The Godfather of FI Talks Fatherhood | JL Collins | 149 - Catching Up to FI: Financial Independence for Late Starters

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
like most parents, I want my kid to havethe best possible life, but I, caused me
to, to push this on her way too soon andway too hard and, and have the effect of
turning her off to all things financial.
And Jane, my wife, used to say she'sabsorbing more than she lets on.

(00:22):
I used to say, well, she's not lettingthat on at all because it doesn't appear
to me that she's absorbing any of it.
But that's what inspired me to writethose letters that ultimately became the
blog because a friend of mine said, youknow, you gotta put this stuff on a blog.
And I was just thinking it's a greatway to archive the information for her.
But now, you know, it turns out she wasabsorbing it when she went to college.

(00:49):
that was an epiphany for her becauseshe thought everybody grew up hearing
this stuff and she said, you know, dad,that's when I suddenly realized how
important what you had been tellingme really is because all of my friends
were panicking around money and thecost of college and what they were gonna
do when they got out, and they justhad no understanding of this stuff.

(01:11):
And so that's kind of what Ithink turned her philosophically.
But, so she has been on the Simple Path.
She's in her early thirties now.
She just quit her corporate job last fall.
Yeah, I don't know if it's gonnabe permanent or like I did.
I step away from my corporatejobs periodically for sabbaticals.
But, you know, she has, I don'tknow if she's completely financially

(01:34):
independent, but she has what Icall FU money, which allows her
to make bold decisions like that.
I didn't quit my last corporate jobin 2011 saying I wanna be an author.
I quit my last corporate job in 2011saying, I don't wanna do this anymore.
I had no idea what I was gonna donext, other than I wanted to get this

(01:56):
information down in black and whitefor my daughter, who I turned off to
hearing it in case by the time shewas ready to hear it, I was dead.
So the information would still beavailable to her and you know when,
when a friend of mine read it andsaid, Hey, this is pretty cool.
You ought to put it on a blog andshare it with your family and friends.
Like, I'd heard of blogs before, I'dnever seen one, but I thought, that's

(02:20):
a great way to archive the information.

(02:53):
Hello and welcome backto Catching Up to FI.
I'm Bill y with my co-host JackieCumminsky, and today we have one
of our favorite guests on the show.
He leads the pack with regards to thenumber of times he's been on the show now.
And Jackie, what can we sayabout J Collins other than, he
is a friend and to, not just tous, but to the entire community.

(03:16):
Yeah, we're so lucky to have him today.
So let me do a proper introduction'cause we do have new cohorts of
people that may not be as familiar,so let's make sure they are.
So, our guest today is J Collins.
He is referred to affectionatelyas the godfather of FI.
He's created a wide following throughhis popular blog, JL Collins, nh, which

(03:36):
was originated out of letters he wroteto his daughter Jessica, which I totally
relate because I did a little bookmyself dedicating it to my daughter.
So I will forever feel that connection.
who wrote the first letters toher daughter, book you or JL?
I think JL has me.
'cause he started his blog.
He was writing his blog andI just put it in book format.

(03:57):
I think it was 2013 thatI put it in book format.
But he'd been writinghis blog for a while.
And I would definitely notthink that it's even rises to
the occasion of what he's done.
So aside from that though, bill,you know, he is the author of three
books, Pathfinders, which we loved.
And we actually interviewed oneperson that was in that book and

(04:17):
we're about to interview a second one.
So it's funny how our paths crossed his.
Second book is how I Lost Money inReal Estate before it was Fashionable.
And then of course, the Iconic,the Simple Path to Wealth.
With nearly a million copies soldacross 20 languages, this book has
inspired countless readers to rethinktheir relationship with money and

(04:42):
achieve true financial independence.
after we've had this Global Pandemic,three presidential administrations.
A turbulent stockmarket, crazy volatility.
And this year, the current tariff Doesthe simple path to wealth still work?
Well, that's why we brought in JL Collins.

(05:03):
He joins us again to talk aboutthe updated and expanded version
of The Simple Path to Wealth.
This new version, it not only updatesand reflects the realities of 2025,
which has been a little bit crazy, butit also introduces brand new sections
like a punch list that distills thebook's wisdom into actionable steps, a

(05:23):
comprehensive frequently asked questionsaddressing crypto meme, stocks and
inflation, and an organized resourcelist to make implementation even easier.
So he's making it even moreeasy for our listeners.
And for his readers.
So j it is an honor to have youwelcome back to Catching Up to FI.
What a great introductionfrom both of you.

(05:45):
Thank you so much.
That's very kind and, and a greatoverview of the new edition of the book.
Jackie.
I don't know what else I can say.
Thing to me right outta the bat is youfinished this book around January, right?
That was when the lastwords went to paper.
And since that time, we've hadquite the interesting economic

(06:06):
history or living history.
Do
you wish you'd finish the bookfour months later and had all of
this other stuff to talk about?
No, because all this other stuffdoesn't matter, Jackie touched on the
core question that I get a lot, and I,it kind of makes me chuckle candidly,
but I understand that it comes froma place of fear, and that is whenever

(06:28):
something untoward happens, whetherit's a pandemic or the turmoil around
tariffs the question comes up is, is thisgonna derail the simple path to wealth?
Is the simple path to wealth still valid?
And I chuckle at that because the simplepath to wealth is a strategy that is
designed to be implemented for decades.

(06:48):
And the idea that some turmoil in themarket and there is always turmoil in
the market, it's a perfectly naturalpart of the process would derail that
would make it a fairly ineffective path.
So no, the simple path to wealth issound and it continues to work, and it
wouldn't have mattered if I finishedthis four months later and accounted

(07:11):
for the current turmoil becauseat some point in the not tradition
future, there'll be some other turmoil.
It's just the nature of the beast.
The trigger that upsets the marketis always different, but the process
is always the same, which is themarket goes into a tizzy for a while
and then it recovers and continues.

(07:31):
Its relentless march up making those whostay the course wealthier and wealthier.
Yeah.
And I have to believe that your book,being out for 10 years and having
so many people that read throughthat book with your mantra of, you
know, just stay the course, stay thecourse, that that may have helped a
lot of people through these last fewmonths at the beginning of the year.

(07:54):
'cause you were really hitting home thatthe market will have its ups and downs.
You know, you wrote the first bookafter 2008, which was horrible.
Probably way worse than it is right now.
But I think hopefully when people readthat, that helped them get a really,
really good, solid foundation of whatto do when they see the market drop.

(08:15):
So you may have saved alot of people from selling.
His meditation certainly did.
Oh, we used that.
We used it.
Jl we didn't tell you this, but so it wasApril 2nd was what, what did they call it?
Liberation day.
Okay.
That was the day that theysupposedly implemented the tariffs.
Okay.
The day after, which was a Thursdayand a Friday, the market dropped.
Like I could feel my heart droppingeven though I didn't do anything.

(08:38):
It didn't feel good.
I have emotions, but a lot of people,that's when everybody was just so
afraid of what was happening becauseit was dropping so much, so fast.
And Bill and I, we recorded a quick littleepisode and we had it out by Monday before
the market opened and we were recording.
We're like, we need toinclude j Collins meditation.

(08:59):
So that was alreadysomething you knew that.
helpful for people and remindedpeople to kind of calm your nerves.
You know, emotions are, automatic.
So it's so hard to not feel something,but you help people understand you don't
need to do anything and take a moment withthis beautiful meditation that you did

(09:20):
to calm your nerves during these markets.
So it still is something thatis a go-to for a lot of people.
Well, that's great to hear.
I, I recorded that quite a fewyears ago before Covid actually.
So this would be the second bit of turmoilthat meditation has been around for.
But yeah, I understand thesethings are scary at least for,

(09:41):
people who are new to all of this.
But this is what you do when the marketis in turmoil and when the market's
dropping, is gonna determine whetherthe market makes you wealthy or leaves
you bleeding at the side of the road.
Because if you panic and sell,you're gonna be left bleeding
at the side of the road.

