Podcast Summary: The Long View – JL Collins: The (Still) Simple Path to Wealth
In the May 20, 2025 episode of The Long View hosted by Morningstar, Christine Benz engages in an insightful conversation with JL Collins, renowned author and financial blogger. Collins discusses his latest endeavors, notably the revised edition of his acclaimed book, "The Simple Path to Wealth." This detailed summary encapsulates the core discussions, key insights, and valuable conclusions drawn from their dialogue.
1. Introduction to JL Collins and His Work
Christine Benz opens the episode by reintroducing JL Collins, highlighting his influential works in personal finance. Collins is best known for his first book, "The Simple Path to Wealth," published in 2016, which has sold over a million copies. He recently released a second edition of this book, collaborating with his daughter, Jess, and a new publication titled "Extraordinary Stories of People like You on the Quest for Financial Independence."
Quote:
“JL’s first book, the Simple Path to Roadmap to Financial Independence and a Rich Free Life, was published in 2016 and has since sold more than a million copies.”
— Christine Benz [00:36]
2. Revising The Simple Path to Wealth
Collins shares his motivations behind revising the original book. Initially hesitant, fearing the book's timelessness would render updates unnecessary, he ultimately appreciated the enhancements, including a new "Toolkit" section and a poignant case study about financial downfall.
Quote:
“I think the physical book itself will be a much better product. Just like Pathfinders is a stunningly good looking book physically.”
— JL Collins [02:10]
3. Preserving the Core Philosophy
When asked if he altered any fundamental aspects of his original advice, Collins affirms the consistency of his philosophy. The revised edition primarily expands on existing content, incorporating reader questions and providing additional clarity without changing core principles.
Quote:
“What the new edition allowed me to do is add to it and respond to some of the questions that since 2016, readers have been kind enough to share with me.”
— JL Collins [03:25]
4. Engaging with the Q&A Section
Collins expresses mixed feelings about certain audience questions. He is particularly fond of addressing misconceptions, such as doubts about the strategy's longevity.
Quote:
“If you read the Simple Path to Wealth, you should come away with the understanding that this is an approach you're going to implement for decades.”
— JL Collins [04:33]
5. The Case Study of Tom: A Lesson in Financial Resilience
A notable segment discusses a case study about Tom, a real friend and client of Collins. Tom's financial collapse in his 60s, despite losing his home and becoming bankrupt, exemplifies the importance of a solid financial foundation and a resilient mindset.
Quote:
“The moral of Tom's story, in my mind, is that even then, it doesn't matter. Because the truth is, if your needs are simple, it really doesn't take much to keep body and soul together.”
— JL Collins [07:23]
6. Financial Independence vs. Retirement
Collins clarifies his stance on the FIRE (Financial Independence, Retire Early) movement, emphasizing that financial independence is about having options rather than mandating early retirement. He advocates for leveraging financial freedom to choose whether to continue working based on personal fulfillment.
Quote:
“The whole point of being financially independent is that you have options to do what you want.”
— JL Collins [10:33]
7. Evaluating the 4% Withdrawal Rule
Addressing concerns about the 4% withdrawal rule over extended periods, Collins defends its conservativeness. He references the Trinity Study, noting that the rule remains robust even beyond 30 years and encourages flexibility based on individual circumstances.
Quote:
“The financial advisor Bill Bagan... in his mind very, very conservative... I think it's a pretty safe and comfortable thing to do.”
— JL Collins [13:37]
8. Key Principles of the Simple Path
The trio delves into the three foundational principles of Collins' approach: aggressive saving (ideally 50% of income), debt avoidance, and investing in low-cost index funds. Collins recounts his personal journey, underscoring the transformative power of a high savings rate.
Quote:
“My savings rate is what saved me.”
— JL Collins [16:29]
9. The Feasibility of a 50% Savings Rate
Collins addresses skepticism surrounding the practicality of saving half one's income. He argues that while challenging, especially in high-cost living areas, many can achieve significant savings by prioritizing investments and maintaining disciplined spending.
Quote:
“If you believe you can, you're right. If you believe you can't, you're right.”
— JL Collins [18:43]
10. The Role of Growing Income in Financial Success
Expanding on his principles, Collins acknowledges that increasing one's income is a powerful avenue to financial stability. He encourages pursuing careers one excels in, which naturally lead to higher earnings and greater investment potential.
Quote:
“If you become good at something, then you tend to love it, but you also earn more money almost by default.”
— JL Collins [21:58]
11. Strategies for Debt Paydown
Collins emphasizes eliminating debt as a cornerstone of financial independence. He provides guidelines based on interest rates, advocating for aggressive debt repayment when rates exceed 4% and suggesting investment over debt reduction for lower rates.
Quote:
“Job one becomes getting rid of the debt.”
— JL Collins [23:04]
12. Perspectives on Student Debt
The discussion shifts to the contentious topic of student debt. Collins criticizes the accessibility of student loans, linking it to rising college costs and advocating for personal responsibility in managing such debts.
