JL Collins: The (Still) Simple Path to Wealth

Summary

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.

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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]

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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.

Transcript

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[Christine Benz]

Hi and welcome to the Longview. I'm Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar. Today on the podcast we welcome back author and blogger Jael Collins. 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. He has recently come out with a second edition of the book, which his daughter Jess collaborated on. In 2023 he published another book called Extraordinary Stories of People like you on the Quest for Financial Independence. Jl. Welcome back to the Longview, Christine.

[Jael Collins]

It's a pleasure to be back. Thanks for having me.

[Christine Benz]

Well, it's a pleasure to have you here. So we want to talk about the newly revised edition of the Simple Path to Wealth. The first Simple Path was published in 2016 and it seems so timeless to me, which I do think helps explain its really consistent popularity since its first publication. What were the main things that you wanted to address in the new edition since you published that first book?

[Jael Collins]

Well, you know, first of all, I've got to tell you a little story about that. In the middle of doing the revisions for the new book, which was candidly a much bigger project than I had anticipated and a whole lot more work than I had counted on. I was talking to a friend of mine and he said, you know, the great thing about the Simple Path to Wealth is you're never going to have to update it. It's timeless. I didn't say anything to him at the time, but I'm thinking to myself, why am I doing this? But to your point, now that it's done, I'm very glad that I did it because I think it is a better book. It's an expanded book. There's a new section in it called Toolkit. There's a new case study in it that's one of my all time favorites about what it looks like when everything financial goes wrong. So I'm thrilled with it and I'm also thrilled, you know, I now have a publisher, author's equity, and I just think the. Well, I know the physical book itself will be a much better product. Just like Pathfinders is a stunningly good looking book physically. And Simple Path to Wealth, because it's self published, has always been okay. But I looked at Pathfinders, I thought this is just an entirely new level. And now the new edition of Simple Path will have that going forward as well.

[Christine Benz]

Yeah, I'm curious, were there any aspects of the 2016 Simple Path where you realized you got it wrong the first time or maybe you wanted to kind of tweak your take?

[Jael Collins]

Not at all. In fact, one of the key points is the basic philosophy. The basic approach from the original to the new edition is exactly the same. 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. And in fact, I think I mentioned there's an FAQ in the new edition where I actually took some of those questions and specifically addressed them. And sometimes the questions refer back to the book content, but sometimes it's outside of the book content. So, yeah, there's nothing I felt I had to take out because it didn't work. Which of course validates in my mind at least the approach.

[Christine Benz]

Yeah, definitely. I wanted to ask about that Q and A section. I had fun reading through it. I'm curious, are there any questions when you hear them coming your way, that you kind of rub your hands together because you really love tackling them, or you feel like you have an especially differentiated take on a question?

[Jael Collins]

You know, not so much. It's more. There are questions occasionally that cause me to slap my forehead. And you're probably not going to find those in the FAQ necessarily, although at least one is, and this is a pretty common one that I get. And that is especially seeing as the Simple Path to Wealth has been out for a decade, is it still valid? And that always kind of makes me roll my eyes a bit. Because 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. And if I thought for a moment that anything would change that, would change that and make it invalid or substantially change it, then there wouldn't be a Simple Path to Wealth. I've got my daughter on it. I'm on it. She'll be on it. For the next 50 years, you know, unless our capitalist economy goes away and we can no longer own individual stocks and funds. So it is designed to be timeless. And so if you read it and it resonates with you, part of what should resonate is the fact that you don't have to worry about it going out of fashion, like so many other investment approaches probably do. The other more humorous one that I don't bother to address is anybody who reads my work knows I'm a big fan of lowcost broad based index funds. And VTSAX from Vanguard is my favorite. And on a distressingly regular basis, I. I get the question, do you think I ought to invest in vtsx? At one point on the block, I responded that said, you're yanking my chain, right? I mean, you. You have to be kidding me.

[Christine Benz]

Well, now there are VTSAX and Chill T shirts and sweatshirts and stuff. So you're definitely in the vanguard of kind of encouraging people to use simplicity to their benefit.

[Jael Collins]

I wish I'd come up with that T shirt. I think it's great.

[Christine Benz]

I wanted to touch on that case study that you referenced with your friend Tom first. Is Tom a real human being?

[Jael Collins]

Tom is a real human being and he's a real friend. Tom was actually a client of mine back in the 1990s, and Tom is a couple of years older than I am, which puts him in his mid-70s. But yes, he's absolutely a real human being.

