The Childfree Wealth Podcast, hosted by Bri Conn and Dr. Jay Zigmont, CFP®, is a financial and lifestyle podcast that explores the unique perspectives and concerns of childfree individuals and couples. In this episode, Bri & Dr. Jay discuss The Simple Path to Wealth by JL Collins.
Each month Bri & Dr. Jay discuss a different book. For the month of July, they discuss Collins’s ever-popular book about investing. Before writing this book, he shared his investing mistakes on a blog & in letters to his daughter. After gaining popularity, the book was born. If you’ve been around the FIRE community, you likely know about his famous VTSAX and chill method of investing. In this podcast, Bri & Dr. Jay share their reactions to the book along with some investing insight.
Resources:
Like the show? Leave us a rating & review. If you want to join the conversation, email us at podcast@childfreewealth.com, follow Childfree Wealth® on social media, or visit our website www.childfreewealth.com!
Stay up to date with Childfree Wealth® by signing up for our newsletter here! Schedule a meeting with a Childfree Wealth Specialist® here!
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Disclaimer: This podcast is for educational & entertainment purposes. Please consult your advisor before implementing any ideas heard on this podcast.
The Childfree Wealth Podcast, hosted by Bri Conn and Dr. Jay Zigmont, CFP®, is a financial and lifestyle podcast that explores the unique perspectives and concerns of childfree individuals and couples. In this episode, Bri & Dr. Jay discuss The Simple Path to Wealth by JL Collins.
Each month Bri & Dr. Jay discuss a different book. For the month of July, they discuss Collins’s ever-popular book about investing. Before writing this book, he shared his investing mistakes on a blog & in letters to his daughter. After gaining popularity, the book was born. If you’ve been around the FIRE community, you likely know about his famous VTSAX and chill method of investing. In this podcast, Bri & Dr. Jay share their reactions to the book along with some investing insight.
Resources:
Like the show? Leave us a rating & review. If you want to join the conversation, email us at podcast@childfreewealth.com, follow Childfree Wealth® on social media, or visit our website www.childfreewealth.com!
Stay up to date with Childfree Wealth® by signing up for our newsletter here! Schedule a meeting with a Childfree Wealth Specialist® here!
Instagram | Facebook | LinkedIn
Disclaimer: This podcast is for educational & entertainment purposes. Please consult your advisor before implementing any ideas heard on this podcast.
Dr. Jay
Hey, all you childfree wealth listeners, we are back in book club. So each month I've given Bri a book to read and kind of debate and work through, and we decided rather than us, you know, talking about it offline, we talk about it here on the podcast and let you listen in. So this month's book was The Simple Path to Wealth.
It is the one that I give to just about everybody who wants to understand investing wants is a good place to start. You know, and spoiler alert, if it's the only book you read, it probably is good enough for most things you do. I’ve got some childfree spins on it, but that's okay. But Bri kind of tell us, what's it about?
And what's the highlight of the book?
Bri
The book itself is more of like an instruction manual on how to invest, and it gives you specific stock tickers to invest in and it says, do this, this and this. J.L. Collins, the author of it. It started out by writing letters to his daughter and then he turned it into a book sharing his money, mistakes that he's made.
And he wanted to share with other people because it was a blog and it became really popular. So now he's like, alright, this is what I did, and this is how I achieve financial independence. So it really is… It reads like an instruction manual, so at times is a little bit dry because of that, but it is good quality information and easy to understand.
Dr. Jay
So does that mean we all have to adopt J.L. Collins as our Dad? Is that kind of how this works?
Bri
I mean, if you want to, I think I'll keep my dad. But if you'd like, I don't know.
Dr. Jay
And by the way, Bri's underselling. I mean, the book is a phenomenal seller. He's had a lot of luck with it, a lot of podcasts, different things. It's a lot of core beliefs of kind of the FIRE community. It's kind of one of those if you're just going to read one book, it's a good place to go. So he starts off, he talks about, you know, hey, spend less than you make.
