The Simple Path to Wealth | JL Collins

The Simple Path to Wealth by JL Collins book review by a long term investor who has reached financial independence, how does this classic stand up today?

The Simple Path to Wealth by JL Collins is a must read for those on their path to financial independence. The book is a summary of the content on his blog, which is regarded as one of the first FI blogs created. The book encourages a focus on simple, diversified long term investing using index funds and is a personal favourite of mine and features in my library.

The Good

  • Simple and straight forward approach to financial independence
  • Focus on long term Index fund investing
  • The principle of F you money and the power and freedom this gives you to forge your own path and take risks
  • Easy to understand concepts paired with case studies
  • Contains relevant information for all stages of the investing journey

The Bad

  • Heavy US focus on investing
  • Focus on US retirement accounts, however much of this can be applied to Super accounts for Australians.

Verdict: The Simple Path to Wealth is a must read for anyone interested in FI or investing in general

CaptainFI is not a Financial Advisor and the information below is factual review information, not financial advice. This website is reader-supported, which means we may be paid by advertising on the site, or when you visit links to partner or featured sites. For more information please read my Privacy PolicyTerms of Use, and Financial Disclaimer.

JL Collins The simple path to wealth

The Simple Path to Wealth | J L Collins

JL Collins is one of the undisputed heavy weights of the personal finance industry. He presents his no-nonsense advice and blogs freely on the topic and about his journey to Financial Independence.

He condensed and summarised his entire blog into the book ‘The Simple Path to Wealth’ with a foreword by Mr Money Mustache. It’s a great read, and he is quick to point out that you don’t need to buy the book at all – it is all freely available on his blog, albeit in a slightly more disorganised state due to the organic nature of how and when he initially thought of and posted the concepts.

I recently had the immense privilege of interviewing JL Collins on my podcast which was an amazing experience as he is one of my personal idols in the FI space. We covered his thoughts on FIRE, debt and investing styles, as well as his journey to where he is today.

“Statistics show that over fifteen years, the index actually beats something like 85% of active fund managers. Over thirty years, the number of active fund managers that can outperform the market is less than 1%. That is statistically insignificant”

J L Collins
JL Collins
For those who like audiobooks, you have the privilege of having the book narrated by JL Collins himself

Easy to Understand Principles

As JL initially started his blog as an educational tool for his daughter, the book which has come from this is easy to read and follow. Rather than focusing on the complex world of investing tools and strategies, JL breaks down his concepts in to simple language making the book very beginner friendly and actionable.

He covers topics such as the 4% rule for withdrawals, dollar cost averaging, how the stock market works and why it keeps going up, asset allocation and how it changes throughout your investing life and the problem with traditional investing advice. He pairs these timeless principles and real life examples to allow readers to understand these concepts and offers a map to financial independence.

F-you Money

JL was the first to introduce the concept of F-you money, which is basically the point where you have enough financial resources to be able to say F-you to things in your life that you don’t agree with. This F-you money gives you the power and control in your life that you would not have if you are dependent on others for financial support through things like a job.

“I always wanted to have that F-you money because while I loved working, I didn’t want to have to work all the time.”

JL Collins

Investment Philosophy

The core of Collins’ philosophy centers around low-cost index fund investing. He started as an individual stock picker and even worked for an investment firm, and while he did do ok, he admits he would have been better off putting it all into a Vanguard index fund. By advocating for a single, well-diversified fund, such as the VTSAX index fund, the US equivalent of VTS, he simplifies the investment process and reduces the risk of having him lose money investing.

He covers his thoughts on why complex investments exist only to benefit those who provide them, rather than the customer, due to their high fees and underperformance.

The emphasis on a long-term perspective and resilience against market fluctuations provides a practical roadmap for building wealth steadily over time.

US focus

The only possible criticism that is given to “The Simple Path to Wealth” is its heavy focus on the US market for investing, as this is how JL invests. I discussed this with him in our recent interview, and it is a function of the time frame that he has been investing in. During his Lifetime the US has been the dominant global economy and through its international influence, it does give a certain degree of global diversification.

He did say that in the future, as other economies grow, the US share of the total market will decrease and would recommend a world index fund in the future as this happens.

Australian investors and readers also don’t have the US retirement investment vehicles such as Roth IRA’s and 401K’s available to them. However, as we have our own tax advantaged retirement investing scheme through Superannuation many of the topics mentioned on this may be relatable to an international audience. This is important as he covers target retirement funds for wealth preservation phases.

Summary

“The Simple Path to Wealth” is a must read for those seeking a straightforward and actionable guide to financial independence. J L provides readers with the tools to navigate the complexities of personal finance, offering not just investment advice but also valuable insights into developing sound financial habits. Whether you’re just starting your financial journey or looking to refine your strategy, this book serves as a reliable companion on the path to financial well-being.

JL also released a follow-up book called “Pathfinders” in October 2023 which is a collection of around one hundred stories of people around the world on their path to financial independence. Pathfinders: Extraordinary Stories of People Like You on the Quest for Financial Independence―And How to Join Them is available to order through Amazon, Audible and Booktopia.

Sale
Pathfinders: Extraordinary Stories of People Like You on the Quest for Financial Independence―And How to Join Them
  • Hardcover Book
  • Collins, JL (Author)
  • English (Publication Language)
  • 320 Pages - 10/31/2023 (Publication Date) - Harriman House (Publisher)

For further reading, check out this interview of the author at a recent Talks at Google session.

JL Collins interview on ‘The Simple Path to Wealth’ February 2018 Google Talks.
Sale
The Simple Path to Wealth: Your road map to financial independence and a rich, free life
  • Hardcover Book
  • Collins, Jl (Author)
  • English (Publication Language)
  • 286 Pages - 08/16/2021 (Publication Date) - Jl Collins LLC (Publisher)

Check it out on Amazon, listen to it through Audible or buy it from Australia’s local bookstore Booktopia.

CaptainFI

Financial Disclaimer

Financial Disclaimer: CaptainFI is NOT a financial advisor and does not hold an AFSL. This is not financial Advice!

I am not a financial adviser and I do not hold an Australian Financial Services Licence (AFSL). In this article, I am giving you factual, balanced information without judgment or bias, to the best of my ability. I am not giving you any general or personal financial advice about what you should do with your investments. Just because I do something with my money (or use a particular service or platform) doesn’t mean it is automatically appropriate for your personal circumstances. I do not recommend nor endorse any financial or investment product, and my usage or opinion of any product should not be interpreted as an endorsement, advertisement, or intent to influence.

I can only provide factual information based on my journey to Financial Independence, and that is provided for general informational and entertainment purposes only. I make no guarantee about the performance of any product, and although I strive to keep the information accurate and updated as it changes, I make no guarantee about the correctness of reviews or information posted.

Remember – you always need to do your own independent research and due diligence before making any transaction. This includes reading and analysing Product Disclosure Statements, Terms and Conditions, Service Arrangement and Fee Structures. It is always smart to compare products and discuss them, but ultimately you need to take responsibility for your use of any particular product and make sure it suits your personal circumstances. If you need help and would like to obtain personal financial advice about which investment options or platforms may be right for you, please talk to a licensed financial adviser or AFSL holder – you can take the first steps to find a financial advisor by reading this interview, or by visiting the ASIC financial adviser register and searching in your area.

For more information please read my Privacy PolicyTerms of Use, and Financial Disclaimer.

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