..

I read Andrew Hallam’s book following my interview with financial theorist and author Bill Bernstein. Bill recommended Andrew’s book “The Millionaire Teacher” and I can’t thank him enough for it. I liked it so much that I’ve gifted about 10 copies to friends and family over the past couple of months.

Interviewing Andrew was a real blast – he is SO full of energy! There are plenty of great personal finance and life ideas in there and I hope you enjoy it as much as I did.

About Andrew

Andrew Hallam the author of the best-selling personal finance book, Millionaire Teacher—The Nine Rules of Wealth You Should Have Learned in School. Andrew teaches Personal Finance at Singapore American School and I also writes a few regular columns for the Canadian Business magazine, weekly for The Globe and Mail , and at least twice a month for Assetbuilder , a U.S. based financial service company. Periodically, he also write for MoneySense magazine, where two of his articles were nominated as national publishing award finalists.

If you didn’t grow up in a wealthy household, Andrew and you probably have plenty in common. His dad was a mechanic, and his mom worked part-time at a retail store, earning slightly more than the minimum wage. As one of four children, his parents expected him to pay for my own college education. He developed an early respect for money because he never had any while growing up. And when he was 19, I met a mechanic who happened to be a millionaire. He learned that it wasn’t always necessary to have a high paying job in order to build wealth. He wanted to become a school teacher and figured that if a mechanic could grow wealthy on a middle class salary, then he could too.

So before his 20th birthday, he started to invest and along the way, he learned some vital financial lessons. And as he started to succeed financially, he grew more baffled at the absence of sound financial lessons in schools. His blog provides links to his published writing and more free-to-access content.

My favorite snippets –

“Even something as simple as choosing to go to Starbucks three times a week versus once every second week can make a difference of hundreds of thousands of dollars over the course of a lifetime.  What about other little decisions that get made?  For example, taking the five star holiday versus the three star holiday, flying business class versus flying economy class, or taking taxis everyday versus taking the MRT are huge differences.  For me the trick is getting the kids to come to these conclusions on their own.”

“Invest regular sums into the market  and ideally, for someone your age, you should actually be really happy if the market drops after you start purchasing.”

“One of my biggest mistakes in teaching people about money was learning that not everybody can manage their own money. Then I recognized that a lot of really smart friends of mine with IQ’s way above mine just aren’t emotionally wired to invest. If you can’t do that, then you can hire somebody to invest dispassionately for you with low cost indexes or ETF’s.  That’s the secret.  Don’t pay them more than 1% per year to do that job.”

“To me, it’s really inspiring knowing that every day I live is one day closer to my ultimate demise. If people don’t recognize that, I don’t think they truly live. You have to recognize that every single day is special.”

Full transcript, as always, on

On Silver to Central Banks and Credit

This week’s learning is part 2 of a 12 part series on The Ascent of Money by Niall Ferguson. (Part 1)

When money was first conceptualized, it was tied to silver and gold. But, there is very limited silver and gold and that meant demand always exceeded supply. Big leaps were made when the first banks were formed to make money lending legitimate (versus leaving people at the mercy of money lenders – Think Shylock).

It was in London, Amsterdam, and Stockholm that financial innovation began taking place with the formation of a central bank and the beginnings of banks lending depositor’s money. To illustrate the power of this, let’s imagine the central bank gives bank A $100.
– Bank A keeps $9 and lends $91 to Bank B
– Bank B then keeps $9 and lends $82 to Bank C

If you pause here, you realize that while the real money from the central bank is $100, the money in circulation is $373. This works well until the central bank wants all of its money back, of course. That means bank A needs to reliably recall money to bank B and so on.

In this case, the central bank is Bank A’s only depositor. When all/most of the depositors of a bank want their money back, it is called a “run.” Thus, the dangers of having one depositor is obvious – hence, banks need to “diversify.” And, to make sure banks don’t “default,” they need to make sure their “leverage,” or ability to call back money when depositors want it, is strong. If they do not watch their leverage (like in this example), it would result in a “bankruptcy” – literally the rupture of a bank.