And that sounds weird, but like, that's the core of finance. I mean, I don't know. He had almost like spend the beginning of the book talking all about that. Does it have too much, too little. What do you think?
Bri
Well, I think after people I've heard talk this weekend, it is not enough. That is definitely the core of finance. But people forget that so easily. And I like the saying, “Money talks, wealth whispers.” You know, you have to remember, in order to get wealthy, it doesn't mean blow your money and everything. You have to follow simple investing.
And that's what this book really hits. And I liked it for that.
Dr. Jay
Yeah, but that's going to be unpopular. I mean, let's be real honest. So if we're going to follow that path and say, alright, I'm going to spend less than I make, which, by the way, I'm kind of laughing at because like, that is like finance 101. Spend less than you make. But it's countercultural because that's really going in this next step, which is get out of debt.
But if we're going to do that, like we'd have to like put off buying stuff like the new car we want or the house or other things and spend less than we make it. And I don't know, social media just doesn't agree with that. And I mean, do you think that's generational? I mean, is that just because J.L. Collins is a dad talking to his kid?
I mean, or is this I don't know.
Bri
No, I think a lot of it has to do with the keeping up with the Joneses impact. And now, you know, it used to be for well, Dr. Jay for your generation. You didn't have a smartphone as a kid.
Dr. Jay
Wow. She just like out of me, like, hey, we still had a landline phone. I mean, like, we didn’t even have a cell phone.
Bri
Yeah. And so you didn't grow up seeing everybody. It used to be like the people you compare yourself to or the people next door. Whereas my generation, you know, I've had a cell phone since fifth grade and I was, I don't know, 11, maybe? I think. So I've had a phone since then, and I've always been able to see, even if the person's right, not next to me, like what they're doing and people from high school, even though I graduated high school like seven years ago, I can still see what they're doing.
And it's easy to compare yourself to that, even though I haven't talked to them since we graduated, different things like that. So it… you get trapped in this mindset and just of comparison and that makes you want to spend money. And then marketers like me have done a very good job of pushing the next, latest and greatest thing.
I mean, think about the Stanley Water bottle. Everybody all of a sudden has like 40 of them and they're these $40 water bottles. Are you ever going to be drinking from 40 water bottles at the same time? No, but it gets pushed out on social media and you have to say, oh, you have this one or I have this one, and then you buy them and resell them.
And it's very, very easy to get in that trap of constantly buying things, even if you don't need it.
Dr. Jay
Okay. I have no clue what a Stanley water bottle is, but I guess that's just because I'm old and don't mind. I'm not on social media. I mean, I have the same cup that I've had for a long time, but I…
Bri
Wow, Dr. Jay you really you really show where you're where you're at ‘cause the Stanley Water bottle is like the trend. Everybody has one and you can change out the handle. And I know somebody who has 40 of them. 40.
Dr. Jay
40 water bottles.
Bri
Yeah. They're all the exact same. The only thing that's different is the color water bottles.
Dr. Jay
I'm sorry, I'm still having problems with this. So there's like. And how much is that? How much does the water bottle cost?
Bri
$40.
Dr. Jay
40, 40, $1,600 in water bottles.
Bri
Yeah. And you can resell them and even higher value.
Dr. Jay
So in theory.
Bri
Well people will buy them. Some will sell them for like 100 bucks.
Dr. Jay
Are these the new Beanie Babies? I mean, you know, that's what I grew up with, as you know.
Bri
I do not now.
Dr. Jay
Okay. So we could go down a path here because that's the whole point is like he's like, look, don't spend money on shit. Junk. Garbage.
Bri
Exactly. I mean, I don't I do not have one. I have one that looks like a similar that I bought years ago. But you don't need that like, you just don't.
Dr. Jay
I, I don't know. I'm going to have a problem. I’m going to have to look at these water bottles. I'm like, you know, whatever is the cheapest that works. But I mean, his point is right. He first got to start living on less than you make and people go, well, but I'm paycheck to paycheck. That's cause you're buying stuff. I'll do this exercise with people.
