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The Simple Path to Wealth MP3 CD – Unabridged, February 27, 2018
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- Publisher : Audible Studios on Brilliance Audio; Unabridged edition (February 27, 2018)
- Language : English
- ISBN-10 : 1543697976
- ISBN-13 : 978-1543697971
- Item Weight : 3.5 ounces
- Dimensions : 6.75 x 5.5 x 0.5 inches
- Best Sellers Rank: #264,309 in Books (See Top 100 in Books)
- Customer Reviews:
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Top reviews from the United States
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This book is perfect for beginners, and some seasoned investors who are sick and tired of searching for that short-term investment miracle. Collins stuck with Bogle’s purest message from the beginning to the last word. As a Bogle devotee myself, I appreciate his courage to stand up, write a terrific book and argue effectively for the powerful and low-cost indexing strategy and against the delusional appeal of day-traders, hedge fund managers, active management strategies, timers, or individuals who claim they can successfully speculate and win big. Far too many normal investors get caught up in those phony, but exciting fantasies and lose. The new guy or gal investor gets the skills to construct a simple portfolio you understand, and then have the courage and the confidence to permanently ignore the media’s seductive financial noise machine.
The Simple Path to Wealth's basic message to beginners is well-known in the Do It Yourself (DIY) and ESPECIALLY for the Youthful Financial Independence (aka FI and FIRE Financial Independence Retire Early) community.
• think long-term
• live below your means
• plan ahead with a fully diversified portfolio (except international stocks, more on this below)
• invest in Vanguards low-cost index funds
Sooooo, what is not to like? I’ll admit it’s a boring plan, and not all DIYers embrace it. But I love my boring plan and it’s exactly where the power of what we can do lies—after setting up our plan, we must be patient.
Collins writes much about psychology, for good reason. The power lies with us. It's not us versus the big intimidating stock market. With time and experience, we learn to be psychologically tough for long periods of time. In the movie Wizard of OZ, Glenda told Dorothy that she “always had the power to go home again?” It's the same for us investors. All of the features of constructing a balanced plan remains under our control. It fairly easy to learn. But the hard part is the unfair and counterintuitive psychology. Thinking long-term is the best antidote. Over time the growth will pay enough of a return to meet or beat the inflation rate. Meeting or beating inflation is a simple, realistic goal, and psychologically attractive. This book shows you how to like saving with minimal time and effort to discover the investing process.
Patience, psychology, and philosophy are a difficult sell. Many investing aficionados are more interested in the adrenaline rush and chasing the opposite sex than building wealth over time. The market is not something to conquer or control. It is simply made up of wonderful organizations of hardworking people, called publicly traded corporations. The author explains how to harness all of that positive corporate energy, and just flow with it, whether it goes up or down, and over time it goes up. The author addressed the tough sell challenge with elegance and subtle toughness.
The author discusses investment costs, taxes, tax-deferred retirement plans offered by employers, the retirement years and strategies to keep from running out of money. My favorite chapters are “Why I don’t like Investment Advisers” and “Some final thoughts about risk.” Financial advisers are an easy target with hundreds of reasons not to like. Most of us DIYers will never need a financial adviser, for two good reasons: Collins writes “Nobody cares about your money more than you do,” and “you can learn to manage your money yourself with far less cost and better results.” From my personal experience, knowing how to save investment costs alone was enough to pay cash for the Tesla Model S.
On the subject of risk, my favorite part, and I quote as the author was speaking to the zombie apocalyptics among us especially the financial media: “Major Armageddon extinction events, like the asteroid that took out the dinosaurs some 65 million years ago, have happened about five times. So that’s about one every 10 million years or so. Are we really arrogant enough to think it’s going to happen in the geological eye-blink we’ll be around? That we’ll be the ones to witness it? Not likely.” Economic Armageddon ain’t going to happen either.
There are a few minor omissions. The author is not well known, so he needs to talk more about himself about what he did. I felt like he had more to say as examples of his fears of risk and the mistakes he made. All of that would have made the book even more authentic and organic. What was the role of his wife? What exactly did the author and his wife do for a living? He did report that he worked as a financial analyst. So, was he in the financial industry? He did not explain why he had an overly aggressive portfolio for an individual in his 60s. He did not share his diversification plan, except that he doesn’t own international stocks (he explains why).
Consequently, I give him an A for telling us how to set up a portfolio and his rationale, but I give him a B for not showing what exactly he did and for how long. His rationale is spot on, but portfolio construction and asset allocation strategies and information can be found in many books (The Boglehead Guide to Investors, any book written by Jack Bogle or his followers, Ferri, Swedroe, Roth, and Bernstein).