[Christine Benz]

Okay, so he has had a life. Reading through that case study, it's hard to believe that an individual could have had so many different experiences and relocations and spouses. But maybe talk about why you wanted to include his story in the book.

[Jael Collins]

Well, mainly, Christine, because one of the other recurring not questions, but concerns that I get and that I see in the whole financial independence space is this obsessive worry that people have about whether they are successfully securing their financial future. And in my mind, the irony of that is the kind of people who are reading my book, the kind of people who are engaged in the financial independence community have the least to worry about because they're already paying attention. I think that is a huge worry for large numbers of Americans. But those people are not reading my book and they're not tuning into the financial community. If you are, you're probably going to be okay. And Tom Canally was one of those people who did not. I mean, Tom and I never talked about this before I started writing about it, and that wasn't until 2011. So Tom is, I think, an extreme example, which is what makes it interesting, but probably not atypical of what a lot of Americans who haven't paid attention might be facing. And 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. And Tom loses everything. He goes into his 60s, jobless, his home is foreclosed and he's forced out and he's bankrupt. And yet Tom, when I met him and to this day, and through all that trauma, is probably the single happiest guy I know. But that's the attitude that he brings to it. And that attitude also attracts amazing people into his life.

[Christine Benz]

So the lesson, the broader lesson you think is that people should stop obsessing about their financial management, that it's really sort of like what's inside of us that determines our outcomes and our contentment in this world. Is that how you want people to come away from that story?

[Jael Collins]

Yeah, it's VTSAX and chill. You know, if you, if you follow my advice even a little bit and go into broad based, low cost index funds like vtsax and contribute on a regular basis, you're going to be fine. You're going to be fine. And you mitigate risk in lots of different ways. But one of the big ways is in your mind, is understanding that, you know, even when things go bad, life can still be good.

[Christine Benz]

Right. So you referenced Jael, your connection with the FIRE community, the financial independence, retire early community. Can you talk about that? And the fact that you said your work has never been about retirement, even though you've been very much aligned with fire.

[Jael Collins]

Right. So I love the acronym FIRE because I think it's very clever. But I don't actually use it because as you just pointed out for me, it's never been about retirement. So already in our conversation, you've heard me refer to it as the FI community, the financial independence community. I have nothing against people who choose to early retire. In fact, my friends are working towards that and many of them have accomplished it and are living it. It just wasn't particularly my life. And in many ways you could argue I'm still not retired. I mean, I. I just put a lot of work into revising a book.

[Christine Benz]

Right.

[Jael Collins]

Candidly, I didn't have to do that, but I've always enjoyed working and I think I'm fortunate in doing that. But. And I frequently I'll get people who will say to me, you know, I'VE achieved financial independence, you know, looking at these formulas. But I don't want to quit my job. I love my work. And I say, well, there's nothing written here that says just because you're financially independent, you have to stop working. If you enjoy working, then by all means continue working. The whole point of being financially independent is that you have options to do what you want. By the same token, incidentally, I get people who occasionally will say, I am in this soul crushing job and I am not quite financially independent. If you think about the 4% guideline, right, I need $50,000 a year to live on and I've got a million dollars invested, but that's only going to throw off 40 grand. But I'm in the soul crushing job. And my response to that is always, I'd quit yesterday. For a couple of reasons. One is if you look at the Trinity study, a 5% withdrawal rate works. I want to say from memory 87% of the time I'm going to roll those dice. It's not the 96% of the time that 4% gives you, but 87% are pretty good odds, especially if it gets me out of a soul crushing job. And the second question I ask these people and anybody who's in this position is by almost by definition smart and resourceful, is do you think there is some way you could figure out how to earn an extra $10,000 during the course of the year doing something? And I've yet to have anybody say to me, no, no, I don't think I could do that. So there you go. I say retire, pull the 5% if push comes to shove, or if you're nervous about that, figure out a way to make the other 10 grand that doesn't get you the 4% and, and get out of that soul crushing situation.

[Christine Benz]

So following up on the 4% guideline that a lot of fire or FI people take and run with, it seems that there's some concern among retirement researchers who I talk to about taking the 4% guideline and extrapolating it to a really long time horizon, like 40 or 50 years. What are your thoughts on that question?