(10:02):
It's kinda like hurricanesin Florida, right?
Very, very scary and dangerousthings, especially if you panic
and run out in the middle of one.
But if you hunker down and wait itout, probably not gonna be a problem.
And the sun comes out again.
And if you're gonna live in Florida,you should expect these things.
These are perfectly natural occurrencesand turmoil in the market, whether it's

(10:26):
a 10% correction or a 20% bear marketor something more serious, these are
perfectly natural parts of the process.
The triggers are always different.
They always, especially if it's a crash,they always, like at Covid, I remember
people telling me, you know, JL, weget it, that you're supposed to stay
the course, but this time, surely thesimple path isn't gonna work anymore.

(10:50):
People are dying.
You know, economies all around theworld are shutting down completely.
And my response to that was, no,this is not different this time.
The trigger is different.
The trigger is unique.
It's tragic that people are dying.
We haven't had a pandemic likethis in a hundred years, but that's

(11:10):
the only thing that's different.
How the market will react isgonna be exactly the same.
In fact, if anything that was differentin Covid is how quickly the market
recovered after that particular drop.
So right now as we're recording this, themarkets have pretty much recovered from
the turmoil around that, that April 2ndannouncement, one of the tragedies, by the

(11:34):
way, is I, I had a comment on my blog froma woman who in the midst of when it was
down, pretty much the worst, which is not,I think it went down at one point 19%.
So very close to that she soldand she commented on the blog.
She said, I learned thatI just can't take this.
I understand that I shouldbe able to, but I can't.

(11:56):
And so I, I sold and I've justdecided equities are not for me.
That's a perfectly validposition to take, you know, as a
philosopher, say, know thyself.
The tragedy here is that shedidn't go through that process of
understanding that about herself.

(12:17):
When times were good.
So right now, the market has recovered.
If this has terrified you, what'shappened in the last couple of months, the
market's just giving you an opportunity,at least as we're recording this today
to change your allocation or maybechange your approach and with little
or no damage, which it rarely does.

(12:38):
But if you're not gonna stay the coursethrough these, expected turmoils, then
yeah, you should not be following thesimple path, the wealth, and you should
not be investing in equities at all.
And there are other options you can pursueand there's nothing wrong with that.
But if you're gonna do this, it'sessential you not panic and sell.
I mean, my mother is a perfect example.

(12:59):
She realized that she couldn't be inequities and she managed to retire at 70,
but she is an individual bond portfolio.
She has done quite well beingfrugal in individual bonds
not needing to be in equities.
And I think she's seen her portfoliodouble the doubling time was
longer, but being frugal and beingindividual bonds works for her.

(13:20):
And she can sleep at night, right.
Oh, absolutely.
Absolutely.
Well, and I think that's a good point,jl that based on what's happened the
last few months and it tested a lotof people, so maybe have a little
reflection about how you felt, whatyou did, and is there anything else
you feel like you need to do based onyour risk tolerance in a bad market.

(13:41):
Well, we haven't seen a longbad market in a long time.
So these have been testing the waters.
I mean, tariffs is one thingand I want to hear your, this
is the shock this time tariffs.
I haven't seen that one before.
Do you have any particular take onthis sort of, schizophrenic tariff war?
Well, for what it's worth Ipersonally think that tariffs are

(14:03):
a terrible and a dangerous idea.
I can see the case for renegotiating someof our trade agreements with a variety
of countries, maybe a lot of countries.
I think it would be betterapproached in a different fashion.
So, I mean, I can appreciate that goaland there could be an advantage to that.

(14:26):
But I think sweeping tariffs are adangerous and bad idea now, you know.
We'll, one of the things I've learned, andI actually did a post about this recently
one of the things I've learned 50 yearsof investing is how often I can be wrong.
So, who knows?
I mean, maybe these tariffsare not to be a wonderful idea.
Maybe they'll turn out to beevery bit as glorious as the

(14:48):
president says they're gonna be.
Yeah.
What was interesting for me was itwasn't so much the tariffs as it
was the uncertainty and the trust.
'cause the market didn't changeone day to the next, but the
announcement of the tariffs did.
And it was amazing to see these,dramatic fluctuations, which I
hadn't seen, I mean, since I woke up.

(15:09):
Other than Covid, I haven't seen suchdramatic fluctuations in the market.
'cause I was pretty much agnosticand, and, and head in the sand when
the great recession occurred and Isold at the bottom, I was completely
oblivious as to what was going on.
I, the simple path to wealthhadn't come out and I needed it.
But so I, yeah, that's okay.
It's okay.
Late starters, it's a common story, butthese little shocks, and these are more

(15:33):
little shocks, we talk about them, butit, it's sort of, as you said, test the
waters to see if we can stay the course.
I.
Yeah, I think it's instructivemaybe to look at a, worse
time, 'cause these have been.
Very short term.
I mean, who knows what this is gonnalead to that's still an open book.
But looking at something like Covid,it was remarkably short term, but if

(15:55):
you go back to the 08, 09 financialdebacle, and even before that, if you
go a decade earlier to the tech crashof 2000, so if you look at, at that tech
crash, the market went down, I wanna say49%, and then in oh 8, 0 9, and I think
it got down as low as 50 negative 56%.

(16:19):
And between those two crashesthat bookend that decade, we,
you had kind of a lost decade.
The market.
Over that 10 years return something,I mean, surprisingly, not as bad
as you might think, but it wasdown like 0.63% a year on average.
So kind of a negative, a negative return.

(16:41):
And I think most people would lookat that and say, wow, that's a
terrible time to be an investor.
And if I'd known that,I would've, gotten out.
But the truth is, if you were followingthe simple path, the wealth, which
says you stay the course through thickand thin, you would've spent a decade
accumulating shares at bargain prices.

(17:01):
And then of course, after 09 themarket is by and large had a, an
incredible run for the last 15 years.
And those shares that you acquiredfrom 2000 to 2009 at remarkably
low prices would be payinghuge returns to you now, so.
If you're in the wealth accumulationstage, a market crash or an extended

(17:27):
down market is an absolute giftas long as you stay the course.
Now, if you're living on your portfolio,it can be a little tougher, but if
you've added bonds to your portfolioin that phase, as the simple path
calls for, well now, you adjust yourallocation, and that's how you take
advantage of these downturns, becausein the downturn, the percent that

(17:51):
you own in stocks is gonna drop.
'cause the value ofyour stocks is dropping.
The relative value of thebond portion is gonna rise.
So you sell some of those bond sharesto pick up some of those cheap stock
shares to bring it back into whetherit's 80 20 or 70 30 or 60 40, or
whatever your preferred allocation is.

(18:13):
So if you're on simple path,as long as you stay the course
and follow your discipline.
If anything, market declines.
Work to your advantage.
Yeah, and I would say j I'mdefinitely a living example.
So I retired about six years ago in2019, but I started most of my heavy
lifting in terms of investing in 2008.

(18:36):
And I was around smarter people thanme telling me to stay the course.
Again the simple path to Wealth wasn'tquite out there, but I, started reading
your blog shortly after that, and I canfirmly say that I would never reached
financial independence, retired early.
If I didn't have the help of thestock market and I wasn't shoving
as much money into the market as Ipossibly could through 2008, 2009,

(19:01):
and the 10 years that followed that.
So it made all the difference becausea lot of people will say, me, well,
you just started at the right time.
And I'm like, I didn't know it at thetime, but yeah, that helped a lot.
So yeah, just, and, I guess whenI see the market drop now, COVID.
And then what happened this year?
I think about 2008.

