Rating:  ☆☆☆☆

Recommended by:

Author:   JL Collins

Genre:  Non-Fiction, Personal Finance, Self Improvement, Economics

288 pages, published June 17, 2016

Reading Format:  Book

Summary

Legendary Blogger JL Collins has written an easy to understand (but not simplistic) book about personal finance, money and investing that grew out of a series of letters to his daughter.  His premise is that since money is the single most powerful tool we have for navigating the complex world we live in, understanding it is critical.   Collins outlines an uncomplicated approach to money that is not only easy to understand and implement, it is more powerful than anything more complex or complicated.  Here are the topics he discusses:

Debt:   Why you must avoid it and what to do if you have it.

The importance of having F-you Money.

How to think about money, and the unique way understanding this is key to building your wealth.

Where traditional investing advice goes wrong and what actually works.

What the stock market really is and how it really works.

Why the stock market always goes up and why most people still lose money investing in it.

How to invest in a raging bull, or bear, market.

Specific investments to implement these strategies.

The Wealth Building and Wealth Preservation phases of your investing life and why they are not always tied to your age.

How your asset allocation is tied to those phases and how to choose it.

How to simplify the sometimes confusing world of 401(k), 403(b), TSP, IRA and Roth accounts.

TRFs (Target Retirement Funds), HSAs (Health Savings Accounts) and RMDs (Required Minimum Distributions).

What investment firm to use.

Why you should be very cautious when engaging an investment advisor and whether you need to at all.

Why and how you can be conned, and how to avoid becoming prey.

Why dollar cost averaging is not recommended.

What financial independence looks like and how to have your money support you.

What the 4% rule is and how to use it to safely spend your wealth.

The truth behind Social Security.

Quotes 

“There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and to work for whom you respect.”

 

“I may not have owned a Mercedes, but I owned my freedom.  Freedom to choose when to leave a job and freedom from worry when the choice wasn’t mine.”

 

“Being independently wealthy is every bit as much about limiting needs as it is about how much money you have. It has less to do with how much you earn—high-income earners often go broke while low-income earners get there—than what you value. Money can buy many things, none of which is more important than your financial independence.

 

“It’s a big beautiful world out there. Money is a small part of it. But F-You Money buys you the freedom, resources and time to explore it on your own terms. Retired or not. Enjoy your journey.”

 

“It’s not hard. Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn.”

 

“Three things saved us:  Our unwavering 50% savings rate. Avoiding debt. We’ve never even had a car payment. Finally embracing the indexing lessons Jack Bogle—the founder of The Vanguard Group and the inventor of index funds—perfected 40 years ago.”

 

“Look again at those people around you. For most, debt is simply a part of life. But it doesn’t have to be for you. You weren’t born to be a slave.”

 

“If your goal is financial independence, it is also to hold as little debt as possible. This means you’ll seek the least house to meet your needs rather than the most house you can technically afford.”

 

“Wisdom comes from experience. Experience is often a result of lack of wisdom.”

My Take

I have long been a reader of JL Collins’ blog and especially recommend reading his famous Stock Series, which provides the best explanation and analysis of investing in stocks that I have come across (and I have read a lot on this subject).  The Simple Path to Wealth is expands on the Stock Series and contains a lot of straightforward, easy to understand (but not always easy to do) advice on how to save and invest so that you can’t help but become wealthy (and it won’t take too long to do it).  I have given my 19 year old son and my teenaged niece and nephew this book to read and I will be ordering more copies to give away as high school and college graduation gifts.  While my husband and I are already basically retired, we could have gotten here a lot sooner by starting to follow the advice set forth in The Simple Path to Wealth when we first married 23 years ago.