[Jael Collins]

So, a couple of things. Certainly it's true. If you, again, if you look at the Trinity study, you can see situations where if you start to go out past 30 years, because that 4% of the time I've referenced a moment ago that it's successful 96% of the time. And there's obviously the implication that 4% of the time it's not. So if you go out more than 30 years, the number of times that the money doesn't last begins to rise, but it doesn't rise dramatically. 4% is extraordinarily conservative and I think it was the financial advisor Bill Bagan who came up with it originally and it was in his mind very, very conservative. And if I'm recalling correctly, he even encouraged clients to do more, which is one of the reasons for my comment for the soul crushing job situation. So I think if you look at the fact that it is a very conservative withdrawal rate to begin with and that even when you go out beyond the 30 years, the number of times the money doesn't last is pretty modest. I think it's a pretty safe and comfortable thing to do. Now, having said that, I have always said, and I'll repeat it here, that nobody should take their investments, set up a 4% automatic withdrawal and then forget about it for two reasons. The obvious reason is, well, even in 30 years, 4% of the time that might not work out. And of course the next 30 years might be different. So maybe the percentage doesn't work out to be something larger or maybe something less. But the other reason that people don't think about is again, if you look at the Trinity study, there's a huge percentage of cases far larger than those that fail where it succeeds in a spectacular fashion. And if over 30 years you are only withdrawing 4%, you are going to wind up. If you start with say a million dollars with 8, 10, 15 million dollars at the end of the day, that's great if you want to have that at the end of the day. But I would think more people would want to enjoy it and increase their spending along the way. So two reasons to pay attention so you don't run out of money and in the more likely event that you enjoy the extra money that it's earning.

[Christine Benz]

Yeah, that's a key point. I wanted to talk about the key principles of the Simple Path which are save as much as you can, ideally 50% of what you make, avoid debt and invest in a basic index fund. As you reflect on those three key principles, which would you say has had the biggest impact in your own own financial success?

[Jael Collins]

Well, because for a large portion of my life I made all kinds of financial mistakes. Very clearly my savings rate is what saved me. And I, as you alluded to, when I came out of college and got my first professional job, which paid me the princely sum of $10,000 a year. Of course, back in those days, $10,000 a year was bought a Lot more stuff than it does today. But in the event, I just randomly said, you know, I. I want to begin building what I called FU money. I had no concept of early retirement or financial independence then, but I knew I wanted to have a financial cushion. And I just arbitrarily said, you know what? I can live on $5,000 a year. That's a whole lot more than I was living on in college. So I'm going to live on that and I'm going to invest the other 5,000. That's what I did. So that is the thing that is probably the most powerful thing. Had I been smart enough and aware enough to embrace index funds earlier, ironically, the first index fund that Jack Bogle created came out in 1975, which was the first year I ever bought stock. So theoretically, I could have been in the beginning, but I didn't know that. And even 1985, when I was finally introduced to the concept of indexing and index funds and Van Guard, I still wasn't smart enough to embrace it. It took me another 10, 15 years to get there, but that's a problem with me. But for people today, especially young people like my daughter, who isn't going to go through all the mistakes I went through, and who started with, in her case, vtsax from the get go, the path is going to be a lot smoother. And her savings rate, which has been aggressive, is just going to get her there faster.

[Christine Benz]

So you referenced that 50% savings rate. I guess the question is how realistic it is. Especially, you know, if you think about people who might be sole earners who are living in expensive metropolitan areas. Is it an unrealistic target, do you think, for many people?

[Jael Collins]

You know, probably for some, but probably for far fewer than who think it is. And if you read Pathfinders, which is my third book, and it's a collection of about a hundred stories from all over the world, people who read the Simple Path to Wealth and embrace the principles in it. One of the things that's a little bit stunning and very gratifying to me is how humble many of the beginnings for these people are, how little they had to start with when they started down this path. You know, I mentioned that my first job paid me $10,000 a year and I lived on 5,000. I'm sure if I'd had the Internet in my hand, which thankfully I didn't, it would have been filled with people telling me that Jay couldn't possibly live on $5,000 a year. And frankly, by doing that, a lot of My peers were living a bigger lifestyle than I was because they weren't doing that. But as somebody smarter than me once said, if you want extraordinary results, you're going to have to do something different than the ordinary. And a high savings rate is one of those things. What's striking to me is I get a lot of pushback on 50%, saying, oh, you know, that's just unrealistic. And as Henry Ford would have said, you know, if you believe you can, you're right. If you believe you can't, you're right, you're right. And so for that person, it will always be unrealistic. But interestingly, I get pushback from the other direction, too, where people say 50%, I'm saving 60, 70, 80%. You know, what. What kind of piker are you at only 50. So, and the other point I would make about the 50% is, you know, a lot of people think that this approach is one of deprivation. I've never felt that way. And as my income expanded, I maintained that 50%. And what people somehow fail to notice is that, yes, my amount of dollars I had available to invest rose dramatically when I was making $20,000 a year. Well, I was now investing 10, but so did my. My lifestyle. Instead of living on 5,000, now I was living on 10 and. Or I was making 100 grand. Well, now I'm living on 50 and investing the other 50. And of course, when you cross the Rubicon and you're financially independent, well, then saving becomes optional. So, you know, you get to a point where, as my friend Pete, Mr. Money Mustache, once told me, everything's free. And by that, what's meant is that within reason at least almost no matter how much you're spending, your investments are replacing it at a faster rate.

