I saw The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by JL Collins at the desk the other day. It sounded like an interesting read; I mean, who doesn’t want to be financially independent? And if it’s a simple path to financial independence, all the better!
The Simple Path to Wealth does deliver: Collins’ approach to financial independence is very simple. According to Collins, you are most likely either in a wealth accumulation phase of your life or a wealth preservation stage (and you can go back and forth between the two as your life circumstances change). To accumulate wealth, you need to get yourself out of debt and invest heavily; Collins recommends investing 50% of the wealth that you accumulate (if you can) into a stock index fund. He says index funds are a safer bet than trying to predict the outcome of individual stocks. And if you’re trying to preserve your wealth, he recommends adding some bonds into your portfolio as well. If you’re wondering where to invest, Collins recommends Vanguard (VTSAX for stocks, VBTLX for bonds); he likes Vanguard because their interests align with the interests of their investors. While his advice is very simple, he cautions that it is hard for many people to follow.
I really enjoyed Collins’ writing. Collins’ book is great for beginning investors because he breaks down some difficult concepts really well. My only major complaint about the book is that it is American, and so parts of The Simple Path to Wealth focus strictly on American accounts. But even with that flaw, Collins’ advice is still solid, no matter where in the world you live.