In his book, The Simple Path to Wealth, JL Collins writes: “Money is the single most powerful tool… If you choose to master it, money becomes a wonderful servant. If you don’t, it will surely master you” – and he then guides readers on a journey to explain how investing in a simple manner can lead to financial independence.
Keeping it simple
One of the book’s recurring themes is that investing simply is not only easier, it’s also more profitable than complicated alternatives.
“Simple is good. Simple is easier. Simple is more profitable,” Collins writes, stressing the value of index investing and noting that more than 80 per cent of the time, the index will outperform actively-managed funds.
While many find excitement in monitoring the performance of their stocks and funds, Collins argues it’s better to let indexing do the hard work, and find your excitement outside of investing.
Starting early
Another recurring message in the book is the importance of investing early. Collins talks about the concept of compounding and how powerful it can be over time. The best strategy, he says, is to set it and forget it.
“Fiddling with your investments almost always leads to worse results,” he writes. “Making a few sound choices and letting them run is the essence of success.”
Solid advice
I believe that Collins does an excellent job of persuading readers that simplicity in investing beats complexity almost every time. The book itself is easy to follow, and Collins’ writing style lays his arguments out clearly. His tone is assertive yet inspirational, and he’s open about his past mistakes to ensure readers won’t make the same ones.
As someone who is early in my investing journey, this knowledge is invaluable. It’s a roadmap I can continue to refer back to throughout the different stages of my life.
A couple things to note: Collins is very opinionated, and the book focuses heavily on U.S. retirement plans.
Overall, this book delivers exactly what the title implies: A roadmap to financial independence and to a rich, free life through simple investing.
I would recommend this book to anyone who wants to learn more about the concept of financial independence and how to achieve it.