(19:21):
It makes me realize, like howimportant it is to see the
market, see it as an opportunity.
And I'm hoping that so many people inour community that might have been in the
Facebook group all these people sharing,stay the course you sharing in your
books, stay the course, that is the key.
And I have to believe that we've had someimpact on people when it comes to that.

(19:42):
But it's been a decade, right?
And I think it really doesprove that simplicity.
People are very attracted to that.
That shows in how successfulthe book has been.
Well, you struck a chord because youwrote this for your daughter, started his
letters turned into a book,and now it's been 10 years.
How is your daughter's portfolio?
Did she read the book and she'sbeen involved in this book?

(20:03):
I mean, how, how is her simple path?
Because this is all about her really.
Yeah.
I mean, it is, it is all about her.
You know, to back up the story, I,I think that getting money right
can make your life so much better.
And if you don't get money right,your life can be so much harder.
So, like most parents, I want mykid to have the best possible life,

(20:27):
but I, caused me to, to push thison her way too soon and way too hard
and, and have the effect of turningher off to all things financial.
And Jane, my wife, used to say she'sabsorbing more than she lets on.
I used to say, well, she's not lettingthat on at all because it doesn't appear
to me that she's absorbing any of it.

(20:48):
But that's what inspired me to writethose letters that ultimately became the
blog because a friend of mine said, youknow, you gotta put this stuff on a blog.
And I was just thinking it's a greatway to archive the information for her.
But now, you know, it turns out she wasabsorbing it when she went to college.
She, that was an epiphany for her becauseshe thought everybody grew up hearing

(21:11):
this stuff and she said, you know, dad,that's when I suddenly realized how
important what you had been tellingme really is because all of my friends
were panicking around money and thecost of college and what they were gonna
do when they got out, and they justhad no understanding of this stuff.
And so that's kind of what Ithink turned her philosophically.

(21:35):
But, so she has been on the Simple Path.
She's in her early thirties now.
She just quit her corporate job last fall.
Yeah, I don't know if it's gonnabe permanent or like I did.
I step away from my corporatejobs periodically for sabbaticals.
But, you know, she has, I don'tknow if she's completely financially
independent, but she has what Icall FU money, which allows her
to make bold decisions like that.

(21:58):
So I knew that she had been followingthe Simple Path, but the simple Path
is designed to be easy to follow.
You know, you don't really need tohave a great depth of understanding of
investing to follow the simple path.
You have to understand a couplebasic concepts, implement a couple
of strategies set 'em on up onautopilot, and then you're done.

(22:22):
And that's kind of whatI thought she'd done.
But when we started working onthe revision of the book together.
I suddenly realized how deeplyshe actually understood this
stuff in a way that I didn't know.
And which was of courseenormously gratifying.
And she likes to tease me today.
You know, she says, you know,dad, if I'd listened to you when
I was young, there'd be no blog.

(22:45):
There would've been no CH talks.
There'd be no books.
And Bill and Jackie wouldn'twanna interview you.
That's, that's right.
so I have a quick questionabout your daughter.
When you were saying you tried to pushit on her too early, 'cause I think I
was guilty of that and let Daddy overhere was definitely guilty of that.
But, how old was she when you weretrying to teach her this stuff?

(23:07):
Like, was she in the high chairand trying to eat her baby food
or like, how young was she?
I think she's probably in the womb.
Okay.
VTS
Right.
Some people
learn through osmosis
when they're
people, yeah.
Right.
Some people play music, you know, herewe have the Wall Street Journal, you

(23:28):
know, so no, I, I think maybe when shewas young, as young as four, maybe five.
Yeah.
We have a picture of us sittingtogether where I'm on the couch
reading the newspaper and she'ssitting next to me holding up a section
of the newspaper, which is upsidedown, looking like she's reading it.
that's pretty early.

(23:52):
it's incredible that you've done that.
Now you're doing it for generationsbecause my nieces, actually, my nieces
are graduating from high school andmoving on to college and their graduation
present this year, in the next coupleof weeks is the book Fire for Dummies
and the book, simple Path to Wealth.
Those are the two books.
And then they get a $50 bill that says ifyou do this 50 bucks a week for the rest

(24:15):
of your life, you'll be a millionaireand you're my future millionaire.
And Jackie said, you'regonna set the world on fire.
So, I mean, these are thingsthat get handed down now, not
just to your daughter, but ourdaughters, our sons, our nieces,
and that must be really gratifying.
Oh, it really is.
And what a huge advantage for thesekids to start so early, because,

(24:38):
this is a, a long-term game.
As I said, this is a strategy youimplement for decades, and that gives
you the power of compounding, whichis just tremendous growth potential.
So I, I mean, I spent decades wandering inthe wilderness, figuring this stuff out.
What an advantage to our kids that are,you know, assuming they're smart enough to

(25:01):
embrace it and not feel like they have togo out and make the same mistakes we made.
But what, what an advantage it is for mydaughter, I, and you know, for your kids.
And it's just yeah, it'skind of amazing to see,
Yeah.
So I have a question aroundyour sort of late starter,
like, so what was your career?
'cause I, I only know you as JL Collins,the godfather of FI, but you did something

(25:24):
before you started writing that blog.
Right.
And I
guess when
did you, what was your career?
When did you step away from that andthen started doing the blog and it,
it may have crossed over a little bit.
Yeah.
So I I was in the magazine publishingbusiness in business to business
magazines, trade magazines.
So yeah, that's where I spent my career.

(25:47):
And I started saving and investingas soon as, pretty much as soon as
I got my first professional job.
I, I came outta collegein the seventies and.
It was the age of stagflation.
It was really a very, very bad economy.
So it took me two years to get thatfirst professional job, and it just
happened to be in the magazine business.

(26:08):
And that sort of set the course.
And for the most part,I liked it quite a bit.
I've often said I liked working, I justdidn't like to have to do it all the time.
And so by accumulating what Ithought of, I had no concept.
In fact, it wasn't until afterI started the blog that I'd
even heard the concept of fi.

(26:28):
I just, that just wasn't a thing.
I had come across the concept ofhaving fu money in a novel by James
Clavell back in the seventies,and I thought, that's what I want.
And fu money is just enough money tomake bold decisions to be able to.
Tell someone f you ifyou need to and move on.
And so as I accumulated thatmoney, I was able to step away from

(26:51):
jobs for periods of time, whichnobody else in my world was doing.
You know, whether their job was goingwell or not going well, they just
continually had to grind it out.
'cause they didn't have thatfinancial cushion that I had.
But if I got bored or got a bossI didn't care for, or just felt

(27:13):
like, you know, I want travelfor a while, I, I could do that.
Your daughter's doing it now too.
She is.
Got the concept down.
She learned it from you.
yeah, apparently.
I mean, I mean, or shemay just be fully retired.
We, I mean, that remains to be seen,but back corporately, who knows?
But
Oh, so she
doesn't, she doesn't talkto you about her money, huh?
oh, who know?

(27:33):
We talk about it.
Yeah, absolutely.
We, we talk about it, but.
I think right now, she gottired of the corporate stuff.
She was very successful at it andmade good money, but she's very
into nutrition and physical fitness.
And so she teaches several classesat, I think three different
gyms in the Savannah area.
And she loves you know weighttraining and, kickboxing and

(27:56):
Zumba and those kinds of classes.
And they don't pay a lot of money, but,you know, they, they, they pay enough
for the day-to-day kinds of stuff, andthen the portfolio supports the rest.
There you go.
She is your daughter.
she's created her own shadowbecause living in the shadow of j
Collins, you don't get it right,that, that's a lot of pressure.