We lay out what they must, should, could and won't spend money on. Must are kind of like everything that keeps a roof over your head, basic needs. Everything else is wants. Once it will get to the end of it and be like, okay, we've budgeted everything and that means us. You're spending $1,000 a month on your stuff that way thousand is actually low, but let me use that as an example.
And they're like, “Well, but I need this.” And then I'll be like, “No, you bought that on Amazon because you wanted it. That doesn't mean you need it.” Now, I'm not judging like you can spend your money however you want, but to say, hey, I need. Well, we already took care of the basic needs of clothing, food, water, utilities like everything else is stuff.
And in order to make progress on money, you have to start putting money away. Now people go well, but housing is really expensive and I'm with them on that. Okay. Housing right now is broken. Depend where you live. You may have very little room in your budget, but at the same time you might be able to live somewhere cheaper, if you're willing to make some sacrifices. Just saying, you might be able to make some adjustments. You might be able to pick up some more income. You've got to have some room in your budget if you can make any progress. The other part of it is debt’s eating that away. So that's the second part to get to the book is, is get out of debt & stay out of debt.
Now, at the same time, you know, this is not new, novel. I mean, you know, this is the Dave Ramsey/Suzy Orman get out of debt routine. Anything jump out at you in the book on getting out of debt?
Bri
Not really as far as getting out of debt, because it all is very you know, it's just very basic stuff that sucks. Like it's not fun to be getting out of debt. It's just not. But it's important. And being patient and working through it is important.
Dr. Jay
So Collins looks at it and starts talking about good versus bad, and he's a little bit more kind of willing to understand that some debt is good debt. I'm not. I'm just being frank on that. You know, I'm like, that's a marketing term.
But he says, look, get out of debt. Stay out of debt. Cool. Now, when it comes to this debate about debt versus investing in, he's kind of on the fence a little bit more than I am. I'm pretty clear. Get out of debt first, then invest and that's okay. Like we can fight over that a little bit. But he's not saying take debt out to invest.
I mean, that's real simple. He's saying get out of debt, then do investing. You know, he's saying there's some good debt, bad debt. We can balance that out. I mean, what's your reaction, Bri?
Bri
I think it's very hard to say that there's good debt when, you know, you have these you sign up for something like a car, you get it. It's really exciting. And then you have these payments that follow you for years afterwards and they're not fun. You want to be paying… I’ll just use an example for myself. So we have a vehicle that was purchased a couple of years ago and we're like working to pay it off now.
It sucks. I hate that car payment every single month like I'm trying to get it gone because it is the most annoying thing in my life. It irritates the hell out of me. Do you want to keep having a car payment every single month for the rest of your life? I don't. I would rather be investing that money elsewhere.
Dr. Jay
That’s fair. So most of the book dives into investing and investing strategies. And by the way, we are going to talk about this. We're going to tell us specific tickers in this case. I'll give you my $0.02. I'm not saying you should or shouldn't invest in it. You talk to your financial advisor or your financial planner about that. But let's dove in and if you've been in the FIRE community, at some point you've seen VTSAX and chill.
That's The Simple Path to Wealth. That's Collins. He gets credit for that. I mean there's there's yeah very few ideas where you can really give people credit. Yeah that's him. What do you think Bri? VTSAX and chill?
Bri
I think, you know, do whatever you're comfortable with this.
Dr. Jay
Okay. That was a weasel.
Bri
If you're good with that, go right ahead. I'm more of a three-fund portfolio type of person, so that's my preference.
Dr. Jay
Alright. So let's get some clarity on this. VTSAX is Vanguard's total stock market mutual fund. You may have also heard of VTI. That is their ETF version. I tend to go to the ETF version. He he goes in both. He's good with both. I'm good with that. And then he goes, well, VTSAX has enough international exposure, set it, forget it.
