There is brilliance in simplicity. – Bruce Lee
Recently, I began reading the book The Simple Path to Wealth by JL Collins.
The book originated with letters to his daughter about financing.
On my path towards financial freedom, I have decided to read the books of other Personal Financial Bloggers.
The book du jour: The Simple Path to Wealth.
Do you believe in coincidence?
I don’t believe in coincidence. I think that all things work together for good. – Kathie Lee Gifford
“I do not believe in meaningless coincidences. I believe every coincidence is a message, a clue about a particular facet of our lives that requires our attention.” – Deepak Chopra
Well, it just so happened that the last finance blogger I interviewed for this website was Dave of Accidental FIRE called: Accidentally Wealthy on Purpose.
In that interview, he informed me that his favorite personal finance book was The Simple Path by JL Collins.
I mean what are the odds that I would be reading that EXACT BOOK at that EXACT MOMENT. 😲 Pretty slim that is for sure.
I too thought the book was pretty good and gives some sound financial advice.
I even tweeted out that advice directly from the book. And to my surprise JL Collins gave me a like. I appreciated that! 😉
After, doing that interview and sending the tweet and the getting a like form the author, I decided that I must do a book review on this book. Why? I feel that if you see something three times (3x), then it must be for a reason. They say things happen in three’s. So I went with it!
Let’s get to it!
Drum roll please.
THEEEEEEE SIMPLE PATH TO WEALTH!!!!
The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
WHO IS JL COLLINS?
He has been an investor since 1975. In 2011, he wrote a series of letters to his daughter about money and investing; which morphed into jlcollinsnh.com and led to this book.
Welcome inside the mind of the man who started the infamous Stock Series on his blog.
The foreword of his book was by Mr. Money Mustache.
Serious praise for the book:
“Let’s face it: Most investment books are boring. Dull. Uninspired. This book brings managing your money to life.” – Paula Pant, Afford Anything
“The media claim stock investing is no better than gambling. Collins cuts through the crap. He demonstrates a simple level-headed way to wealth that will lead you to a richer life.” – J.D. Roth, Founder Money Boss and Get Rich Slowly
I have to agree wholeheartedly with J.D. Roth’s assessment. I also got to meet him at FinCon. Nice guy 😉
See my post on FinCon
FinCon 18: The Recap From Your Friendly Neighborhood Greenbacks Magnet Part I and Part II
After reading the book, it was really eye-opening. One of the simplest approaches to investing and building wealth that I have ever read and I read A LOT!
My library card is on fire!!! 😂
Now let me tell you why I feel that way about the book.
DEBT IS A BURDEN
There is no free lunch. tweet
There is no such thing as E-Z financing. Credit cards come with enormous interest rates. If you look on credit card statements today, it will give you two numbers.
One is how long it will take to pay off your balance paying the minimum amount.
The other is how long it will take before your balance is paid in full after three years.
Knowing that you can be paying off that sweater from last year until your kids are ready to graduate from college should scare most straight to the path of cash only!
Debt causes too many constraints and limits personal and financial freedom.
Paying a $10 minimum on a $300 balance is a sure fire way to the poor house.
If you owe more than 5% interest on any debt, then get rid of it ASAP. And forget all these consolidation loans and balance transfers. That’s like robbing Peter to pay Paul. Just work on steadily paying off the one with the most interest and then continue until all the debt is gone.
Then make being debt free last forever.
WHY YOU NEED F-U MONEY
We all need it.
You know why? Because sh*t happens, that’s why.
What happens if you chip a tooth, get hit by an uninsured motorist, and the basement floods all in the same week?
You have to pay to handle of these situations. If nothing else, an insurance deductible; which can run into the thousands as house flooding can be a deductible as high as $5,000!
I previously wrote on F you money in a blog post called How Do You Play With FIRE?
Here is part of that post here for your convenience.
My blog post from the Mark Cuban on F-U Money blog post
LEVELS OF WEALTH
Only you can decide how much money is enough. However, if we go by Rockefeller, enough is always a little more. Basically, how much money is enough?
For purposes of simplicity, we will use the examples of enough money given by billionaire Mark Cuban.
“‘Enough’ is what it takes to not worry about the bills.”
“‘A lot’ is enough that you never have to worry about working again.”
“‘F you’ money means you can rent a jet to go wherever you want, whenever you want, and no party is out of reach.”
“‘F everyone’ money means you can have your favorite band in your backyard, not care how much it costs, and lend them your jet to get there.”
We’re not talking about rich; talking about wealthy. Chris Rock once said, “Shaquille O’Neal is rich. The guy who pays his salary is wealthy.”
He also said comfort is the poison. Too much of it can slow down your progress on the road to wealth. All I mean is to stay hungry. I’m just saying there are different levels of wealth.
So trust me when I say you need F-U Money.
MAGIC BEANS ARE INDEX FUNDS
Coco Chanel — ‘Simplicity is the keynote of all true elegance.’
Jack Bogle founded the Vanguard Group in 1974.
Mr. Bogle created the first S & P 500 index fund. Due to its immensely low fees because the investors own Vanguard and not some company or board of directors that want to please shareholders, this book advises an investment in the VTSAX at Vanguard.
JL Collins advice: Invest in index funds with Vanguard and keep what is yours.
I concur.
I need all my coins. I want ALL of my MONEY! I aim to keep as much of it as possible. I’m almost as bad as Scrooge McDuck. Almost.
See my post on Money Lessons I Learned From Scrooge McDuck
Remember that episode of Ducktales when Fenton Crackshell was counting all of Scrooge’s money that he dumped into the lake in “Liquid Assets Part 1.” That’s me! 🤣
This total stock market fund holds the entire U.S. stock market fund; which includes about 3,700 stocks. As most of these companies are worldwide and involved in international markets, you only need this one fund. Simple right? 😉
And it is comprised of 80% of all the top funds in the S & P 500, so no need to diversify as you already have it here.
If that did not convince you, the maybe the best stock-picker of all time can: Warren Buffet.
He owns the company Berkshire Hathaway (stock symbols; BRK.A and BRK.B)
See my posts
Forget Simon, Do What Buffet Says
How I Used The Buffet 25 Strategy to Walk The Talk
Do You Want A Million Dollars? Ask For It!
In the 2013 Berkshire Hathaway annual shareholder letter, Buffet advised the following:
“What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)”
I am a Vanguard and Berkshire Hathaway investor and I approve this message. 😉
Have you recently wrote a book? Are you looking for a review? Do you want to be Greenback’d? Tweet me. I’ll be here @mjp2520