(28:19):
I don't know that she ever,she ever felt that way.
You know, I, years ago I thinkshe was still in college.
I, we were out in California, thethree of us, and I had been invited
to give a talk at Dreamworks.
And so we go over to Dreamworks.
And Dreamworks of course, madea lot of the movies that she
grew up with, loving as a kid.
So very nice people.

(28:40):
And they gave us alittle tour of the place.
And we had lunch at the cafeteria.
And then there's was a handfulof employees of Dreamworks
that, were fans of my work.
And I wanna say maybe 30 people gatheredin the conference room afterwards.
And we were doing a little q and a.
And, and Jane and Jessica andI are, are sitting up on the
dais in front of this group.

(29:02):
And of course most of the questionsare coming to me, but one woman turns
to Jessica and she says somethingalong the lines of Jessica, it
must have been wonderful growingup with this man as your father.
And Jessica sat back in her chair and shelooked at me and she looked back at this
woman and she looked at me again and shesaid, you know, not as much as you think.

(29:26):
Oh,
I think, I think all kidssay that about their parents.
They appreci you and they appreciateyou hindsight, but that's really cool
that she was on the stage with you.
And I mean that, you know, we needto have the podcast with you, your
wife, and Jessica all on at thesame time and have a, a generational
approach to this, that that onemay not have been done that often.

(29:49):
So let's put a pin in thatfor the future, Jackie.
Yeah, I think we definitely should,you know, you know, and this is
so fascinating, JI didn't knowa lot of these things about you.
I didn't know you were in the magazinebusiness, but you said you kind of
started your career in the seventies.
So to me, what's fascinating is mostpeople that grew up in the seventies,
they stayed at companies for 30 yearsand they were getting a pension.

(30:09):
But for you, that wasn't the case.
And, and, 'cause I was alwayscurious, like, well, didn't he
have a pension like everybody else?
Why is he worried about the stock market?
But you were investing in a401k, it, it sounds like, and not
depending on a pension and stayingwith one company for 30 years.
Yeah, I think actually the whole pensionthing was even the generation before

(30:31):
mine, the way I've looked at it is,the generation before mine you know,
pensions were not a thing for very long.
I think people that they're aware of themat all aware that they kinda went away.
And, I think there's some people whofeel cheated by that, but pensions
only lasted for about generationbecause the idea that a company could

(30:53):
pay all of its ex-employees a fixedamount of money until they died was
just not a sustainable business model.
And so it only lasted for a generation,I wanna say it probably started maybe
in the thirties or forties, and then bythe seventies that was pretty much over.
But in the generation prior to mine,I'm a baby boomer, and I'm not even

(31:16):
sure what the older gen, I thinkthat was the greatest generation,
the World War II generation.
I think it, those were the daysthat if you were fortunate you
went to work for a company.
And you stayed at that companyfor 30 years or whatever it was,
and you, at age 65, you got a goldwatch and a pension, and you went
on your way for my generation.

(31:39):
And, and, and if I'm an example ofit, I, I stayed in one industry.
I stayed in business to businessmagazines, but I worked for a
variety of different companies.
I went from job to job wheneversomebody candidly would pay me more
money or offer me a better position.
So job hopping was sort of thekey to success in my generation

(32:00):
or the way I thought about it.
And, but still in the same industry, itwas very difficult to change industries.
And I think nowadays not only dopeople not stay in one job for
30 years, I don't even think theystay in one industry for 30 years.
They're a lot, more mobile and flexible.
And I, I, I think that's very cool.
I think that's very exciting.

(32:20):
I would not have won it.
To work for one company for 30 years.
That sounds awful to me.
But I, you know, it would've beenfun to try a couple different
industries in my career, but thatjust was not an option on the table.
So I think there's a lot moreflexibility around, but yeah, pensions
are, are gone, but they were reallyonly here for maybe one generation.

(32:43):
Well, you know, the only, theonly constant in life is change.
Right.
what's it, well, the other constant inlife might be the simple path to wealth
because we need to know what has changed.
What changed in the book for you thatyou needed to update that this 10 year
mark, what did you find was differentand what did you find was the same?

(33:04):
Well, before I get into that,let me focus a little bit on your
comment about, what lasts, right.
Yeah.
So why, I mean, why do I think the simplepath to wealth is something that will
survive for decades and be effective in?
It is because it, it kind of aligns withhuman nature as our economy does, right?
We live in a capitalist economy, whichmeans that individuals can own property.

(33:27):
You can own a, a house, you canown a car, you can own a business.
And because we have a a market stockmarket, you can own shares and, companies.
You can be an owner.
That's what allows a simple path to work.
And if you're invested at broadbased low cost index funds, as
I recommend, V-T-S-A-X is thefund I personally invest in.

(33:49):
It's a total stock market index fund.
That means that thereare about 3,600 roughly.
This changes as companies go outof business or, or drop off the the
exchanges and new companies are created.
But there's about 3,600 publiclytraded companies in the United
States and with V-T-S-A-X, I own asmall portion of every one of them.

(34:14):
And everybody in those companiesfrom the factory floor to the
CEO is working to make me richer.
Now, some of them willsucceed and some won't.
The ones that don't fade awayand they go off the index, the
ones that succeed become a largerand larger part of the index.
'cause the index is cap weighted, whichsimply means that the bigger and more

(34:36):
successful the company, the biggerpercentage of that company the index owns.
So as long as that dynamic of peoplestriving to create products and services,
that human drive of creativity exists,and I don't see that going away anymore.
And as long as we have an economic systemthat allows individuals like us to own

(34:59):
a piece of that, then the simple pathto wealth is going to apply for the
foreseeable future through thick and thin.
What's interesting to me is you've stuckwith V-T-S-A-X and not moved to say VTI.
Why did the simple path to wealthnot become a VT A VTI and chill
where ETFs are now the thing, whydid you stick with a mutual fund?

(35:23):
because I'm an old guy andthat's what I started with.
You know, that's a,that's a great question.
So first of all, VTI, as you alluded to isthe ETF exchange traded fund, ETF version
of the mutual fund, which is V-T-S-A-X.
So VTI owns exactly the same portfolio.

(35:45):
So for anybody who owns VTI, and I getthis question all the time, can I own VTI?
Of course you can own VTI.
It's exactly the sameportfolio, and as it happens.
The expense ratio is slightly less.
I think VTSX is 0.04 and is 0.03 for VTI.
So if I were to do it over today, I wouldprobably use VTI, just for that reason.

(36:09):
I don't think it's worthnecessarily making the change.
But maybe someday I'll make the change.
But anyway, you can.
I mean, they're, they're the equivalent.
So whichever is most comfortablefor the investor is fine with me.
And by the way, I'll go furtherand say these are, are an ETF and
a fund that, that are part of theVanguard group that are Vanguards.

(36:33):
But there are other investmentcompanies besides Vanguard.
Like Fidelity and these days they all havetheir own version of a total stock market
index fund or a total stock market ETF.
And one step further, a question I get alot is, well, what about an S&P500 fund,
which is an index, attracts just the500 largest publicly traded companies.

(36:57):
That's all my 401k offers, for instance,they don't have a total stock market fund.
You know, is that okay?
Absolutely.
That's okay.
That's the fund that, that was thefund that Jack Bogle first created
in 1975 when he created the firstindex fund available to individuals.
That's the fund he owned himself untilhis death that's the fund I think

(37:19):
Warren Buffet recommends to his heirs.
So yeah, an S&P500 fund.
It's just as good.
If you look at the performance,they track almost identically.
So then the question becomes whydo I prefer the total stock market?
Just because it gives me a littlebit of small cap, a little bit of

(37:41):
mid cap, and it's kind of the samereason I add Tabasco to my eggs.
I, I like that littleextra, but the eggs still.
The eggs, yeah.
So, so j since bill was asking you about,you know, why didn't you change the fund
and this new version, I'm just curiousabout like your team and, and other,
how did you even decide what piecesyou felt like needed to be updated?

