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The Simple Path to Wealth by JL Collins

A straightforward approach to financial independence written in letters to his daughter.

ByChris

The Simple Path to Wealth by JL Collins gives a clear strategy for achieving financial independence with minimal complexity, focusing on saving and low-cost index funds. He emphasizes avoiding debt, letting investments grow over time, and maintaining a long-term perspective free from market panic. By combining advice with straightforward explanations, he shows how ordinary investors can steadily build freedom.

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, and crises, the market rises over time
    • Trust it. Stay invested. Play the long game.
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