Personal finance can be very overwhelming and fraught with emotion. We all have a sense of the critical role that wealth plays in helping us achieve our goals, but what is the best way to actually go about making money in the first place? In The Simple Path to Wealth, JL Collins cuts through the uncertainty and offers a straightforward and proven way to reach financial independence.
First and foremost, this book is not about “getting rich quick.” The motivating idea of the book is this: You can either work for your money, or make your money work for you. Put a different way, if you don’t take control of your finances, then debt, crises, and bills will take control of your entire life. Wealth is ultimately about making life less complicated and more free. It shouldn’t be an oppressive weight on your mind.
Dominated by fear, procrastination, and carelessness, people often become slaves to debt, reckless spending, and their own ignorance and apathy with respect to the future. The bad news is that you must live within your means and save, if you ever want to become wealthy. The good news is that once you have this baseline of self-control, the road to building wealth is actually quite simple.
Collin argues throughout the book that investing successfully is a simple, beautifully simple, affair. There are a lot of people in the world of investment that make it seem more complicated than it is in order to profit off of the ignorance of others. Such financial wizardry is truly an illusion. No one can see the future. No one can time the market.
If that is the case, how do you make money off of the stock market? Collins advocates strongly for low-fee mutual fonds, in particular Vanguard funds such as VTSAX. While freely acknowledging the reality of financial crises and major shifts in the market, Collins argues for the basic strategy of buy and hold. The stock market is a great bet against inflation and has consistently produced wealth over time.
One thing that makes this book so great is that it is simple, straightforward, and thoroughly practical. By design. The idea for the book originated in a series of letters that Collins wrote to his then-teenage daughter to help her take control of her personal finances. The style is informal, but this readability never hinders the book from being thorough and actionable.
Simply put, The Simple Path to Wealth is one of the best introductions to personal finance and investment out there. While some may take issue Collins’ unwavering faith in the power of the stock-market, even skeptics can learn a lot from his wisdom and insight.
The Simple Path to Wealth by JL Collins is available for purchase here.