Ever since I discovered financial independence and started reading everything I could about the subject, there was one person who kept coming up over and over again, a Mr. JL Collins. The stock series found on his own personal blog might be the best resource I’ve ever found on the proper mentality to have when investing in the stock market to grow and preserve wealth over time. He not only lays out an extremely simple method that anyone can follow, but also explains why the method is proven over time and not simply the latest “trick” to make money in the market.
JL recently complied all of the knowledge spread across his blog and his stock series, cleaned it up a bit, added some new insights, and released it all in book form. This new book is The Simple Path to Wealth and he was kind enough to send me a copy in exchange for my honest opinion on the book which you can find below. If you’ve ever been hesitant to invest money in the stock market, this is definitely a book you don’t want to miss.
The Simple Path to Wealth
For the same reason I’ve been linking JL Collins’ Stock Series to friends and family for the past couple years, I would recommend you to pick up this book. If you’ve ever been overwhelmed by the investment options available in the world today or don’t have any idea what the stock market actually is, then JL is the perfect person to explain both of them in a way you will understand.
His writing started as a way to pass along all of the information he’s learned over the years (and through many investment mistakes) to his daughter, who like many children, didn’t have much interest in listening to someone drone on about investment strategies. Luckily, he shared this insightful information with the public and we can all pretend to be JL’s children as we absorb what he’s learned about investing over the years.
One of the keys to the investment strategy laid out in the book is in it’s simplicity, but as JL is quick to point out on multiple occasions, simple does not mean low returns and in fact will probably come out ahead of the vast majority of investors out there. Low cost index funds are the name of the game and happen to be the exact strategy Becky and I follow ourselves to protect and grow our surplus income on a monthly basis.
The Book vs. The Stock Series
If you’re already familiar with JL Collins’ free online stock series that walks through investing in the stock market, market crashes, F-You Money, financial independence, and more, then you aren’t going to get a ton of new information from the book itself. The book is the stock series cleaned up, better organized, and with a few new tidbits thrown in, but you’re probably not going to come out with a new perspective on investment strategies if you’ve already gone through the blog.
Having said that, the book is probably going to be my go-to recommendation from now on because it’s a much smoother read that presents the information in a friendlier manner. Not to mention that a lot of people might be intimidated by a ~30 part blog series as opposed to a couple hundred pages that can be much easier to process and reference later.
On it’s own, the book is a perfect introduction to investing and financial independence for beginners, that shares specific recommendations on exactly where to invest your money in both the wealth building and wealth preservation stages. There are no complex algorithms or suggestions you have to follow and you won’t have to constantly monitor your holdings looking for signs to change them, this is long-term index investing at it’s finest achieved with just a couple of funds that you can hold for a lifetime. For anyone who is hesitant to invest in the “big scary” stock market or doesn’t want to throw their money into something they don’t understand, JL is the perfect person to walk through the what, the how, and the why to make you feel comfortable in your investment choices.
What This Book Won’t Do
It’s nearly impossible for any one resource to apply perfectly to people in all situations with all kinds of goals, so I thought it was important to lay out where I think this book may leave something to be desired.
Personally, I break financial independence down into a few key parts, Avoid Debt, Reduce Expenses, Grow Income, and Invest Efficiently for the long term. I think The Simple Path to Wealth does an amazing job with the last part (Invest Efficiently for the long term), and touches on the importance of the first (Avoid Debt), but there is something to be desired on the middle two.
The key to achieving financial independence is growing your savings rate, or the difference between income and expenses at any given time, and this is the most important factor in determining how quickly you can reach the various stages of F-You Money and financial independence. Other than a couple mentions that a higher savings rate is better (particularly in the solid case study found in the book), I don’t think I would recommend this to someone who is struggling with their current obligations in life and is living paycheck to paycheck.
In fact, I think this book makes the perfect compliment to Your Money or Your Life. One of the classics in the financial independence space, it walks through evaluating your relationship with money and determining what’s most important to you in order to grow your savings rate. Where Your Money or Your Life leaves off with vague investment strategy once you get your financial life in order, The Simple Path to Wealth picks up with exactly the right methodology to take that new found savings and invest it in the most intelligent way to grow and build wealth.
The two books in conjunction may very well be the perfect combination to set anyone from almost any financial situation on the right path to financial independence and long term wealth.
Start Building Your Own Freedom!
Financial independence is a good goal to set for just about anyone from any walk of life. Whether you intend to work to traditional retirement age with a comfortable life or plan to retire early and live off investments for 50+ years, it’s never too late to start taking an in depth look at your relationship with money. If you already have investments, have extra cash laying around, or intend to increase your savings rate in the future to get to that state, then investing those funds in an intelligent long-term manner should be one of your top priorities.
In The Simple Path to Wealth, JL Collins walks through the importance of building F-You Money, how to think about the stock market, and walks through the exact funds you should be using to grow and preserve your wealth over time. I don’t foresee myself writing much on the subject going forward because JL has already laid out everything you need to know on the subject in a concise, easy to read manner. The investment strategy is the same one I follow myself and should easily stand the test of time because it’s based on such simple fundamentals of how the market works as a whole.
Anytime someone asks me how I invest or why I chose low-cost Vanguard funds, I plan to let JL Collins walk them through everything they need to know.