• Some other minor items that I found perplexing and discouraging for people starting out. On page 246, he writes, “Save and invest at least 50% of your income.” What? I reread this twice, and could not comprehend why the author wrote this. In my working career, I could not even contribute the maximum allowed in my 403(b) plan let alone save 50% of my income (No, I never had new car payments because I could not afford car payments and invest too). Yet, I reached financial independence at age 61. 50% of one’s income is overreaching and dangerously discouraging (unless you are a highly elite and talented employee with a 7 figure income). For the rest of us, just start with what you can afford. For example, I started at age 37 with $200 a month in my 403(b), and that was a lot out of my meager income. But I kept it up for 24 more years.
• Back to his strategy about avoiding international stocks. The author knows he will get pushback, and he probably has heard my argument for international investing many times. Mr. Collins is just following Bogle's advice about keeping it simple. But one can have it both simple and fully diversified worldwide by one fund. Diversification means investing in all available stocks, worldwide. So, let’s take advantage of these opportunities to invest in just one fund, the Vanguard Total World Stock ETF (VT). The author won’t have it. IMO, the author might be reflecting his age and the Familiarity/home bias that is so frequent with the silent generation. The author writes investing in the United States domestic market is enough diversification because of the worn-out 21st-century global connections argument. He offers what appears at first glance valid reasons, but they are out-of-date, and one about excessive costs is flatly wrong. Vanguard's Global fund charges .14%. I don’t know about you, but the opportunity to invest in all publically traded companies on the planet is inexpensive!
Also, I am 72 years old and old enough to remember my elders saying that is too risky to invest in foreign stocks. We are well into the 21st century and the world has changed. Don’t you think that international corporations want to grow and prosper too? Of course. Don’t you think opportunities for diversification have evolved for the better? Yes. I want as much diversification as possible to reduce equity risk, and reduce volatility. I might even get higher returns, but that’s not part of my expectations. The global index funds or ETFs make full diversification in just one investment a synch.
• Another minor objection is his downplaying the Roth IRA. I think he over-complicated with trying to predict the tax rate to decide to use or not use the Roth IRA. It’s futile and a waste of time to guess the future. Not having to pay capital gains taxes after investing in the Roth IRA is one of the best strategies for us regular investors (You can run the numbers on a brilliant Excel program created by The Finance Buff). After running the numbers on the Excel program, you will be thoroughly convinced to include the Roth IRA in your plan.
• One last objection. I recommend to readers who don’t have a “lump sum” that is, a bundle of money to invest already, that you ignore the “Why I don’t like dollar-cost averaging” chapter. I had to use DCA during my entire working career investing in my 403(b). Because I started from NOTHING and had less than $50,000 for years. If you have a lump sum to invest, follow the author’s advice. But I think I can speak for most investors who have little choice but to use DCA. His opinion about DCA was more discouraging than encouraging.
Collin’s strong opinions about some of his investment ideas represent more of his individuality than sound investment practice. Of course, the author never intended to be discouraging. I am just responding as a reader with a few of my opinions about his outstanding work. That’s perfectly fine for him as his opinions worked for him and they might work for you too. My opinions worked well for me. In the final analyses, he follows the “Boglehead” way. For that, I am delighted he wrote a great self-published book showing once again the work of the legendary investor, advocate, and teacher, Jack Bogle. Outside of these minor differences of opinion, Mr. Collins earned a well-deserved five stars.
In sum, if any author self-publishes a book about investing, I think it is important to readers to know that the message is organic—no other agenda item hangs in secret, other than to explain and layout a simple plan which will connect with new investors and get them results.
This is my single favorite book on finance. After reading over 100 finance books, this is hands down the best one. There are some business books that rival it, but all told its in the top 3 of all time.
Top reviews from other countries
Collins’s message is to find financial freedom: the ability to never work again, if you don’t want to, and have enough money “F-you money” that your investments provide appropriate income for you to retire early and live comfortably. The book’s majority focuses on a simple investment strategy. Collins’s simple strategy is all an investor ever need. He also provides clear, pithy advice on how to live, such as “Avoid debt”. Simple yet telling. What surprised me most, and what I benefited from the most, was his reassuring view to the behaviour of investing. He tells the truth at every stage, and doesn’t pull any punches, such as the market will drop, and you will see your investments half. But, as always, he’s the anchor of sanity, and says we need to hold our nerve when that happens, to actually buy more during those downturns and ride out the bad times, as the good times come a lot more often and provide great returns.
The highlight here is Collins’s experienced, uncle’s voice. He writes in a way that is friendly and smart. A voice to trust. Collins’s been there, made the mistakes, dusted himself off and seen the light; it’s almost as if he took the hard route in order to pass on his knowledge so that we don’t need to make the same mistakes, and we can follow him on the right path.
The Simple Path to Wealth is a rare book that is both thoroughly enjoyable and wise in its teaching. I adored reading every word and learning everything I need to know about investing in the stock market. I’d recommend this book to everyone, but especially people who say, “I know nothing about stocks and shares.” All they need to do is read this short book and follow its simple message. A superb book in a sea of unhelpful, impenetrable finance books.
Well worth your 'investment' :-)