The language of truth is simple. We should not, therefore, make that language intricate; since there is nothing less fitting for a soul of great endeavor than such crafty cleverness.
These are the wise words of the Roman Stoic philosopher, Seneca.
It sums up many of the elements you will find inside “The Simple Path to Wealth”, by JL Collins, a new book that we were invited to review and honored to accept.
If you are looking to find the truths about saving and investing, and in living a relaxed lifestyle devoid of financial worries, then the clever and ever so simple stories in this accessible book will set you on your way.
A little perspective first – one of the many reasons people across the globe are so put off by investing their money is the sheer complexity of the whole process. The irony is that we have never had such a “wealth of information” at our fingertips through internet, social media feeds and traditional sources like TV and radio. Yet that information overload has the average Joe and Jane either (a) running to the hills for cover or (b) frantically scouring Yelp in search of the wise financial advisor who will fix their woes. Perhaps more likely: (c) zipping down to the nearest shopping mall where they will spend their hard-earned greenbacks on things they did not even think they needed.
OK, on to the review. The author starts off in the book by offering the three basic tenets of his wealth building philosophy.
- Avoid debt
- Live below your means by spending much less than you earn
- Invest the surplus
Told you it is simple!
The places where we typically launch into our lives – as students first and then as gainfully employed individuals with a new home – is where many people start getting into financial trouble. That financial trouble is debt. Jim challenges the normalcy of debt. It is not normal to live in a McMansion and carry a mortgage that is 5x the combined salaries of the owners. It is not normal to carry credit card debt month to month at interest rates you will rarely see from high performing funds in a bull market. Cautionary tales on what this will do to your mental well-being as well as practical advice on the hard work (it is not a free ride to wealth building!) needed to rid yourself of debt will lay the foundation for the next phase of the wealth building journey.
A wise person once said: “It is not what you earn that matters. It is what you save.” And this is the hardest thing to do for most families. Jim outlines the need to live below your means – not an impoverished existence by any stretch of the imagination, just not spending wildly to keep up with the Joneses. A beautiful example is the explanation of the simple concept whereby you stop thinking about what your money can buy and instead think about what it can earn. And then, here is the snowball effect, the money it earns can earn. At the end of the day, it is always a trade-off for what you think you need today versus what you can save and build for a better tomorrow. Jim simply reminds us that if you are able to save 30-50% of your salary which should be doable for many earners (single or dual) and put it to work with the investing strategies which follow in the book, you will wake up one day wealthy.
Having guided you along the path to be free of debt, get a handle on your monthly expenses and therefore be aware of your savings rate, Jim then turns to the real stuff. If debt avoidance and savings are the soup and salad beginnings, then the third main section of the book, investing, is the grass-fed dry aged rib-eye steak and fingerling potatoes. The entrée that will fuel your journey toward greatness. It is this part of the book that truly excels. Jim takes us through his own investing experience, sprinkled throughout with tales of mistakes and triumphs as he built his own wealth. Jim reminds us that there is no such thing as the perfect investor and is humble enough to offer sage advice that will prevent you from falling into the same traps.
In terms of fueling your wealth building, this is where simplicity reigns. He lays out straightforward plans for investing your hard saved money, at low cost and low stress. He takes to task the advice of financial advisors who invariably are peddling nothing more than high priced snake-oil. Unlike these advisors, Jim is not trying to sell you something or confuse you with colorful charts, ill-defined metrics or make bold predictions. He offers down to earth advice through story-telling, real world examples and distills it down into practical steps that you can implement.
See, told you it is simple!
Finally, Jim addresses the critically important aspect of how to utilize the assets that you have amassed and never run out of money. For those close to Financial Independence Retire Early (FIRE), this is a really important topic to understand and get to grips with. The hard work that you put in in the accumulation phase needs to be continued as you implement the plans offered by Jim in terms of withdrawing from your portfolio. Again, some simple math is offered on which rate of withdrawal can be utilized. Jim reminds you of the need for flexibility and importance of adjusting your spend as market conditions dictate. Markets up, you may be able to spend a little more. Markets down, tighten the purse strings a little. Do these simple things and you will be fine. In fact more than fine, a sizeable legacy will invariably be left to either your children and/or charity if you choose. On this latter point, Jim shares his own experience in setting up a charitable fund through a popular investment house. At low cost, favorable tax implications and all of that money going to those who need it most – the charities of your choice.
See, told you…..you get the picture.
Who should read this book? To be honest, I think this book applies to all ages. If you are young enough, you have time to implement everything this book has to offer. Time in the wealth building game is your best friend. If you are older, there are still numerous important takeaways. There are many concepts in this book that we ourselves are implementing to accelerate our own wealth building journey and retire early. As parents who did not have the advantage of such a wealth of insight on saving and investing strategies, this book should stand the test of time and will make the conversation with our own children a little bit easier. It will undoubtedly kick-start their own journeys to wealth building.
In summary, if you are looking for a get rich quick scheme, don’t look to this book for answers. If you are inclined to take practical simple advice and implement it using the straightforward strategies laid out in this book, you will build the all-important FU money along with freedom and time to do as you please. You will also marvel at how easy it all was.
Where can you find this book? This link provided here by the the author will take you to the Amazon page for the book (his affiliate link). Consider buying it- and if you like it, which we are sure you will, tell your friends about it.
Mr. and Mrs. PIE