[Christine Benz]

Do you think growing income could have been another one of those key principles in Simple Path? Because it does seem like if you can concentrate on that, assuming you're doing something that you enjoy, I mean, that is a really magical thing too, right?

[Jael Collins]

You know, that's a good point, Christine. And I'm kind of wishing that was part of the faq, as you say it, because you know that's valid. And in fact, if you're doing something you love or even that you're just good at, which is the other way to approach your career is, you know, there's some pushback on this idea that you should find something to do that you love. And you know that that's great if you can, but that's not necessarily available to a lot of people. I never particularly loved what I did, but I was good at it. And if you become good at something, then you tend to love it. But you also earn more money almost by default. So that's a great point.

[Christine Benz]

Debt pay down is in the book as well. You have some helpful breakpoints when people are trying to decide whether to sort of prepay debt or more aggressively pay down debt. Can you walk us through those and also talk about the impact of the prevailing interest rate environment and how that might or might not change the calculus?

[Jael Collins]

Right. So my basic intention is that if you have debt, you are never going to be financially independent. So if you have debt, it's an emergency. It's what Mr. Money Mustache calls your hairs on fire. And I agree with that. So job one becomes getting rid of the debt. And there's no easy way to do that. You simply have to organize your life in such a fashion that you are not only are no longer adding new debt, but that you are spending less than you earn, which of course is a basic principle to becoming wealthy. You're spending less than you earn, and you're taking that excess and applying it to the debt and paying it off. And of course, the bigger a chunk that you can divert to your debt, the better off you are. So again, going back to, say, 50%, if you can figure out how to live on 50% of your income, and you probably can for the vast majority of people listening to us, then you've got the money to push towards the debt. By the way, the great silver lining in that is, once you've blown the debt out, you've already learned the habit of living on half of what you're making. And now you simply take what you were paying off the debt with and begin investing. And then your wealth begins to build. But before you can begin your wealth, you have to dig yourself out of the hole. Now, I think what you were referring to in terms of the interest rates is there. One of the questions I'll get is, well, you know what? If I. If I have debt that is really low interest, wouldn't I be better off investing the money which will theoretically at least give me a larger return? So a good example of that is, suppose you have a mortgage from a few years ago, that's 2, 3, even 4%. Well, in that case, and I break it out by percentages, but I'd say, okay, if you're carrying debt that's less than 4% interest, maybe it's not such a bad idea to keep that debt and invest the excess money instead. The key thing of course, is organizing your life to have excess money. If you're somewhere between 4 and in my mind, maybe 6%, that becomes more of a difficult question to answer. Theoretically, your investments will do better than 6% over time. But having caring debt should feel very uncomfortable to everybody listening. So personally I'd be inclined to begin blowing off debt at that point. Anything above 6%? Absolutely. Job one blow off the debt before you do anything else.

[Schwab Representative]

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[Christine Benz]

Maybe you can talk about how students and their families should decide whether and when to take it on. Because you know, you do see a very good ROI for investing in college. So how do families decide how to approach that decision?

[Jael Collins]

You know, Christine, I. I don't know that I have a good answer for that because as you point out, going to college does have a great return on investment. There's a lot of pushback on that idea, but I don't think I'd particularly be personally willing to give that up or to have my child give it up. We were in a position to put our daughter through college. The deal, by the way, was we paid for the essential things and anything extra she had to work for. I put myself through college, but it was easier to do in those days. I think it's criminal that student debt has become so widely available because there's a direct link between the fact that student debt is widely available and the fact that college is so expensive. Because anytime you take anything and you can convince people to borrow money to buy it, whether it's a house or a car or an education or now I'm reading that even doordash food deliveries you can do. You can borrow money. Oh dear, you're going to make it more expensive because more people will be willing to pay more money because it doesn't feel so expensive when you're borrowing it. It. So it's just a very pernicious cycle and I'm a big believer in personal responsibility and if you take on debt, paying it off. But having said that, the idea of offering kids who are 17, 18, 19, 20 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. Now, to answer your question, which I haven't, and I appreciate I haven't, is what do you do about it today? I don't have a good answer to that.

