This book is constantly referenced by many people as their favorite finance book and for me it’s really no different. This book truly was what kick started my path towards financial independence. It was the catalyst that led to the creation of this blog.
Let me explain
As I have said in the past, I started my first real job directly out of PT school and was clueless about money and investing, and everything in between. I knew I was too frugal at my core to spend all this new income and understood I couldn’t just let that money build in my savings account. So I knew I needed to invest.
So similar to Jim’s path, I started picking stocks. Picking some winners, but many other losers. I would spend hours reading articles from random sites about who they predicted to be the next winner. I would read about each company and about their future plans. I would read about new laws that were getting voted upon and how it would impact companies. (this led to me owning a very average Canadian marijuana stock). I would pick the brain of everyone who even thought they knew how to pick winners.
It was a full time job on top of my regular work. And I still wasn’t the millionaire that I thought I would be. I continued this “research” for almost 6 months before I stumbled randomly into the financial independence blog: Millennial Revolution. Which led me to many others.
I began digesting it as fast as I could. Reading these blogs at lunch and after work. These bloggers probably didn’t anticipate someone actually scrolling all the way to their first posts and attempting to read their years of work chronologically.
And through all of this, these people I trusted all trusted one person’s investing advice: Jim Collins.
I can still remember exactly where I was when I read it. I had just started my first traveling assignment and was in rural South Carolina. I was staying in the guest house of a plantation (actually). I didn’t have the internet, so when I received that book I sat down on the porch swing and read.
I read that book in 2 days with every chapter making more sense than the last. I would be asking a question in my head and the next chapter of this book would address it. It felt like this book was written for me.
And here I am almost 3 years later, with the same love for this book. I have recommended it frequently and I even gave my precious copy away to a friend.
Book Review
The Simple Path to Wealth takes a complicated topic like investing and makes it as simple as the name suggests. This book was created from his stock series on his blog (link) which originated from writing letters to his daughter to help her invest. So right away, Jim brings a certain trust factor that most investing advice doesn’t have.
Throughout this book, along with simplifying investing, he takes an extremely boring topic and makes it fun. He writes in a way that can engage anyone with frequent examples and personal stories.
Don’t Waste Your Time Trying to Invest
Jim’s daughter, like most of us, had no interest in spending the time to learn about investing nor spend the time actually investing. So Jim’s strategy involves a set it and forget it strategy that makes it easy for anyone to begin while requiring little to no extra time out of your busy life.
Simplify Investing
Everyone likes to overcomplicate investing so much that it makes it so you “need” a financial advisor/planner. Jim’s honest, and easy advice takes this need away completely and saves you that extra 1-2% annual fee that your advisor would charge you.
Jim advises you to invest in basically two index funds. It doesn’t get easier than that.
Diversification
I understand that this goes against what everyone says in regards to a diversified portfolio. But this book eloquently explains how index funds work, specifically, VTSAX which is the Vanguard Total Stock Market Index fund that Jim recommends which tracks the United States stock market. (Though there are many other just as good of low cost funds like this with other companies, just check the expense ratio).
As Jim explains, you own a piece of every company in the United States so this diversifies you. And as Jim coins, this allows for “self-cleansing” of the market. Meaning you get a piece all the winners, and as the losers slough off, you get a piece of all the replacements that fill their space. You don’t need to guess who these winners will be, you already own them!
He even discusses how by owning a fund like this, it also offers international exposure as well as most of these bigger companies in the United States all have international exposure as well.
F-U Money
Despite all the eye-opening investment advice this book offers, Jim’s concept on F-U Money might still be my favorite part of this book. Reading about this concept gave meaning to what I was already trying to do in my life. I didn’t necessarily think I was working to retire, but I knew I wanted the money to control my own life. Jim explains this “superpower” and all that comes with it which helps to further motivate anyone on their path to FI.
Conclusion
Overall, this book is worth every cent. You should read it, your significant other should read it, and you should give it to your kids to read when they are ready.
You may not agree with every point he makes, I know I don’t, but it lays the investing foundation that I feel that every single investor new or old needs to create generational wealth.
To purchase this book feel free to follow the Amazon link below
Purchase The Simple Path to Wealth Now
Full Disclosure: This is an affiliate link, so a small portion of each sale will go to keeping this website operating for free
What’s your favorite financial book? Let me know what you think in the comments below.
As always, if you have any questions or concerns feel free to comment or email me directly at fiscaltherapist1@gmail.com
