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The Simple Path to Wealth by JL Collins

Learn a clear, practical approach to achieving financial independence and living life on your own terms.

ByChris

The Simple Path to Wealth by JL Collins offers a straightforward roadmap to financial independence. Collins emphasizes living below your means, avoiding debt, and investing in low-cost index funds to let compound growth work in your favor. Originally written as letters to his daughter, the book focuses not just on money but on achieving the freedom to live life on your own terms.

The Path

  • Freedom-First
    • Center life around autonomy, not jobs
    • Simple lifestyle: no car payments, high savings rate
    • Time-rich: hands-on parenting, freedom over consumption
    • True wealth = choice over time and work
  • Simplicity
    • No complex schemes or side hustles required
    • Use low-cost, broad-based index funds
    • Live below your means
  • Avoid Debt
    • Normalized, but destructive
    • Easy credit inflates prices (cars, college, lifestyle)
    • Adapt to the numbers, not to comfort
  • Invest Prudently
    • Time in the market > timing the market
    • Long-term investing compounds massively
    • Crashes = buying opportunities, not reasons to quit
    • Downturns are normal, temporary, and healthy for markets
    • Allocate based on life stage, tolerance, horizon
    • Rebalance once per year
  • Investment Vehicles (order of priority)
    • Roth IRA, Traditional IRA
    • 401(k), Roth 401(k), 403(b), TSP
    • HSA (most tax-advantaged)
  • Three Portfolio Tools
    • Stocks → growth + inflation hedge
    • Bonds → stability + income
    • Cash → emergencies + deflation hedge
  • Use Index Funds
    • Wins due to low fees + diversification + simplicity
    • Accept market return — it’s enough
  • Avoid Common Mistakes
    • Don’t try to time markets or pick individual stocks
    • Most active managers underperform
    • More trading = worse results
    • Avoid margin — high risk, low benefit
  • Withdrawal Strategy
    • 4% rule as guideline
    • Reassess annually for flexibility
    • Withdraw in tax-efficient order
  • Core Belief
    • Despite wars, crashes, inflation, and crises, the market rises over time
    • Trust it. Stay invested. Play the long game.

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