[Christine Benz]

Well, I appreciate that honesty, because I don't either. I did want to switch over to discuss investing as we're taping this in early April 2025. US stocks have been incredibly volatile, mainly due to some of the tariff concerns. You've argued that periods like the current one make having a very simple investing plan more important than ever. Can you talk about that?

[Jael Collins]

Sure. Well, I think the real argument that I would make is that what's going on in the world at any given time should matter to your investments. So a great example is during COVID So one of the core parts of my philosophy is that you tie yourself to the mast the market's always going to be volatile. Corrections, bear markets, even crashes, are a perfectly normal part of the process, and they should be expected. Right. And the thing that triggers those is always going to be different. But what's not different is that we always recover from it and the market goes up. What's not different is we never know when it's going to happen. It's not predictable. So the idea that, as Warren Buffett said, once you can dance in and out of the market successfully is nonsense. Nobody can do that. So my philosophy is you buy and you hold throughout, regardless of what goes on. Now, during COVID I got a lot of pushback on that. And of course, the market crashed. The crash didn't last very long, but nobody knew that at the time. And people said, you know, JL what you say makes sense, but this is a pandemic. People are dying. This time it is truly different. And I said, yes, it's truly different and tragic and the people are dying, but in terms of your investments, it is not different at all. I had no idea that that crash would only last six weeks or whatever it was. I think it's the shortest in history, but I knew that it wouldn't last forever. Now I'm hearing the same thing around the political uncertainty. This time is different. Yeah. J.L. everything you said made sense up until now, but what's going on politically is different. Well, first of all as we sit here recording today, I think the market's down year to date, 5, 6%, something like that. So we're not even in a correction. I have no idea what it's going to do. I don't know if this is as low as it's going to go and then it continues its rise up or if we're going to see something much uglier. Candidly, I am very concerned about the tariffs. I'm not in favor of them, but I don't really know, first of all, how they are actually going to unfold. And I don't really know what that impact is going to be. But what I do know is that even if it leads to a crash, that too will pass. And the best approach is to tie yourself to the mast. Don't panic. The worst thing you can do is sell in any crash or any downturn and that will not change. And if at some point in the future, Christine, I'm wrong about that, then where you're invested won't make any difference because things will have gone so off the rails that, you know, unless you've been building a bunker and stocking guns and ammunition and canned goods, you know, if my approach fails and that's the approach that will be working.

[Christine Benz]

That'Ll be the least of your problems. In other words. Right. I wanted to ask about us versus non us. As you've said, you are a big proponent of someone owning the total US market and calling it a day. But I'm curious and I have a feeling I know what you'll say, but isn't non US exposure starting to look more attractive now that we're seeing the US pursue very different economic policies than other developed markets? It seems like international diversification could be more valuable than ever over the next decade, especially if the dollar declines.

[Jael Collins]

Yeah. So first of all, if you look over the past 10 years since I first published A Simple Path to Wealth, the approach that I use, which is 100% US, has just crushed it because the US market has outperformed everything.

[Christine Benz]

Right.

[Jael Collins]

But that's not why I recommend it. It's not like 10 years ago I had a crystal ball and could see that the US Market was going to crush it. I had no idea. Just like I don't know if the US will continue to dominate going forward or if International will have its day in the sun. So far this year, International is definitely having its day in the sun, where our market again, as we're talking, is down 6%. I think Europe is up 15, 18%. So yeah, I mean international is, is having its day in the sun. And that's typical. By the way, if you look back over history, the US hasn't always dominated and suddenly now it stopped. There have been other times in the past where international has done better than the US market. So this is not a surprise. And how long the international market does better than the U.S. just like 10 years ago, I had no idea that the U.S. was going to be so dominant. I have no idea. You might be right. Maybe the coming decade is the decade of international, maybe not. I don't know. There is no way to know that. But none of that informs the reason that I invest only in the US the reason is that if you're invested in the US you have international exposure. If you look at vtsax or any total stock market index fund, it is cap weighted, which means the largest companies make up the largest portion of the fund. And those companies, those large US companies are almost by definition international. Many of them generate more than half of their revenue and profit internationally. So when the rest of the world prospers, that's good for those US companies, that's good for me as an investor. The other two reasons, there is no stock market in the world that is as transparent as the U.S. now, there are still to be clear, you know, you still have things like Enron that pop up occasionally, although that's been a while. But it is in that sense the most honest market in the world. So I feel more secure there. And the third reason is becoming less of a case. But investing in the US is simply less expensive in terms of expense ratios. Now that's becoming less of an issue because Vanguard has been steadily reducing the expense ratio on their international funds. So that gap is closing a little bit. Having said all that, and I was saying this 10 years ago for those people listening to us who disagree with me and say, no, I really want to have international exposure, you'll get no great argument from me. I don't think it's a bad thing to do. I just personally don't feel the need.