Sketch by EB

This financial innovation has been critical in the progress of society. Debit and credit are the foundation of economic growth and the development of the world. The world would not have been better without money, contrary to popular belief. Credit is what enables us to ‘move up’ in financial terms and is the first building block.

Next week, we will explore the bond markets – the next building block..

Are you steering?

Are you steering?

Your boat is making it’s way along the ocean. The ocean has a will of it’s own. You don’t control it’s currents. You don’t have a say on the direction of the winds. You do, however, have a say on the direction your tiny, leaky boat takes. Once you get on the steering wheel, you can work your boat towards a direction of your choice.

Alternatively, you can let the boat be. The currents and winds have a will of their own and the boat will likely get somewhere. You will be passenger and observer and probably prone to sea-sickness. While you are at it, you will probably also complain about the currents and winds. Why can’t the gods be better to you?

Steering is painful business since you will find the currents and winds oppose you right from the start. They’ll test your resolve to get to wherever you want to get. You’ll soon realize it doesn’t really matter where you want to get – you will always face the resistance. There is no right path. There is only your path. You’ll seen millions of other boats around you who join you for part of your journey. You might even trade lessons and pick up a companion or two for a while. But, for the most part, it’s your journey.. and it is what you make of it. Over to the big question then..

Are you steering?

Caveat confabulation

Confabulation is when you try to make up logical reasons for emotionally driven actions. When you eat that cheesy snack on the 6th day of your diet regime after some initial resistance and find your logical brain telling you it is a reward for a job well done so far, you are confabulating.

Confabulation popped up in 2 conversations yesterday. The in-person one was interesting. I was describing my hopes/goals/dreams and trying hard to make it sound like the logical thing to do. A minute into my explanation, I caught myself and said I could try to make this very logical but the real driver is that the roots of this are completely emotional. He understood. We laughed.

Most of the action and decisions we take happen because of a strong surge in emotion and it helps to recognize it. Acceptance comes with recognition and further action comes after acceptance.

Exercise for the weekend – Try and catch yourself confabulating at least once and say it aloud immediately.

Self awareness takes practice.

The first step to a happy life.. asking yourself what it will take for you to be a happy life.

There is no template. There is a theory and a suggested path like always. Every footballer knows it’s best to have phenomenal ball control and the ability to kick with both feet. Good in theory but there’s been many a successful footballer who made it without these attributes. If Jim Furyk had followed the theory, he would never have become the golfer he is today.

Understanding the theory and suggested path is helpful. Ask why before you ask why not after all. Just remember not to diss the “why” because you don’t agree with all of it. And, don’t forget the “why not” bit because that’s when you develop your own style..


2000 years ago, timing was everything. If the weather wasn’t favourable, travellers didn’t set out on a new journey and housewives worried about whether their clothes would ever dry as there weren’t any fans to dry them indoor either.

Thanks to technological advances, we don’t have to worry about timing anymore. Everything is around and available 24*7. It is no wonder that we hardly feel the need to believe in the supernatural. Most things feel within our control. If we relied on the weather, however, we’d probably believe in omens just like our ancestors did.

It is tempting to negate the effect of timing. However, timing still matters.. a lot. It sounds fatalistic to say this but some things don’t really happen until they’re meant to happen and some things happen a lot quicker than we meant them to happen. It’s akin to sailing. You don’t control the vast open sea and it helps watching it carefully. There are times when it’s easy to make progress and then again, there are times when it’s incredibly hard. If you want to be a sailor, you have to learn to live with that reality and potentially, use it to your advantage.

Keeping a close watch out for timing helps with your personal habits too. Ideally, you do your most productive work when you feel most productive and leave the admin for times when you have less willpower. And if we feel depleted, we ought to eat and sleep. Regular rhythms help our body to stay productive.

Timing is everywhere. If we keep our eyes open, we learn how to use it to our advantage. Else we are in danger of just putting in useless effort and wondering why things don’t seem to work as well.

PS: This was an astonishingly difficult idea to communicate. I’m still not sure I’ve done justice.