The Simple Path to Wealth

Library · Investing

• Author: JL Collins
• FinSimLab rating: 4/5
• Reading: Easy
• Finance level: Beginner
• Published: 2016

A simple approach to long-term investing: a few index funds, low costs and patience.

What it covers

The book grew out of letters Collins wrote to his daughter. It argues for avoiding debt, spending less than you earn, investing in a broad stock index fund, holding it through downturns and using the 4% rule as a guide to living off the portfolio. The accounts and tax rules it covers are US-specific.

What you will learn

• Why a portfolio of one or two funds can be enough.
• How to fit market falls into your plan.
• What a withdrawal rate is and how it relates to financial independence.

Who it is for

People who want a minimal investment plan and do not want to follow the market every day.

Concepts

Index investing, Financial independence, Long term

What you will not learn

Non-US products or tax rules: the account examples are American.

Already read a book on this?

• It shares long-term index funds with The Little Book of Common Sense Investing. If you have read The Little Book of Common Sense Investing, this one mainly adds a complete plan: saving, a minimal portfolio and how to live off it. The Little Book of Common Sense Investing
• It shares financial independence with Your Money or Your Life. If you have read Your Money or Your Life, this one mainly adds how to invest to get there and what a withdrawal rate is. Your Money or Your Life

We suggest you continue with

• A Random Walk Down Wall Street (in the "I want to start investing" path)
• Die With Zero (in the "I want to build wealth" path)

Related Academy guides

• FIRE: financial independence explained
• The 4% Rule: how much capital you need to live off your investments
• What is Dollar Cost Averaging (DCA) and why it works

Put it into practice

• Compound interest calculator
• Investment planner

More investing books

• The Intelligent Investor
• A Random Walk Down Wall Street
• The Little Book of Common Sense Investing
• One Up On Wall Street
• Common Stocks and Uncommon Profits
• The Little Book That Beats the Market
• The Most Important Thing
• The Little Book of Valuation

Descriptions written by FinSimLab for educational purposes. They do not summarise the books and are not investment advice.