[Christine Benz]

Sticking with current events, I wanted to ask a little bit about inflation or lack of inflation. In the book you note that stocks have been a really nice long term hedge against inflation, that they've outrun inflation. But what about stagflation, which has been getting some serious attention recently, this idea that we could have slow economic growth with some accompanying inflation as well?

[Jael Collins]

Yeah, stagflation is, it's a very bad thing, a very difficult time. And I came of age in the 70s as an adult. And that was the decade of stagflation. And it was a very, very difficult decade for stocks. I forget the exact numbers, but you know, it was probably the. Well, of course we had a lost decade between 2000 and 2010. And by lost decade, I mean a decade where stocks performed poorly. And I think the 70s were the last decade before that that, that happened. And that does happen on a regular basis. If you're going to follow the simple path to wealth, you have to be aware of that and prepare for it. There's not a whole lot you can or want to do in terms of your investments. Again, in my view, you want to stay the course. So if I look at the 70s, and I was just beginning to invest in the mid-70s, what I would have done and what I would have recommended is keep investing, even though your returns might be a little bit disappointing because you are accumulating shares at a very attractive price. Certainly if you'd done that from 2000 to 2010, you would have been richly rewarded now. And so will another decade like that come? Absolutely, it probably will. Are we about to begin it now? Well, possibly. I mean, if we do in fact trigger stagflation, as some think, and I, and I understand the reasoning behind believing that, then, then yeah, this might be the decade, but that'll be a wonderful decade, especially if you're a new investor to, to accumulate shares as is any decline. I've, I've said, you know, the best thing that can happen to a new investor who's just beginning to build their wealth is a massive market crash because it puts everything on sale for an old guy like me. Maybe it's not so good.

[Christine Benz]

You talk about in the book how the three things we should have in our investment toolkits would be kind of a broad market index fund, an equity index fund, a core bond fund, and some cash. I'm curious where, if at all, inflation protected bonds would fit in that mix. Do you think it makes sense to add some additional inflation protection for that portion of the portfolio to help protect the fixed income portfolio's purchasing power?

[Jael Collins]

You know, it's been a long time since I've looked at tips or considered them. As I recall, you pay a pretty big price to own them in terms of lower interest rates overall. I guess I look at inflation and as you alluded to earlier in our conversation, stocks are a very impressive inflation hedge over time. And I think a simple bond fund to balance the stocks when you've already accumulated your wealth. I'm a believer in 100% stocks when you're building your wealth because you're going to be adding money, so whenever it drops, you're buying shares at a lower price and stocks give you the best performance over time. And then when you're living on the portfolio, then maybe you want to add some bonds. So just to make that clear. But yeah, I remember looking at tips and thinking, I just don't see the appeal. And I haven't looked at them a while, candidly, but as far as I know, nothing fundamental has changed with them. So again, if somebody said, yeah, I definitely want to have these things in my portfolio, okay, but I don't feel the need.

[Christine Benz]

One lively ongoing debate in the investing space is whether investing a lump sum or moving the money in gradually is the better course. You are on Team Lump Sum. You don't like dollar cost averaging too much. I guess a question that I always have in this debate is most of us just earn our money in dribs and drabs and we have it to invest in dribs and drabs. So is it kind of an overdone discussion in that most of us do not have a lump sum at our disposal?