Quote:
“Offering kids... access to huge amounts of money, borrowed money at that point in their life, with probably a real lack of understanding of what they're taking on, I think is unconscionable.”
— JL Collins [26:44]
13. Navigating Volatile Markets
Given the economic uncertainties in April 2025, Collins reiterates his steadfast belief in maintaining a simple, long-term investment strategy. He advises investors to "tie themselves to the mast," emphasizing that market downturns are temporary and should not deter long-term plans.
Quote:
“The worst thing you can do is sell in any crash or any downturn and that will not change.”
— JL Collins [29:14]
14. US vs. International Market Exposure
Collins defends his preference for investing solely in the US market through broad-based index funds like VTSAX. He argues that US companies often have significant international revenues, providing inherent global exposure. Additionally, he cites the US market's transparency and lower expense ratios as key advantages.
Quote:
“If you're invested in the US, you have international exposure.”
— JL Collins [33:05]
15. Addressing Inflation and Stagflation
When discussing inflation, Collins points out that stocks historically serve as effective hedges. He acknowledges the challenges of stagflation—a combination of slow growth and high inflation—but maintains that maintaining a disciplined investment approach is crucial during such periods.
Quote:
“If you're going to follow the simple path to wealth, you have to be aware of that and prepare for it.”
— JL Collins [36:49]
16. The Role of Inflation-Protected Bonds
Collins expresses skepticism towards inflation-protected bonds (TIPS), citing their lower overall returns compared to traditional index funds. He prefers focusing on stock investments for wealth accumulation, suggesting bonds be considered primarily during the withdrawal phase.
Quote:
“If somebody said, yeah, I definitely want to have these things in my portfolio, okay, but I don't feel the need.”
— JL Collins [39:22]
17. Lump Sum vs. Dollar Cost Averaging
Collins clarifies his position on the investment strategy debate. While advocating for lump-sum investing when a significant sum is available, he fully supports dollar cost averaging (investing incrementally from earned income) as a practical and effective approach.
Quote:
“If we're talking about a lump sum, if you come into an inheritance... I am a hundred percent lump sum, do it all at once because the odds favor a better result.”
— JL Collins [41:06]
18. The Market as Beer and Foam
In a memorable metaphor, Collins likens the stock market to a mug of beer, where the "foam" represents market noise and short-term fluctuations, while the "beer" symbolizes the underlying value of the companies. He urges investors to focus on the latter for long-term success.
Quote:
“The stock market... there is the stock market of the financial news... that's all the noise you hear on the TV... it's the beer that investors are interested in.”
— JL Collins [43:49]
19. Private Equity and Diversification
Addressing contemporary investment trends, Collins remains cautious about private equity and non-public company investments. He emphasizes the superior diversification and historical performance of broad-based index funds like VTSAX over more speculative ventures.
Quote:
“Wall street is always coming up with new ways to invest and typically those new ways to invest benefit the people who sell them more than the investors.”
— JL Collins [46:52]
20. Caution on Assuming Past Performance Continues
Collins warns against relying on historical returns, acknowledging that past market performance, while impressive, does not guarantee future results. He advocates for realistic expectations and disciplined investing irrespective of market conditions.
Quote:
“I am a conservative kind of guy and I would never suggest and strongly suggest that nobody think that they can rely on 12% a year.”
— JL Collins [48:48]
21. The Time Machine Metaphor: Market Resilience
One of Collins' favorite analogies, the "Time Machine" essay, illustrates the stock market's ability to rebound from severe downturns. By projecting historical resilience, he underscores the value of long-term investment commitment.
Quote:
“Imagine that you're back with a bunch of friends around the campfire in 1975... it still delivered almost 12% a year.”
— JL Collins [51:52]
22. Reader Feedback and the Book's Impact
Collins highlights the most gratifying feedback from his readers: transforming complex financial concepts into accessible, actionable advice. He emphasizes that his primary audience—those previously disinterested in finances—now find clarity and empowerment through his work.
Quote:
“The people say to me, I never could understand this financial stuff. I try, and I just couldn't get it. And now I do.”
— JL Collins [53:08]
Conclusion
The episode concludes with heartfelt thanks to JL Collins for his contributions and an encouragement for listeners to engage with their own financial journeys through the principles discussed. Collins' emphasis on simplicity, disciplined saving, and long-term investing offers a steady blueprint amidst the complexities of modern financial landscapes.
Closing Quote:
“I'd be willing to bet a whole lot of money that my daughter and people like her who follow the simple path to wealth and don't tinker at the end of 10, 20, 30, 40 years are going to have a much stronger performance than those who do tinker.”
— JL Collins [53:08]
For those interested in delving deeper into JL Collins' financial philosophies and strategies, his books offer extensive guidance aligned with the principles discussed in this episode.