Millionaire teacher’s first rule of wealth

B.C. native Andrew Hallam is an English teacher who started investing when he was 19. In an excerpt from The Millionaire Teacher he explores the power of compound interest.
So much of what schools teach in a traditional mathematics class is . . . hmm, let me word this diplomatically, not likely to affect our day-to-day lives. Sure, learning the formulas for quadratic equations (and their abstract family members) might jazz the odd engineering student. But let’s be honest. Few people get aroused by quadratic equations.
Perhaps I’m committing heresy in the eyes of the world’s math teachers, but I think quadratic equations (a polynomial equation of the second degree, if that clears things up) are about as useful to most people as ingrown toenails and just as painful for some.
Having said that, buried in the dull pages of most school math books is something that’s actually useful: the magical premise of compound interest.
Warren Buffett applied it to become a billionaire. More importantly, so can you and I’ll show you how.
Buffett has long jockeyed with Microsoft Chairman Bill Gates for the title of “World’s Richest Man.” He lives like a typical millionaire (he doesn’t spend much on material things) and he mastered the secret of investing his money early. He bought his first stock when he was 11 years old, and the multibillionaire jokes that he started too late.
Starting early is the greatest gift you can give yourself. If you start early and if you invest efficiently (in a manner that I’ll explain in this book) you can build a fortune over time, while spending just 60 minutes a year monitoring your investments.
Warren Buffett famously quips: “Preparation is everything. Noah did not start building the Ark when it was raining.”
Most of us are aware of the Biblical story about Noah’s Ark. God told him to build an Ark and to collect a variety of animals, and eventually, when the rains came, they would sail off to a new beginning. Luckily for the animals, Noah started building that Ark right away. He didn’t procrastinate.
But let’s imagine Noah for a second. The guy probably had a similar nature to you and me, so even if God told him to keep the upcoming flood a secret, he might not have. After all, he was human too. So I can imagine him wandering down to the local watering hole and after having a couple of forerunners to Budweiser beer, whispering to a friend: “Hey listen, God is saying that the rains are going to come and that I have to build an Ark and sail away once the land is flooded.” Some of his buddies (maybe even all of them) might have figured Noah had accidently eaten some kind of naturally grown narcotic. A crazy story they would think.
Yet, someone must have believed him. As far-fetched as Noah’s flood story might have sounded to his buddies, it would have inspired at least one of his friends to build his own Ark— or at least a decent-sized boat.
Despite the best of intentions, though, that person obviously never got around to it. Maybe he planned to build it when he acquired more money to pay for the materials. Maybe he wanted to be sure, waiting to see if the clouds grew dark and it started sprinkling. English naturalist Charles Darwin might call
this guy’s procrastination “natural selection.” Needless to say, he wasn’t selected.
For the best odds of amassing wealth in the stock and bond markets, it’s best to start early.
Thankfully your friends— if they procrastinate— won’t meet the same fate as Noah’s friends, but your metaphorical ship will sail off into the distance while others scramble in the rain to assemble their own boats.
Starting early is more than just getting a head start. It’s about using magic. You can sail away slowly, and your friends can come after you with racing boats. But thanks to the force described by Albert Einstein (some say) as more powerful than splitting the atom, they aren’t likely to catch you.
In William Shakespeare’s Hamlet, the protagonist says to his friend: “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.”
Hamlet was referring to ghosts. Einstein was referring to the magic of compound interest.