[Jael Collins]

Yeah, and this is when I first started writing about this. This is something I wish I had made more clear, that as you said, I'm in camp lump sum, which means invest it all at once. But that's only if we're talking about investing a lump sum. As you pointed out, if you don't have a lump sum investment and you are investing out of your earned income over time, which is by definition dollar cost averaging, I'm hugely in favor of that. I did that. My daughter did it. Almost anybody following the simple path to wealth is going to do it. I suggest that not only that you do it, that you automate it, meaning that that money comes out of your bank account every month or every couple weeks on a regular basis, so you don't have to make the decision to do it, it just happens, which will make it a lot easier to live through market declines. So, yeah, huge, huge fan of dollar cost averaging in that scenario. But if we're talking about a lump sum, if you come into an inheritance or if you sell an asset and you suddenly have a big chunk of money and you want to put it into something like VTS X that conversation about whether you should dollar cost, average it or put it in all at once. I am a hundred percent lump sum do it all at once because the odds favor a better result. The stock market goes up roughly 75% of the time. Three out of four years it goes up. Unless if you dollar cost average, the only time it's going to work out better is if you happen to be investing over time when the market is declining. Again, the odds are that you're going to be investing over time when the market's increasing because it increases 75% of the time. And in that case, if your dollar cost average, you're simply paying more for your shares every month or every week or hour long, whatever the period of time is that you're, that you're doing that. So I look at that and I say, well, you know, I gotta make a choice. And there are odds here. If I go lump sum, I got 75% chance of winning. If I go dollar cost averaging, I got 25%. Now, no matter what choice you make, clearly it can turn out to be the wrong choice. But personally, I'm going to go with the 75%.

[Christine Benz]

You have this wonderful metaphor in the book of the market as a combination of beer and foam. Can you walk us through that?

[Jael Collins]

I'm chuckling because when I came up with that, with that, I, I didn't really think too much of it. I just said, okay, this is not a bad way to illustrate what I want to illustrate. But it really seems to have resonated with a lot of people. Maybe I didn't appreciate how many beer drinkers are reading the Simple Bath to. Well, but anyway, the market is really two things. Just like if you're looking at a mug of beer, it's two things. So if you look at the mug of beer and let's assume it's in a mug that you can't see through, right, there's going to be foam on top and underneath that foam there's going to be beer. And depending how that beer was poured, there will be more or less foam. More or less beer. And if you look at the stock market, there is the stock market of the financial news that you see day to day, the traders, you know all, what's the market going to do next? What stock should you buy now? What should you be selling? All of that speculation, all that is what I call the foam. Underneath all the foam is the beer. And the beer is the actual companies that we own, the actual companies that provide services and make products, and if they do that, well, generate profits that pay us as owners. It's the beer that I'm interested in, it's the beer that investors are interested in because we're long term, we want to own that business or a small part of it. When I own vtsax, I own a piece of every publicly traded company in the United States of America. And everybody in those companies, from the factory floor to the CEO is working to make me richer. That's the beer. The stock price is in large part based on how well that company is doing, based on the beer. But the wild fluctuations you see in the stock price of any given company, that's the foam, that's the traders doing all of the things that traders do day to day, that's all the noise you hear on the TV and all of that. If you're smart, you're just going to ignore because you don't care what the market's doing in a week or a year or tomorrow or later today, because you're in it for the beer.

[Christine Benz]

Investing in private equity and private credit is in vogue today. Or at least investment firms would like us to get excited about it. It seems like one good argument in favor of private equity is that fewer firms are choosing to go public and there are more and more of what are called unicorns, these companies that aren't public but have market values of over a billion dollars. So what's your respons that that in order to, you know, be truly diversified, you would need exposure to some of these non public companies.

[Jael Collins]

So my, my first response is that 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. And almost without exception, they are far more expensive to invest in than a basic broad based, low cost index fund. So are you going to miss some unicorns as you call them, if you don't invest that way? Sure. You're also going to miss some probably major failures as well. BTS X as I alluded to earlier, has 3,600 companies in it. I think that's plenty. You know, when I first started investing and mutual funds were, were not such a big deal and index funds were just beginning, if you looked at the standard device diversification, what you heard was you want to pick out about six to eight industries and within those industries you want to pick out one or two companies. And that's how you want to build your portfolio. And at the end of the day you'll have somewhere between 12 and 20 companies, which is plenty to be diversified and more than enough to try to track. Certainly the last thing is true. But what's striking is that in Those days owning 20 companies was enough to be diversified with one purchase of VTSAX. I own 3600 companies, so I have plenty of diversification, plenty of opportunities for growth, and the track record of the total stock market supports that. In fact, for the last 50 years it's returned over 12% annually on average, which stuns even me.

[Christine Benz]

You caution in the book though that people should not just plug 12% into their personal finance calculators and assume that they're going to keep getting that right. It's important to note that it may not be in that same vicinity going forward.

