Member-only story
My Personal Take on “The Simple Path to Wealth” book: Is It the Ultimate Guide to Financial Independence?
When it comes to financial independence (FI or what the author calls F-You Money), many of us are lured by the notion of a “simple path.” That’s precisely what Jim Collins promises in his book “The Simple Path to Wealth”. But as someone who has spent a good amount of time understanding investment, economics, and the nuances of financial freedom, I found myself questioning: is it really that simple? And more importantly, is this the guide for everyone?
What The Book Offers
“The Simple Path to Wealth” is undoubtedly an excellent introductory course for anyone new to the world of investment and personal finance. Collins uncomplicates the often confusing lingo and intricacies of how to handle your money. He talks about the idea of “F-You Money” — that magical number that allows you to live life on your terms. The freedom to say “no” to things you don’t want to do and “yes” to things that you’ve always wanted to try.
In fact this is what Financial Independence means. It’s not about retiring and sipping mojitos on the beach all day long. It’s about being able to say “no” as often as you want.
The basics of the book can be summarized from a chapter towards the end where Collins outlines his advice to his daughter on how to handle finances for the first ten years of her adult life. From avoiding debt to saving and investing at least 50% of your income in index funds like VTSAX, the book offers a no-frills roadmap. The ultimate goal? Financial independence, which Collins defines as having 25 times your annual expenses saved up.
The US-Centric Approach
As much as the book does well to simplify, it also seems a bit limiting in its scope. For starters, it’s very US-centric. It heavily features financial vehicles like 401(k)s, Roth IRAs, and Traditional IRAs, which might not be applicable to those living outside of the United States. While the central tenets of the book — save, invest, avoid debt — apply universally, the particulars can vary greatly depending on your location.