Because U.S. companies also invest internationally. I like more international exposure. That's what Bri’s talking about. A three fund portfolio meaning the whole U.S., the whole world stock market, and some bonds. That is still the same kind of principles. I mean. Collins I mean, the three fund portfolio still comes out of the Bogle World of Vanguard. Still we're in the same like it's like we're fighting over cars.
Like I like the red one or the black one. Like, it's not like huge difference. It's optimising. And when he says, well, the simple path to wealth, you know, just buy VTSAX and chill. I can't argue that that's a simple way to do it.
Bri
Yeah, it is easy because you're only buying one. You don't have to think about it.
Dr. Jay
You know? And he talks about if you only have target date funds, use target date funds. I'm good with that. And we have a whole series on investing. You're going to find that we're not too far off. I think there's a question he talks about balancing bonds and not you know, is it going to get you a slightly better return, especially an 80/20 90/10, maybe.
And that's and he acknowledges that. But he's also just like I'm good with VTSAX and chill and like I guess I'm in a podcast and I should be like throwing stones and yelling and screaming about how he's got it wrong. No, close enough. I mean, seriously, like some people get into finance and we get these hyper optimizations where we're fighting over tenths of a point, you know what in your life I don't think that really matters.
Now, is it most optimized? I don't know. And the reality check is you only know what's best optimized 40 years down the road after you've run the plan. I mean, it's all guesses. I mean, I don't know. What did you take out of his investing stuff? What jumped out at you and said, hey, this is what I should do?
Bri
I really liked how he made it approachable for anyone because I wish I would have read this book starting out and I just didn't. I'd heard of it, but never even touched it. And I think if you're just getting started, it is very easy to pick it up and be like, okay, now I have a bit more confidence in investing and I like how it's essentially step-by-step.
And he explains why he uses Vanguard and the founding of Vanguard and all of that. Not just saying, “Oh, go use Vanguard, go buy this.” He just goes more in-depth book. So that was really helpful. I think it's a good instruction manual for beginners, beginning investors and honestly, if you're investing now too & you’ve been investing for a while, you can still follow it because it makes it easy. You don't have to get fancy.
Dr. Jay
Yeah, the book came out, I don't know, almost a decade ago. 2013 ish. I think something like that. And so it's interesting because some things in finance age well and some things don't this is age pretty well. And, you know, I'll talk about, you know, do you want your investments to be sexy or do you want to work? He's with me, we want them to work.
I don’t need to be sexy. He's literally talking about buy one fund and call the day, you know, and there's some adjustments as you get older and age and some things. Okay, fine. I'm good with all that. I think the hard part is people get like so worried about, am I investing right? Do I have it perfect? Where spend less than you make, get out of debt, put it in a fund and set it. Forget it.
I'm okay with that concept, you know, and there's some debates in the book and you know, when, when… if we haven't gotten there, we've got a series on investing coming out and we go deep in understanding what you invest in, how it impact your financial plan, where to keep it. And he goes to the same type of concepts.
We have our own spin on it. It's okay. It doesn't really make a difference, you know, I'm with him. I like Vanguard because Vanguard, the people that own the funds on Vanguard, it's a very simple, cheap thing. But I'll tell you right now, their technology kind of sucks. Well, I mean, most financial technology sucks, but, I mean, like, they're they're they're pretty pretty boring.
Bri
It's pretty ugly to look at. Honestly.
Dr. Jay
It’s old, okay. I mean, they don’t put a lot of time and effort into it. There's no fireworks coming out when you buy stuff. There's no fancy apps, no nothing.
Bri
Okay. But even like when we log in and we see it like it just looks, I don't know, I don't like the look of Vanguard, which is a petty thing. I use Fidelity. I like how Fidelity looks better.
Dr. Jay
Yeah. And at the time, you know, Fidelity and Vanguard now are fighting over who's got cheaper fees. And I'm good with that. Like, keep on that fight. Like, you know, like, just keep going. There's some difference in how the companies are structured and that's why he picks Vanguard. And that makes sense. If I if somebody asked me & they want to debate Vanguard feel I'm like, cool you like the ones got green versus red.
