Book Summary, Highlights and Quotes from The Simple Path to Wealth by JL Collins
The Simple Path to Wealth by JL Collins, lives up to the hype, plus some.
The Simple Path to Wealth is written by JL Collins for his daughter. His goal for his book was to have something to give to her when she was ready to take on the world, to help her to build up her “F-You money“, without having to make all the same mistakes that JL, himself, made.
JL lays out a concise, witty, and enjoyable personal finance read. But the book is more than a personal finance read, it is a way of life.
The Simple Path to Wealth includes much of the great writing that you can find in his “Stock Series” on JL’s website. While I had read through the Stock Series and much of JL’s other content, there is something about sitting down with the book and a highlighter that I would recommend for anyone who is serious about getting their finances in order.
Even if you are familiar with JL’s Stock Series, I would recommend picking up the book.
What I love most about The Simple Path to Wealth is that it is an executable strategy that anyone, and I mean anyone can easily use to build up their fund of “F-You Money” and to eventually become Financially Independent.
Though concise, the book is very thorough and includes great overviews of all types of taxable and tax advantaged account types, RMDs, Donor Advised Funds, and specific withdrawal plans for following the 4% rule.
If I wasn’t already in a good place with my F-You Money, then I would immediately begin to execute JL’s plan.
For those who already have money, this is also a great read to help you to further consider simplification of your portfolio and your life.
I for one will be following my own version of The Simple Path to Wealth going forward.
AR’s Book Score: 9 out of 10
Key book highlights from The Simple Path to Wealth
JL’s message throughout is very simple. “Harness the world’s most powerful wealth building tool” – the stock market. It always goes up. Always. All that any of us has to do is invest in low-cost index funds and let it do it’s thing. Obviously that is easier said than done.
To build up F-You money, you need to save very aggressively (50%), avoid debt, invest in low-cost index funds (see VTSAX/Vanguard) and never, ever, pull out when the markets tank.
JL compares the stock market to a beer. When you pour a beer, you get both beer and foam. He says,
It is the beer: The actual operating business of which we can own a part.
It is the foam: The traded pieces of paper that furiously rise and fall in price from moment-to-moment. This is the market of CNBC. This is the market of the daily stock market report. This is the market people are talking about when they liken Wall Street to Las Vegas.”
[…]
While this makes for great drama and television, for our purposes it is only the beer that matters. It is the beer that is the real operating money making underlying businesses, beneath all the foam and froth, that over time drives the market ever higher.
[…]
But it’s all just so much foam, fluff and noise. It doesn’t matter to us. We’re in it for the beer!
The Simple Path to Wealth – JL Collins
I love this analogy. This perfectly explains the “noise” around the stock market. It is foam and fluff. The stuff that doesn’t really matter. For all of us average folks, we just want the beer.
JL provides a deep a thorough overview of the stock market and why it will always go up.
The market always recovers. Always. And, if someday it really doesn’t no investment will be safe and none of this financial stuff will matter anyway.
The Simple Path to Wealth by JL Collins
The book, in its concise format, dives deep into every conceivable topic that you can think of relating to personal finance. But most of all it shows how simple investing should be. Topics discussed include:
- “Investing in raging bull (or bear) markets
- Why most people lose money in the market
- Portfolio Ideas and Asset Allocation
- Taxable Accounts vs. Tax Advantaged Accounts
- Why I don’t like Investment Advisors
- Why I can’t pick winning stocks and you cant either
- Withdrawal rates: How much can I spend anyway?
- How do I pull my 4%?
- Social Security: how secure and when to take it
- How to give like a billionaire
- My path for my kid: the first 10 years”
From the beginnings of investing to how to withdraw your money in retirement, The Simple Path to Wealth is my new go-to reference for anything money.
Best quotes from The Simple Path to Wealth
You own the things you own and they in turn own you
The Simple Path to Wealth by JL Collins
Being independently wealthy is every big as much about limiting needs as it is about how much money you have.
The Simple Path to Wealth by JL Collins
The market is volatile. Crashes, pullbacks and corrections are absolutely normal. None of them are the end of the world, and none are even the end of the market’s relentless rise. They are all, each and every one, expected parts of the process.
The Simple Path to Wealth by JL Collins
The market always recovers. Always. And, if someday it really doesn’t no investment will be safe and none of this financial stuff will matter anyway.
The Simple Path to Wealth by JL Collins
But it’s all just so much foam, fluff and noise. It doesn’t matter to us. We’re in it for the beer!
The Simple Path to Wealth by JL Collins
If you are a novice investor you have two choices:
1. You can learn to pick an advisor.
2. You can learn to pick your investments.
The Simple Path to Wealth by JL Collins
The great irony of successful investing is that simple is cheaper and more profitable. Complicated investments only benefit the people and companies that sell them.
The Simple Path to Wealth by JL Collins
Remember that nobody will care for your money better than you. With less effort than choosing an advisor, you can learn to manage your money yourself, with far less cost and better results.
The Simple Path to Wealth by JL Collins
Plan your financial future assuming Social Security will NOT be there for you. Live below your means, invest the surplus, avoid debt and accumulate F-You Money. Be independent, financially and otherwise. IF/when Social Security comes through, enjoy”
The Simple Path to Wealth by JL Collins
Avoid debt. Nothing is worth paying interest to own.”
The Simple Path to Wealth by JL Collins
More from JL Collins
- Website: JLCollinsNH.com
- Amazon Profile
- Video/Interviews: JL’s “Talks at Google“:
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I honestly stopped reading any books related to money or personal finance after spending 300+ hours reading personal finance blogs and posts and thinking that I read everything there is to know about personal finance.
Your review is making me want to pick up the book.. I haven’t heard of the beer analogy before, that was clever.
Yeah I get that. Someone like you already has an intimate knowledge of all of the topics in the book.
Yet there are a lot of memorable quotes and analogies, many of which I have highlighted that make the content worth a revisit at some point even if you’ve digested much of it before.