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The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life

J.L. Collins, Mr. Money Mustache [foreword]

This book grew out of a series of letters to my daughter concerning various things - mostly about money and investing - she was not yet quite ready to hear.

Since money is the single most powerful tool we have for navigating this complex world we've created, understanding it is critical.

"But Dad," she once said, "I know money is important. I just don't want to spend my life thinking about it." This was eye-opening. I love this stuff. But most people have better things to do with their precious time. Bridges to build, diseases to cure, treaties to negotiate, mountains to climb, technologies to create, children to teach, businesses to run.

Unfortunately, benign neglect of things financial leaves you open to the charlatans of the financial world. The people who make investing endlessly complex, because if it can be made complex it becomes more profitable for them, more expensive for us, and we are forced into their waiting arms.

Here's an important truth: Complex investments exist only to profit those who create and sell them. Not only are they more costly to the investor, they are less effective.

The simple approach I created for her and present now to you is not only easy to understand and implement, it is more powerful than any other.

Together we'll explore:

•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 and why the one I recommend is so far superior to the competition
•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 I don't recommend dollar cost averaging
•What financial independence looks like and how to have your money support you
•What the Four Percent Rule is and how to use it to safely spend your wealth
•The truth behind Social Security
•A case study on how this all can be implemented in real life

E

Enrique

Verified Purchase

Reviewed in the
United States
on
October 15, 2024
The Simple Path to Wealthcontains a first section I will convene in denominating behavioral and another part with technical investment information.BEHAVIORAL- Avoid debt at all costs.- Avoid fiscally irresponsible people and do not marry them.- Spend the next decade working your ass off.- Take low living expenses.- Do not certainly spend more than you earn (do not get trapped by an expansive lifestyle).- Save and invest over 50% of your income.- Avoid financial advisors.TECHNICAL- Avoid multiple stock investment.- 120 - your age = percentage to invest in stocks. The rest in bonds.- Invest in a fund replicating the US market.- Invest in American bonds.- Never withdraw more than 4% of your investments.- Reinvest dividends.CRITICISM- The author only proposes investments with Vanguard. He claims to not be paid by them, which I believe. But lacks other alternatives.-VERYUS focused.Overall, the author proposes a fork of the Buy&Hold strategy with less diversification, some behavioral treats as well as particular details for his investment strategy. A recommended book.
42 people found this helpful
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N

N
- Great value for money

Verified Purchase

Reviewed in the
United States
on
November 2, 2024
Solid book on investment and portfolio building. I really wish I had read this book a few years earlier and highly recommended to everyone.Things to avoid1. Avoid debt.2. Avoid fiscally irresponsible people. Never marry one or otherwise give him or her access to your money.3. Eliminate all non-essential spending4. Avoid investment advisors.5. Never buy stocks on margin.6. Safety is a bit of an illusion. Don't fall for it.7. Spending too much time worrying about how things might work out. It’s a huge waste. Don’t do it.On Saving and thrifty lifestyle1. Save and invest unwavering 50% of your income.2. The beauty of a high savings rate is twofold: You learn to live on less even as you have more to invest.3. When you can live on 4% of your investments per year, you are financially independent.4. If your lifestyle matches or exceeds your income, you are a slave.5. Better to adapt yourself and your attitudes to the numbers than to adapt the strategies to your psychological comfort levels.6. If financial independence is your goal, your savings rate in these years should be high. As you invest that money each month it serves to smooth out the market’s wild ride.7. Be persistent. Life is uncertain.On Stock market and Investing1. Investment rules: Rule #1: Never lose money. Rule #2: Never forget rule #12.The stock market is a powerful wealth-building tool and you should be investing in it.3. Embrace indexing.4. Crashes, pullbacks and corrections are all absolutely normal.5. Any investing done short term is by definition speculation.6. Market timing is an un-winnable game over time.The point is that to play this market timing game well even once, you need to be right twice: First you need to call the high. Then you need to call the low.7. The market always recovers. Always.8. Everybody makes money when the market is rising. But what determines whether it will make you wealthy or leave you bleeding on the side of the road is what you do during the times it is collapsing.9. Most people lose money in the stock market. Here’s why: 1. We think we can time the market. 2. We believe we can pick individual stocks. 3. We believe we can pick winning mutual fund managers.10. By dollar cost averaging you are betting that the market will drop, saving yourself some pain. For any given year the odds of this happening are only ~23%. But the market is about 77% more likely to rise, in which case you will have spared yourself some gain. With each new invested portion you’ll be paying more for your shares.11. Put all your eggs in one basket and forget about it.On F-You Money1. Money is a small part of life. But F-You Money buys you the freedom, resources and time to explore it on your own terms. Retired or not. Enjoy your journey.2. Once you have your F-You Money, all you need do is make sure you continue to reinvest to outpace inflation and keep your spending below the level your stash can replenish.3. You’re young, aggressive and here to build wealth. You’re out to build your pot of F-You Money ASAP. You’re going to focus on the best performing asset class in history: Stocks. You’re going to “get your mind right,” toughen up and learn to ride out the storms.
28 people found this helpful
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L

Liong

Verified Purchase

Reviewed in the
United States
on
November 10, 2024
We can learn a few important principles to follow when you want to achieve financial freedom. Most of the investment examples in this book are practical in the United States. Overall, I learn a lot from this book. Thanks.
15 people found this helpful
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