I don't care. It's not going to make a difference on your portfolio. It's not going to make a difference in your outcomes. It just depends on which structure you like. I think as he starts diving into things, know, he starts kind of answering questions that he's gotten in his blog and all the things. All in a good place.
But really all he's saying is spend less than you make, grab that VTSAX and chill. And he does that over an entire book. But I mean, that's like.
Bri
Hmm.
Dr. Jay
That's like… am my missing anything from the book or is that it?
Bri
No, that's he just repeats that over and over and over.
Dr. Jay
It's not a bad thing to do. Like, yeah, now some of my kind of personal takes on this. I want you to figure out your life first before you just figure out an investing plan that's just kind of one of my spins on it. Also, you know, if you haven't caught it yet, we did a book club on Die With Zero.
It changes some of your structure. Just being childfree changes some of your finances, but most of the book will apply and people can debate on this and go, well, do I need a financial advisor? Not if all you're doing is get out of debt. Stay out of debt. VTSAX and chill. Now we can talk about taxes, insurance, a bunch of other life stuff, long term care.
You know how this fits. But from a core financial standpoint, if you read The Simple Path to Wealth and just didn't read another financial book, I think you're okay. You with me Bri?
Bri
Yeah, I agree. It was very, you know, cut and dry into the point and got it. Like you can easily do that. And he does talk about different advisors in there and says he doesn't like them, which is… That's a fair argument, you know. You don't have to like them. I used to be on that train, too. Now look at me. I'm here.
Dr. Jay
Well, I think one of the things that he is diverse is the difference. And he does talk a little bit about kind of you can buy something for hourly or something. You know, you can get a little help here. They're cool. I think the advice-only model he would probably be more along with then what's in the book because it's really a new model.
His whole point is don't pay for simple investing. I agree with him. Yeah, you shouldn't go to a financial advisor just for investing. That's why what we do is comprehensive financial planning. We do the whole thing and particularly talking about that ever sort of childfree folks. But if you want to just pick up the book, read it and put everything in it, call it a day.
I'm good with it. I mean it, you know? Yeah. Let's make sure your wills, your beneficiaries. We have some insurance things, but I'm good in general and people who read the book then go, well, then I never need a financial planner. You might not. I'm just being truthful. You might not. Now, that being said, what the book's good at is how to gain money.
It's not necessarily good on how to spend money or how to deccumulate your money. That's where I probably spend half my time with clients on my like how to spend money rather than how to save. And that's where it shifts. I think also The Simple Path to Wealth has been embraced pretty heavily by the FIRE community. It doesn't fit 100%, 100% in the FILE community as much of you know, how do I find that life balance of where am I going and this and different things? That's okay. That is just an academic debate. I think it's okay for your finances to be simple and boring. People will read the book and be like, “Well then what do I do when I get more money?” The same thing. It can be that boring.
If you want to dive in deeper, you can go into, you know, some of the other books around investing. We'll get to, you know, The Little Common Sense Book of Investing, A Random Walk Down Wall Street, some of those things. But you're going to come back to about the same solution. You're just going to read a couple more books.
And that's why his book works. It's literally the simple path. If you haven’t read it, pick it up, read it, or pick up the audiobook. The next book we're going to do, we're actually going to go into the classics range. We're going to end up going back to Napoleon Hill, Think and Grow Rich. If you haven't read that one, fun historical book on motivation and thought process, and we're actually going to discuss how we make decisions for life, what matters, what doesn't, but we’re also going to discuss how a lot of the stuff that Napoleon Hill was doing almost 100 years ago now influenced a lot of motivational things. I mean, you were just talking about social media, half the stuff on Tik Tok and motivation actually just could have just been ripped out of the Think and Grow Rich book at least. So we will pick up on that and go from there.