To quote The Office’s great Kevin Malone, “why waste time say lot word when few word do trick?”. Jim Collins, in his book The Simple Path to Wealth, lays out a very simple and straightforward method to accumulating enough money to live off (with a very high probability) indefinitely. The book can be broken down into a succinct list of bullet points:
Don’t sell VTSAX
At some point, probably multiple times over your lifetime, your nest egg will drop by ~50%
When this happens, calm the heck down, and don’t sell
If you want to own a portion of your portfolio on bonds or international stocks, go right ahead
Aim to save at least 50% of your income
Be sure to utilize all of the tax advantaged buckets that you can (IRA, 401k, HSA, etc.)
Advisors=bad, low fees=good
Lump sum investing, in general, will beat dollar cost averaging. So if you have money, invest what you plan to invest, don’t wait and do it now
Bob’s your uncle! It really is that simple. If you follow these small nuggets of advice, you’ll do very well financially.
Look at a graph of the US stock market over the last 120 years. It’s incredible! Sure, it drops here and there, but the drops that once seemed traumatic, would eventually be absolutely dwarfed and appear to be seemingly miniscule. At the bottom of the trough from the 2008 financial crisis, the S&P 500 sat at 680. Now, about 10 years later, is trading at just over 2,800. The value has gone up 4x in 10 years! That’s incredible. The power of the stock market is seemingly unstoppable when utilized correctly (i.e. buying and holding for the long run).
Even though this book can be distilled in a small amount of words, I highly recommend reading it from the horse’s mouth. Jim Collins writes with a trustworthy conviction and level of confidence that really hammers home the point in a way that a short list of bullet points can’t.