(38:02):
You know, talk about your team a littlebit and how you picked what things
to even update in the first place.
And Jessica was part ofthat team too, right?
Yeah, absolutely.
Jessica turned out to be a bigpart of it, and that was probably
the most gratifying part of thisprocess for me personally, was.
Getting a chance to work with her.
'cause that was a lot of fun.

(38:23):
But also seeing how deeply she'd cometo understand and embrace this stuff.
So the new version of The Simple Pathto Wealth as a publisher now authors
equity and the original I self-published.
So now my, my daughter likes disease.
Me.
She says, you know, dad,you have people now.
Ah,

(38:45):
now you're a big deal, right?
You have people now.
And I'm like, oh yeah, I'll, I'llhave my people call your people.
Well that's, that actually is adifference because we had to talk to
your people to get to you to do thisshow today before it was a direct link.
Now we're talking to your peopleat the at at the publisher.
So that's interesting.
You're right.
Yeah, right.
Well, I, I, I don't haveto deal with you anymore,

(39:08):
but.
just gotta show up, you know?
Yeah.
But to answer your question as tohow we chose what to change and
what to add Madeline, who is thepresident of this new publishing?
It's a new company that just startedI think they're just barely a year
old, I think maybe March of last year.
I wondered 'cause I didn't recognize
Yeah.

(39:29):
Yeah.
They were James Clear who did AtomicHabits who was very instrumental
in recruiting me to this publisher.
Madeline was his publisher at , she wasthe president of, I'm drawing a blank,
but one of the big publishing companieswhere he had published Atomic Habits.
And like most new authors withpublishers, the deals they get

(39:52):
initially are not very good.
And of course, atomic Habitswas a huge, huge success.
And he's working on a second book andof course was looking for a much, much
better deal as a now established author.
And when he was negotiating that withthe original publisher, and Madeline

(40:14):
in particular as I understand it, shewas like, I understand what you're
asking for and I understand whyit's a reasonable thing to do, but
you know, we're a large publishingcompany and we're just not structured.
We're not able to accommodate that.
Hmm.
And evidently out of thatconversation became the idea of
launching a new, smaller, morenimble publishing company that was.

(40:37):
Well, the name of this publishingcompany is Authors Equity, which
really speaks to what it is about.
Can you tell us about whatAuthors equity does that's
different from other publishers?
Well, I, it, so first of all, it's, it isbeen a real pleasure to work with them.
They are just a really greatteam and they have different
people doing different things.

(40:57):
Madeline and we're kind of getting awayfrom the original question, but lemme go
back to that Madeline, who worked withme directly, and again, I mean this is
a woman who used to be the CEO of one ofthe major publishing companies, and now
she's functioning as an editor for me.
But that's the nature ofa small company, right?
And so a lot of the new material wereideas that she came up with and she

(41:21):
said, you know, we think we ought to addthe toolkit and the FAQ and the sort of
things you touched on in the introduction.
Jackie we certainly knew we wantedto update all of the numbers.
Throughout the simple path.
We also knew that none of thephilosophy and the basic approach
was gonna change 'cause that's core.
So anyway, she was instrumentalin guiding some of that.

(41:42):
And obviously I had veto power on,on anything and everything as we,
as we went along, although I didn'tfeel the need to do that very often
'cause the ideas were just so, good.
And a lot of the ideas, by the way, cameup when we were discussing whether or
not I was gonna come on board at all.
And because I liked thedynamic of the ideas is one of

(42:05):
the reasons I came on board.
But going back now, bill, to yourquestion and, and your observation
about the name of the author's equity.
From a financial point of view, itjust, the publisher takes a much
smaller percentage of the revenue.
That the book generates, thenthe traditional publisher does.
And I think that's the thing that JamesClear was looking for with his new deal,

(42:28):
so,
I learned that too as well, you know,'cause I fire for Dummies was with
a traditional publisher, and I'mdefinitely not as well known as you guys.
So you know, that aside, youget like peanuts, like it
takes you, you know, dependingon how many you sell.
But if you get an advance, that Iexplained to everyone that's just
a loan and you pay back in the formof book royalties and it could take

(42:51):
years for some people to recoup that.
And then, so you don't make a penny.
You don't get a penny in your pocketuntil you pay back that advance.
And so, yeah, it, it's a littlebit disheartening how little
the author actually gets.
So I absolutely love this concept of
Yeah.
Yeah.
And you know, they're veryselective in who they go after.
'cause they're, small.

(43:11):
They have a pretty limited bandwidth.
So, But yeah,
me out then.
they were, well, you know, not, Imean, you got, you got a successful
book on your hand, once you get the,the first one's the hard one, right?
it was tough.
Yeah,
And then after that you become amuch more marketable commodity.
because most books are not successful.
I remember when I was getting readyto publish the original Simple Path

(43:34):
to Wealth back in 2016, you know, Ispent three years writing it, kinda
finished the manuscript in 2015.
And then 2016 I was doing, 'cause I wasself-publishing all the laborious work of
actually getting it as a finished product.
And as I was coming near that,I thought have no idea even

(43:56):
what success would look like.
So I started asking around andwith people in the, business, and
what I heard pretty consistentlywas the vast majority of books.
Never sell a thousand copies.
right.
And so if you sell more than a thousandcopies, you are in the, rare minority.

(44:18):
If you sell 5,000 copies, you'vehit it out of the ballpark.
And if you sell 10,000 copies,that's a bonafide runaway success.
And I'm looking at this and I'mthinking, well, given the size
of my blog readership, I think Imight be able to hit 10,000 copies.
And if I'm able to hit 10,000 copies,given the number of hours I spent writing

(44:42):
this thing, I will be slightly worseoff than if I'd worked at McDonald's,
but at least it'll get me close.
Well now we're talkinga million copies later.
That is a worldwide impact.
20 different languages, a millioncopies, and we're celebrating a
million because about the time thatthis episode airs celebrating your

(45:06):
work, your book, your legacy will havereached about a million downloads.
So it's a million for a million jl.
that's amazing.
And if you're like me, it'sprobably stunning to you.
I mean, I still can't wrap my head aroundthe fact that, that the book has been
so well received over the last decade.
And I imagine you feel thesame about, about the podcast.

(45:27):
it it, it's incredible.
Just a little idea a message toyour daughter can turn into, you
know, your whole second career.
You're a late starter, as Jackie hassaid, and you have had a Renaissance
second career here that probably fullyeclipses your prior professional career.

(45:49):
Yeah, certainly the mostsatisfying work I've ever done.
But, the other thing is, but it wasnot something I, it was not a goal,
I didn't quit my last corporate jobin 2011 saying I wanna be an author.
I quit my last corporate job in 2011saying, I don't wanna do this anymore.
I had no idea what I was gonna donext, other than I wanted to get this

(46:11):
information down in black and whitefor my daughter, who I turned off to
hearing it in case by the time shewas ready to hear it, I was dead.
So the information would still beavailable to her and you know when,
when a friend of mine read it andsaid, Hey, this is pretty cool.
You ought to put it on a blog andshare it with your family and friends.
Like, I'd heard of blogs before, I'dnever seen one, but I thought, that's

(46:35):
a great way to archive the information.
I don't have to worry about allthese pieces of paper getting lost.
And so at his suggestion, I, Ifigured out how to do the blog.
I remember one of my early readers,'cause I, I picked a design that I
thought looked cool and feedback fromone of the early readers was, you know,

(46:55):
I really like your content, content,but your design makes my eyes bleed.
Well, okay, I got that part wrong.
Well, it, it goes toshow you that content,
can be the heavy hitter and, hit itout of the park where design it can
matter like the cover of your book.
That design was important because

(47:15):
when I think of the simple pathto wealth, I see that picture.
So whoever did that for you,it did make a big difference.
That was, I mean, the illustrationwas done by a, a, a really good friend
of mine a woman I met when I wasriding my bicycle around Ireland in
the seventies by the name of Trish.
And she's a, an amazing artist.
And yeah, so she did that,that illustration for me.

