Warren Buffett, the world’s greatest investor, coined this phrase. I believe what he means is that the principles to make money in the equities markets are simple, but in order to continually make money, it takes diligence and hard work. This is why it is not easy.
As a twist on this idea, I propose that these really are two paths. Ultimately, the choice is yours. Here is how I describe these two paths and tell you how to begin down your chosen path.
The Simple Path to Wealth
First, you should manage your own money. Managing your own money is not difficult and helps you save even more money for your future. If you want the simple path, read the seminal text on the topic, The Simple Path to Wealth by JL Collins.
The book proposes that you invest in index funds for the long term. Do not worry about market fluctuations and continue spending less and saving more. JL Collins recommends investing in index funds based on your risk tolerance, timeline, and general gauge of the market. He recommends the following funds with Vanguard.
- VTSAX – Total Stock Market Index Fund Admiral Shares
- VBTLX – Vanguard Total Bond Market Index Fund Admiral Shares
Quit Like a Millionaire
If the simple path works for you, but you want more ideas, read Quit Like A Millionaire by Kristy Shen and Bryce Leung. In their book, you will learn about geographical arbitrage and the yield shield to further protect yourself from market downturns.
Rule #1 Investing
Do you want to take the not easy path, manage your own investments, and invest in wonderful businesses that meet with your ideals and have meaning to you? This is the path that we chose. It requires more effort, but the rewards can be double, triple, or more than the simple path.
I plan to write at length about our investing ideas, but if you choose this path there are three books to begin on the not easy path.
- Invested: How Warren Buffett and Charlie Munger Taught Me to Master My Mind, My Emotions, and My Money (with a Little Help from My Dad)
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!
- Payback Time: Eight Steps to Outsmarting the System That Failed You and Getting Your Investments Back on Track
In these three books, you will learn the strategies that Phil Town uses based on the principles of Warren Buffett and Charlie Munger. Invested is the latest book. Phil’s daughter, Danielle Town, wrote it after learning from him. Together, they updated and modified the Rule #1 strategy in this newest book. I believe it is easier to grasp and helpful before you tackle the harder books.
The Future
Phil released Rule #1 in 2006. I purchased Rule #1 in 2007 and read it several times since. He released Payback Time in 2010 and I read it shortly after release. Phil and Danielle released Invested in 2018 and I read it the week it came out. The Simple Path to Wealth came out in 2016, but I did not hear about it and read it until last year. JL Collins suggested Quit Like a Millionaire, which released last year and I read it after reading The Simple Path to Wealth.
I love reading, learning, and studying about investing. Hopefully, sharing my passion in investing with you helps you build your own path to wealth.
Time to Save, Swim, and Invest!
Mr. SoS
It’s hard to argue with Vanguard’s low cost funds like VTSAX to easily diversify without getting hit with big fees.
At least it’s caused some innovation in the space, we’ve found some good alternatives with Schwab and Fidelity that have the same or lower expense ratios and no min investments. VTSAX is still the original king though!
Collins has it right with the simplicity.
Chris@TTL recently posted…Buying the Total US Stock Market: VTSAX vs VTI and Alternatives
Chris, thank you for your comment. It is probably not too much to worry about for the buy and hold strategy, but what concerns me is if Schwab and Fidelity are making money instead through the spread and timing of the investments. This would only be an issue with market orders, though.
Thanks for sharing the post. The way you narrated the post is good a and understandable. After reading this post I learned some new things about investing. Keep posting. Please let me know for the upcoming posts.
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