[Jael Collins]

Yes, it's very important. When I first wrote the Simple Path to Wealth, by the way, and I was looking at a 40 year time horizon, the number for that one, I thought, well, I'm going to look up how did they do over that 40 years? Because I didn't know. And kind of to my horror, the actual number was 11.9%. And I agonized over that in terms of writing the book because to your point, I didn't then and I don't now want to for a moment suggest that you should do any kind of planning that assumes you're going to get 12% a year because that's a pretty stunning amount. At the same time, that's what the market actually returned over those 40 years. And those 40 years were pretty damn ugly. There are a lot of really bad things that happened in them, both in the world in general in terms of wars and conflict. And economically we had stagflations in that period of time. We had the crash in 0809, we had 1987 Black Monday, the biggest one day crash in history. So this was not some golden period. And yet, and then doing the new edition and had 50 years to look at it, I thought, well, I wonder what's happened there. And in fact it's even better. It turns out that over that 50 years it's now up to 12.2%. And that includes, you know, a major bear Market in 2022, I think it was, and the crash of COVID you know, the epidemic. So it's an amazingly robust number. But I am a conservative kind of guy and I, you know, I would never suggest and strongly suggest that nobody think that they can rely on 12% a year. But that also goes back to our conversation about the 4% rule of how conservative that is. And I think the 4%, if I remember correctly when he came up with that, the thinking was the market would do about 8% a year, you'd pull 4% and then the other 4% would go to Continue building your portfolio for the future. So I think that's probably a more reasonable way to think about it. But it's also striking again to look at the past half century at this point, with all the turmoil that we've gone through and economic and otherwise, and realize just how powerful a wealth builder the stock market is if you hold it through the bad times.

[Christine Benz]

Yeah. What's the essay of yours about? It's like the market hot tub time machine or something like that, where you talk about all these things, terrible things that happened, and yet the market was still pretty good.

[Jael Collins]

That's one of my favorite blog posts, actually. It's called Time Machine and the Future Value of Stocks. And in that post I say, you know, imagine that you're back with a bunch of friends around the campfire in 1975, which again is the year I started investing. And somebody says, you know, I see this guy, Jack Bogle, just created this new thing called an index fund. It's going to track the s and P500. I wonder how that thing's going to work out over time. And in my story, I pipe up and they say, well, as a matter of fact, I can tell you, because I just got back from 2015 in my time machine, so I can tell you exactly what happened in the last 40 years. And then I go through. There was stagflation and there was. And I just list all of the bad things that happened. And of course, everybody around the campfire was a whole boy. Thank God you came back to tell us this. There's no way we're going to invest in this stupid s and P500 index fund now. And of course, the kicker is, well, it still delivered almost 12% a year.

[Christine Benz]

When you reflect on all the feedback you've received on Simple Path over the years, what's kind of the best compliment that you get from readers about the book?

[Jael Collins]

Oh, that's kind of easy. And I love the question. So thank you. Far and away the best compliment I get. And I get it on a pretty regular basis. 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. Now it makes sense to me. And that was kind of my point because I wrote the Simple Path for my daughter, who at the time at least had no interest in this financial stuff. But she was smart enough to know that she needed to get it right, or if she did get it right, that her life would be much better, had far more options available, but she just had zero interest. And so that's my target market. What's interesting to me, Christine, by the way, is of course, that's not my only market because it's a financial book and people who love this stuff also read it. And, you know, the people like my daughter read and say, wow, this is a simple path. This is exactly what I'm looking for. I actually understand what's in this book. I'm going to implement it. And then the other people who are into this stuff are always saying to me, you know, jail, if only you did this, if only you added this thing. If you. And you've done a little bit of this today, Christine. And what about tips, you know, what about international? What about if we tinker this way or we tinker that way? And my response to them is, well, you know, tinker all you want. That's not the simple path. 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.

[Christine Benz]

Well, J.L. thank you so much for being here today. Today, congratulations on this new edition of Simple Path.

[Jael Collins]

Thank you, Christine. I appreciate all the great questions and it's always a pleasure hanging out with you. I hope we get to do it again in the grill world one of these days.

[Christine Benz]

Thank you so much, JL the pleasure was all mine. Thank you for joining us on the Long View. If you could please take a moment to subscribe to and rate the podcast on Apple, Spotify or wherever you get your podcasts, you can follow me on social media, hristinebenz on X or ChristineBenz on LinkedIn. George Cassidy is our engineer for the podcast and Cary Gretchik produces the show Notes each week. Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us@thelong longvieworningstar.com until next time. Thanks for joining us.

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[Jael Collins]

Join thousands of your peers in Chicago for two days packed with cutting edge research, expert insights and thorough analysis.

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