(47:38):
And of course we used it again on thenew edition because everybody loves it.
Well, and look,
just about to ask that.
and, and, and the contentthat comes out is really it.
It's changed because now we havean album, we have a FI album.
The Donogan have, heralded you alsoin their album with the Simple Path.
They heralded BillBangin with the 4% Rule.
And Bill Bengen is comingout with a new book.

(48:01):
know, it, it.
I saw that.
I
It's, he is tilling the soil againtoo because his information has
updated and is now the 4.7% rule.
Instead of maybe the 4% rule,we can spend more in retirement.
We can retire earlier, whichis great news for people.
Blend your book with Bill Bain'sbook and you know, you've got
a very robust financial life.

(48:22):
You know the thing about Bengen's 4%,and my understanding is I don't know
him personally but I my understandingis that he has always said from way back
when, and I think he created that in like1990 or something, it's long time now.
He's always said that 4% was veryconservative, designed to last

(48:45):
for really bad periods of time.
And of course in recent yearsthere's been all this angst about.
Oh, is 4% too much?
Should it be 3.8% or 3.6927%?
You know, and it's like what theologians400 years ago used to debate how many

(49:07):
angels could dance on the head of a pin.
I mean, it's just 4%, say a,a very conservative guideline.
And then I think if he's comingout, and I, I didn't know he was now
recommending 4.7, but, but anythingthat's an illustration of just how
conservative the original 4% reallyis, and by extension how safe it is.

(49:28):
We've gotta get you to meet him.
We've gotta have him both on Jackie.
I,
to do a time to do a little matchmaking.
Yeah.
We gotta do Bill
I would love,
and j Collins so that the, theicons of this industry can actually,
have a cup of coffee together.
yeah, I would love it.
I think the concept of financialindependence, or at least that there's
a mathematical formula that can identifywhen you've, arrived, the namely the 4%.

(49:55):
That's, that's a, that'sa, that's a big deal.
That's a watermark.
And yeah, I would love to,I, I'd, I'd love to meet him.
Well say no more.
We will hook you up for sure becausewe see a lot of similarities and of
course both of you are well respectedand, and like Bill said following
what you say and what bill Banginsays, you just cannot go wrong.

(50:16):
So I appreciated hearingyour late starter story.
So I about how old were youwhen you started doing the blog?
Because I really want to, for ourother late starters that's listening
to say, man, we still got a lot moreyears, even when you think you're late.
How old were you when you started thatblog and started on this new adventure?
Yeah, so I, I, I startedit in the spring of 2011.

(50:40):
So that's when I, and again,remember, I was not in my mind
starting some new venture.
I was just putting this stuffdown for my daughter, but I
would've been 60 in the spring.
I turned 61 and my birthday's in November.
So in later in 2011, I turned 61.
Right.
So, yeah, and, and it's been it's beenenormously gratifying the way it's, it's

(51:05):
evolved, and I also, when I, quit mycorporate job, I made the classic mistake
that anybody who talks about how peopleshould think about their retirement says,
you know, that, make sure that beforeyou retire, you know what you're retiring
to, you know what you're gonna do.
I, I had no idea.
I mean, I was just, these jottingthese letters down was not

(51:28):
gonna take a whole lot of time.
Right.
And in fact, the stock series, whichis famous on my blog, I only intended
that to be the first five posts.
That's what I had in mind.
And now it's up to like 35.
And that's mainly because of thefeedback I get from readers who
would ask about different things.
And I'd say, yeah, you know, that's,I, I should write about that.

(51:51):
And so that's, I mean, my readershave really kind of guided the work
since I got this very basic stuffdown and out, out in the world.
But yeah, I never intended this to besome second career, but here we are.
And, you know, it's, I mean, I'm avery, very fortunate guy fortunate
that I've enjoyed doing it and thatpeople have responded so well to it.

(52:16):
Well, we agree and I, I have to makeone little ding here because I always
come back to it and Jackie, youknow, gives me a hard time for it.
But with way things have changedand V-T-S-A-X, you know, with the
American stock market has been thebear or the bull in the market.

(52:37):
But internationally, thingshave changed this year.
And I have to ask you, becausewe talked about this last time
and you said, well, we'll seewhere we stay on a decade from now.
Do you think we're reverting to themean now and that international is gonna
come back to the forefront and be adiversifier for us since it's done so
well, whereas the US start market hasnot in the first quarter of this year.

(52:59):
Yeah.
So the first quarter of this year, andyou may know the numbers better than
I do, but I think the US market wasdown like 6% and Europe and Asia were.
Up 12 to 15%.
So that's a, that's a big swing,when you add that 6% to the 12 or 15.
So yeah, international is, certainlybeating the US market this year.

(53:23):
Do you feel differently abouta Total World Index Fund now?
No,
See.
well, but, but, but to be clear, Idon't now, and I didn't back then feel
negative about a to total world fund.
So let, let's talk about it a littlebit because this is not the first

(53:45):
time that international marketshave outperformed the US market.
I wanna say, I think in theeighties, they, for a decade,
international outperformed us.
So I have never been a proponentof only investing in the US market.
Because it was always gonna outperformthe rest of the world because it doesn't,
I mean, it's, these things go in cyclesand we don't know sitting here today

(54:08):
if this is a fluke for these first fewmonths and the US is gonna dominate again,
or if this is the beginning of anotherdecade of dominance for international.
But that's not what drivesmy thinking about us.
My thinking is more that the US is stillthe most dominant economy in the world.

(54:30):
We account for something alongthe order of 60% of all publicly
traded companies in the world.
If you invest in the US market with atotal market index fund or an S&P500
fund, you are investing in companies thatare primarily international companies.
So as the rest of theworld grows and prospers.

(54:52):
Those companies will growand prosper along with it.
So you get to go along on that ride.
You're investing in the market thathas the most secure and transparent
markets available anywhere in theworld, and it's also the least
expensive to invest in as an American.
To be clear, if you are anywhereelse in the world, your market is

(55:14):
not gonna be large enough to allowyou to get away with only investing
in Canada or Australia or England orFrance or Germany or Japan or China.
So this option is you shoulddefinitely be in a world fund if
you're anywhere else in the world.
And I do see at some point, as therest of the world continues to grow

(55:35):
and prosper, even as the US grows andprospers along with it, maybe that.
Portion we represent willbegin to be a smaller part of
the of an ever growing pie.
So at some point you might wanna go toa world fund and for those people say,
you know, I think that points now, likeyou, you don't get big pushback from me.

(55:57):
I'm okay with that.
I don't particularly feel the need.
Now, I talked to my daughter aboutthis, you know, I think the US is,
is gonna be dominant probably forthe rest of my life, but at my age,
that's not that long a time period formy daughter, you know, who's looking
at investing the next 50, 60 years.
Then I tell her, you know, pay attention.

