The Simple Path to Wealth

How Boring Decisions Make You Rich

If you’ve been reading my posts for a while, you know I love two things: building wealth and keeping life simple. Usually, the financial industry tries to tell us those two things are incompatible. They tell us we need complex derivatives, expensive advisors, and 12-screen trading setups to get ahead.

But then there’s J.L. Collins.

I just wrapped up reading the 2025 Revised & Expanded Edition of his classic, The Simple Path to Wealth, and it is the ultimate refresher on why complexity is the enemy of wealth building. As Collins states:

“The simple truth is this: The more complex an investment, the less likely it is to be profitable.”

From Dad Letters to Bestseller

One of the most charming parts of this book is its origin story. Collins didn’t set out to write a finance classic; he originally wrote these chapters as a series of letters to his teenage daughter, Jessica. She wasn’t interested in money (like most teenagers), but he wanted to ensure she had a roadmap when she was ready.

In this new 2025 edition, we actually get a “full circle” moment. After years of resisting the boring advice, Jessica has finally “given in” and is living the path herself.

As a parent, this is reassuring. While my four year old is way too busy with Bluey, my older two are in high school (boy does time fly)! On some days they humor me, but let’s be honest, they could care less about dad’s investing passion. Nonetheless, I’m hopeful the conversations (and actions) will be a roadmap for their success later in life.

Alright, back to the story…

The Big Idea: Wealth is About Freedom, Not Ferraris

Collins makes it pretty clear. The goal of money isn’t to buy more stuff; it’s to buy control over your time. He calls this “F-You Money”, the amount of cash you need to be able to walk away from a job, a boss, or a situation that drains you, without a shred of panic.

As Collins writes:

“Money can buy many things, but nothing more valuable than your freedom.”

The 3 Steps to Wealth

In a world of “get rich quick” schemes and crypto-hype, Collins strips the roadmap down to three non-negotiable rules. If you get these right, the rest is just noise.

1. Spend less than you earn. (This is the fuel)

2. Invest the surplus. (This is the engine)

3. Avoid debt. (This is the brake)

It sounds almost too simple, doesn’t it? But if you cannot master step one, no amount of investment knowledge can save you. On the flip side, once you master step one, the last two are a happy byproducts.

The Portfolio: The Ultimate Minimalist Strategy

For those of us who love researching stocks (like my “Dow Dividend Fund”), Collins offers a challenging counter-narrative: Stop picking stocks!

His strategy is the definition of “set it and forget it.” He argues that you don’t need to find the needle in the haystack; just buy the haystack.

• The Accumulation Phase: 100% VTI (Vanguard Total Stock Market ETF). You own virtually every public company in the US. It’s self-cleansing (bad companies drop out, new ones get added) and comes with an extremely low fee.

• The Preservation Phase: 75% VTI / 25% BND (Bonds). To smooth out the ride when you retire.

Pretty simple, right? That’s the whole book summed up in one practical step; Invest as much as possible in the VTI ETF, then go live your life.

The Best Kept Secret: Doing Nothing Beats Doing Something

Here is the stat that should make you question everything you see on social media:

According to studies cited by Collins, simply investing in a total stock market index (like VTI) outperforms 83% of actively engaged investors - including the professionals.

That alone has me questioning everything!

Let that sink in. The people who do this for a living, who have teams of analysts and Bloomberg terminals, lose to a simple index fund the vast majority of the time.

So, why don’t we hear this more often?

Because “buy VTI and go to the beach” doesn’t sell ads. Collins explicitly calls out programs like CNBC throughout the book, noting that their entire business model depends on you feeling anxious, uninformed, and glued to the screen. They need you to believe that investing is complicated and fast-moving.

The truth is the opposite. If you just ignore the noise, turn off the TV, and buy the index, you don’t just survive, you win.

A Dividend Investor’s Take

Now, I know what you’re thinking. “I love dividends! Is this strategy for me?”

And to be honest, this is my biggest struggle with the book. Collins does mention that you can supplement his strategy with some dividends, but it’s clear he’s thinking more traditional. Enter the 4% rule.

A lot of the book is dedicated to the “4%” rule, which is a common retirement strategy that suggest you live off (you guessed it) 4% of your portfolio each year.

This means you are reducing your portfolio by 4% every year and hoping you have enough to last.

Us dividend investors think different.

We want to build a portfolio that creates a growing cashflow. Enter Dividends.

While Collins isn’t a dividend investor, the framework works for us, too. If you prefer cash flow over selling shares, you can simply apply his “Simple Path” logic but swap the investment vehicle.

• Instead of VTI (Total Market), you might swap in VIG (Dividend Appreciation) or, in my case, SCHD (US Dividend Equity) to prioritize yield and quality.

• I don’t think a fund like SCHD or VIG will perform as well as VTI over the long haul, but then again it doesn’t have to. The dividend income is nearly 3x the income from VTI.

• Of course risk is involved in all investments, but I’m sure Mr. Collins would argue that VTI is the safest option.

With that said, Mr. Collins does give us a nod.

In fact, there is a small, seldom-mentioned paragraph in the book that secretly validates the dividend investor’s ultimate goal, living purely off the income without touching the principal. Collins writes:

“If I were to seek absolute security, I’d hold 100% VTSAX (or VTI) and spend only the ~1.25% dividend it throws off.”

He admits that living off the dividends is the “absolute security” play. The only difference is that we dividend investors prefer a slightly higher yield (3-4%) so we don’t need millions upon millions to make the math work!

Final Takeaway: Simple is Not Easy

Here is the honest truth that most people miss: Investing is simple, but it is not easy.

A simple money strategy (spending less than you earn) and a simple investment (VTI) are technically all you need. But pulling that off for 20-30 years? That takes discipline. It takes long-term thinking and a dash of frugality in a world that wants you to spend everything you have.

It requires creating small daily habits, like sticking to a budget and automating your deposits, that add up quietly over time.

Spoken like a dad on the baseball field, this game takes a mental toughness that many struggle with. When the market is up? You stick to the plan and keep investing. When the market crashes and everyone else is panicking? You stick to the plan and keep investing.

It’s a test of will, not skill. As Mr. Collins says,

“The tough ones will wake up rich.”

Until next time, keep walking!

Jeremy ✌️

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Disclaimer

This article is for informational and entertainment purposes only. I am not a financial advisor, broker, or tax professional. The information provided reflects my personal opinions and experiences as an individual investor and may not be accurate or current. All investment strategies and investments involve risk of loss. Any ideas presented may not be suitable for all investors and may not take into account your specific investment objectives, financial situation, or needs. Past performance is not indicative of future results. Always conduct your own due diligence and consult with qualified financial professionals before making any investment decisions.