Tuesday 15 October 2019

The Simple Path to Wealth - JL Collins - A Review


The author of the book advocates a self-directed approach to investing and money management. In short, it tells you to avoid debts, save half of your income, invest your savings in low-cost index funds and ignore the news about the up and down of the stock market.

In the book, you will learn that the investment industry is interested in making you feel that the whole investment process is complex. For this reason, you would need help to be successful in the stock market and your only solution is to go for those advisers that, without you knowing, will earn money for themselves at your expenses.

The book also offers specific recommendations for self-directed investing, and carefully explains the rationale behind his conclusions. He also translates studies and stats into easy-to-understand English.

The only thing that the author said that an investor needs to do is to invest in the following two funds:
  • VTSAX - Vanguard Total Stock Market Fund
  • VBTLX - Vanguard Total Bond Market Fund
With these two funds, we are basically covered and the more we invest in it, the better. However, to invest in both of the above funds, big capital is needed. So, the author provided an alternative which is the equivalent ETF:
  • VTI - Vanguard Total Stock Market ETF
  • BND - Vanguard Total Bond Market ETF
It is possible for us to invest in both ETF but there will be more works that need to be done before we are able to buy it. I have a bit of experience in this and will share what I know in the near future.

Other information given may not be suitable for us, Malaysian. Stuff such as 401K, Roth and Malaysian low-cost index fund does not really exist in Malaysia. But still, it is a very good read to understand that investing can actually be very simple.

Personally, I have learned a lot from reading this book and my investment strategy is mainly based on the author's concepts of investing but with a tweak to suit our Malaysian market. If you are interested to read this book, you can buy it here.

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