(56:18):
There might come a time.
There probably will come a time where aworld fund will make more sense than now.
Oh, I had to ask, I had to
just, just for Jackie
and I have to say I have to say too,I have been swayed a little bit and
I have to, in full disclosure toour audience, I have stepped back a
little bit from the total world where.
I've tilted a little, I still aman international fan, but I, I've

(56:42):
tilted more towards the US and I'mabout 20% international as opposed to
the 40 that I might've been before.
So I finally gave up on it.
I, I saw the light,
and Jackie and you, and all theinfluences in my life said, okay, and
you, you're supposed to stay the course.
And I have succumbededto a change in strategy.

(57:02):
just when the west of theworld is beginning to dominate.
Yeah, of course.
Of course.
We're, I'm so proud of you, bill.
Y you made that change with,because I was about to say, JL
is very convincing and logical.
And I was gonna ask you, bill, ifyou have changed anything over the
last well, since we've, thoughtthat finally international's coming

(57:24):
back and it's been a decade almost.
And
I didn't give up on it, but I just decidedto have a little home, home country bias.
did.
You did.
Yeah.
So we have another question.
We, ask our audience a little bit, jl youknow, what questions that they had and
we actually got something on SpeakPipe.
And if you're a listener, ifyou're in the Facebook group,

(57:47):
we allow you to go to SpeakPipe.
It's on our website and youcan leave a voicemail question.
So I'm gonna play that jl.
Okay?
And we would love to hear what you think.
So let's see if we can get this work.
Hi, Jim.
I am so excited thatyou updated your book.
My question would be, if I want amore conservative portfolio during

(58:11):
my drawdown phase as I'm in fire, doI adjust my profile now where while
the stock market's down, or do I waitfor the market to recover some then
make my portfolio more conservative?
For example, I'd like to go to 7030 ratio of stocks to bonds versus
the 80 to 20 that I have right now.

(58:35):
In addition, what of draw down strategiesfor variable spending would you institute
a market correction and bear market,and possibly the worst case scenario?
Stagflation, which you suggest.
Thank you so much, Jim.

(58:56):
You're such a valuable person toso many people in this community.
Okay.
Well just for a correction yougo by jl, you're not Jim, but a
lot of us assume that it's Jim.
So what do you say to this caller,
Yeah, it sounds like she's asking JimCollins, the guy who wrote Good To Great,
the other author of this question, and,and I have no idea what Jim Collins would

(59:20):
say, but what JL Collins would say is toanswer the first part of the question.
It depends on how much runway she has,and she doesn't say if, if she's at that.
Retirement stage at, at livingon the portfolio, like right now.
Or if she's looking out, say fiveyears and she sees it coming.

(59:42):
So if you've got a little bit of runway,like five years, then I would say just
begin to make the transition gradually.
If you're looking at it right nowand you want to go from, I think
she said 80 20 to 70 30 then pullthe trigger right now because nobody
knows where the market goes from here.

(01:00:04):
It's been very volatile.
Right now.
Is you, we are recording this.
I don't know when you're gonna releaseit, but we're recording it on May 5th.
The market has recovered most of itslosses, so it's back to about even.
So this would be a, a goodtime if that was your concern.
Maybe by the time this releases, it willbe up considerably or down considerably

(01:00:26):
and whatever it is, you don't knowwhere it's gonna go from there.
So if you were to wait, you would beassuming that it is going to go back
up at that point in, in or rather ifyou're waiting, you're assuming it's
gonna be going down at that point,in which case waiting will pay off.
'cause you'll be able to make thattransition at, at lower prices.

(01:00:49):
But it might not do that.
So because we just don't know.
And even if you're looking, you know,whatever your political persuasions
are, you know, you might be lookingat it saying, I absolutely know
it's gonna recover 'cause I havegreat faith in these policies.
Or I absolutely know it's gonna get worse'cause I have no faith in these policies.
Well yeah, but you really don't knowthat because the market doesn't care

(01:01:11):
what you believe the market's gonnado, whatever the market's gonna do.
And because we don't know that, Iwould say make the change when you
want or need to make the change.
The second part of her questionis withdrawal strategies.
If you go into retirement andyou're follow the simple path to
wealth, you're gonna have a largeSL slug of equities in an S&P 500

(01:01:35):
or a total stock market index fund.
You definitely want to have it atleast 50% in equities 'cause that's
the growth engine that will allowyour portfolio to survive over time.
And then you wanna have somefixed income like bonds and
cash, say in the money market.
And the reason you do that is when themarket goes down, that gives you an

(01:01:58):
opportunity to rebalance and pick upshares that are now at a bargain price.
But it also provides that dry powderthat you can begin to draw on.
So if you don't wanna sell yourequities when they're down, you can
draw on your money market fund topay your immediate expenses or tap
into your bond fund to do the same.

(01:02:20):
But the most fundamentalthing you should do.
When you enter this phase of living on theportfolio, before you're doing that, when
you're building your wealth, you shouldbe having your dividends and interest.
If you own bonds, reinvest itinto the fund to buy more shares.
But when you're living on theportfolio, you're gonna want to
have those dividends sent to yourchecking account as cash to live on.

(01:02:44):
You're gonna have that interestsent to your checking account.
So if you're in, say, V-T-S-A-X with yourstocks and V-B-T-L-X, which is Vanguard's
total bond market fund for your bondsVTSX is paying, I think 1.3% in dividends.
And V-B-T-L-X is like 3.5%, let's say.

(01:03:07):
So if you're pulling from that, you'regonna have, and you're targeting a 4%
withdrawal rate, you're gonna probablycome up with about two and a half percent
of that 4% between those two things.
So that leaves you anextra percent and a half.
And to get there, that's whereyou're gonna be selling shares
either selling some of your money,market your bond or, or your stock.

(01:03:29):
That's an important thing to understandbecause when the market goes down
dramatically, people get so upset andthey say, wow, the market's down 20%.
And if I, if I sell the stock tolive on, then I'm gonna lose 20%.
No.
'cause you're not gonna be sellingyour whole portfolio to live on,
you're gonna be selling maybe 1.5%.
Right?
And the market always recovers.

(01:03:51):
So even if you have to sell thatone point a half percent when
your share price is down, that'snot a terrible, terrible thing.
So that's how I think about withdrawal.
Yeah, so great point.
And we get questions likethat all the time, so I think
you've helped a lot of people.
And there you go.
Our caller just got her a questionanswered by the JL Collins.

(01:04:13):
And, and what I love about the newversion of the book is that you
have an entire section of frequentlyasked questions just like this.
There's a question aboutinternational that Bill asked, and,
you know things about allocation.
There is even a question bill.
I don't know if you remember, but therewas a question about late starters.
You know, it's like, is thisinvesting game just for young people?

(01:04:33):
And we know the answer to that, right?
J
We do, do you want, did you wantme to, do you wanna hear it?
yeah, let's hit it.
Let's hit it.
So, one of, in, in your introduction,you mentioned my, my book Pathfinders
and Pathfinders is a collection ofstories from people all over the world.

(01:04:55):
And at all different stages oftheir investing life, who have
read the simple path to wealth andembraced the process and, and they're
describing their success with it.
And I wrote the Simple Path toWealth for my daughter who was
in college at the time, at thevery beginning of her adult life.
And so there is that kind of bias, ifyou will, in the book for young people.

(01:05:21):
You know, it, it probably feelslike a book that's written for young
people also feels like a book that waswritten for Americans because she's
an American and I'm an American andthat these are the markets I know.
So it's striking to me that peoplefrom all over the world, different
nationalities, different ages,different stages of life, have
found the principles so valuable.

(01:05:42):
And I think one of the reasonsis that no matter when you start.
If you have an aggressive savingsrate, which is one of the things
that's required, my personal choice was50%, so let's use that as our proxy.
If you have a 50% savings rate,getting from zero to FI is a journey

(01:06:03):
of somewhere between 10 and 15 years,depending on whether the market wins
or at your back or in your face, right?
And that's 10 or 15 years, whetheryou start at the age of 20 or you
start at the age of 60, right?
So it's a 10 or 15 yearjourney to get there.

(01:06:23):
It doesn't matter when you start,that's the length of the journey.
That's point number one.
Point number two.
Is my favorite quote maybe of alltime, which is in the original
version of the book and in the newversion, the very first quote in
the book is from a guy named LeoBurnett, who was a ad agency executive
back in the sixties and seventies,Leo Burnett at Big Chicago Agency.

(01:06:48):
And the quote is, if you reach for astar, you might not get one, but you won't
come up with a handful of mud either.
That's so true.
That's so true.
And that's a, that's a great way for ourlate starters to look at this, right.
absolutely, because let's supposeyou, you start and you say, I wanna
accumulate a million dollars andyou don't quite have enough time.

(01:07:12):
Or for whatever reason, you onlyaccumulate half a million dollars and
you didn't quite get that star, butyou still have half a million dollars.
You are still.
Much better off.
And what I try to get people tounderstand is this is not a light switch.
This is a journey.
It's like going to the gym.
You know the, the first day you go tothe gym, you're not gonna bed rest 300

(01:07:34):
pounds, but you're gonna be a littlestronger than you were the day before.
And a little bit stronger, a little bitstronger, the first dollar you save and
invest, you're a little bit stronger.
And then day by day, when I was usingMyFu money back in the day to step away
from corporate jobs, I was not financiallyindependent by any stretch, but I was

(01:07:55):
a lot stronger than people who didn'thave anything saved and invested it.
Yeah.
mean, I feel that way.
Too, because I may be 80, 90% ofthe way on the journey, but say I
couldn't work tomorrow, I'd be fine,because I've been following this path
and I'm looking forward to that day.
And, but right, for right now, it's okay.

(01:08:17):
My wife's working.
I'm working.
We're enjoying our lives, but we'reto stop tomorrow with your path.
We'd be fine.
And we've followed it now for eight, 10years and, you know, we're close and we
want our audience to understand that whatyou've just said, it's 10 to 15 years.

(01:08:37):
If you play your cards, just, justlike JL Collins asked you to play
them, you will not only be healthierfinancially, you'll probably be
healthier physically and mentallybecause you're sleeping better at night.
You know, I, I've had a lot ofconversations with people over the years
especially at Chau, which were these.

(01:08:58):
Annual events I used to do, and one of thequestions that I, I would get on a pretty
regular basis is someone who would say,you know, I'm in this soul crushing job.
I mean, it's killing me and I've gota million dollars, which if we look at
the 4% guideline, can reliably throwoff 40,000 to live on, but I need

(01:09:22):
50,000 to live on and getting thatmillion dollars up to where it needs
to be to throw off that 50,000 and the,so I just don't know if I can do it.
And my response to that is, isalways I would quit yesterday.
I'm in a soul crushing job and I can, Ican leave it with my million dollars and

(01:09:45):
now I've gotta draw 5% instead of four.
Well, if you look at the Trinitystudy, which looked at a lot
of different withdrawal rates.
5% withdrawal has an86% success rate, 86%.
I'm in a soul crushing job.
I'm gonna take those odds.

(01:10:05):
And the other thing I will say tothese people is, imagine that you
really don't wanna pull that 5%,you just wanna be more conservative.
Do you think there is something youcould figure out how to do over the
course of the next 12 months thatwould generate the extra $10,000?
And let's be clear, anybody who hassuccessfully put themselves in a

(01:10:27):
position to have a million dollarsinvested over a course of time
is a smart, resourceful person.
And I've yet to have any ofthose people say to me, no, I,
I don't think I could do that.
Instead, what I see is alittle light bulb goes off.
Well, yeah, I mean,that's a walk in the park.
Of course I could do that.
So.
I, you, I, you mentioned earlier thatbill Bengan is coming out with a new book

(01:10:52):
and suggesting that instead of 4%, andhe was the guy who originated that, by
the way, that it could be 4.7% reliably.
Well, yeah, that's great news.
So there's, and I, I think I've heardBengan say that, you know, six 7% works
a very large percentage of the time.

(01:11:13):
So you need to be flexibleat whatever rate you retire.
You know, if you retire at 4%and you're looking at 30 your
retirement, I would never say.
Put that on autopilot, adjust itfor inflation every year, which is
what the formula calls for, and thenforget about it for two reasons.
One is there's a, a 4%only works 96% of the time.

(01:11:38):
So there is a very slight chancethat it's not gonna work in
your particular 30 year period.
So then you certainly don'twanna run outta money.
So you want to be payingattention for that reason.
But here's the much bigger reason.
And the vast majority of times, ifyou're pulling 4% a year adjusted
for inflation every year, at the endof 30 years, your portfolio would've

(01:12:01):
grown to enormous proportions.
Let's suppose that you startedwith a million dollars.
The odds are at the end of that30 years, you're gonna have 6,
8, 10, 12, $15 million left over.
That's the real reason you wannapay attention, because that's
the most likely scenario, andpresumably you'd rather enjoy.

(01:12:24):
Spending some of that money on the journeyrather than seeing it as a lump sum when
you're 30 years older than when you start.
So four percent's a greatguideline as, as is 5%.
So yeah, don't stay in a soul crushingjob if you have those kinds of resources.
Well, Jackie, that's actually in JL.
That's a great place because we love toend the show with a upswing of optimism.

(01:12:47):
We may get pessimistic in the middle,but simple path to wealth is in its own
nature, inherently an optimistic book, andyou're an optimistic person, and we want
to infuse this optimism into our audience.
Jackie, this has been anawesome conversation today.
It's great to have JL back on theshow and we're gonna have to have
him back with Bill Bangin next time.

(01:13:09):
Right.
Yeah.
We need to find out.
So where can people get the book?
It's, it's pre-order.
And when is the official release date?
This may air a little bit after, buthopefully it'll be right around the
time that it's launched, so the launchdate and everything about the book
and how we can get it in our hands.
Yeah, so the launch date is May 20th.

(01:13:30):
So we have, people are listeningto this on or after May 20th.
It should be, as they say,in bookstores everywhere.
Before that you can go toAmazon and pre-order it.
And you know, my blogis JL collins n h.com.
If you go there, you'll see linksthat will take you to the, to the
book and, and, and let you order it.

(01:13:51):
So it should be one of the beautiesof doing this to a publisher this
time is it should be even morewidely available than it was before.
So even easier to find,
Oh, that's awesome, jl.
You're talking to us fromyour, Refuge Kabana today.
Unfortunately your wife's notthere with you, otherwise, we
bring her on to close the show.

(01:14:12):
But maybe next time we'll have you, yourdaughter and your wife, and then bring
in Bill Bangin as a special guest star.
There's, there's so manythings we can do with this.
We like bringing people together.
We want to thank you from thebottom of our hearts for joining
us today on Catching Up to FI.
We'll see you next week and next monthand next year on Catching Up to FI, right.
Yeah, thanks for having me back.
It's always fun hanging out withyou guys and talking to you,

(01:14:35):
and it's an honor to be here.
I appreciate it.
All right.
Any final words, Jackie?
No, just that this has been an honor.
JL is one of my favorite, and I thinkyou have touched so many people and you
will touch many more with this new book.
So thank you for givingus your time today.
It meant a lot,
Very kind.
Take care.

All Episodes

The Godfather of FI Talks Fatherhood | JL Collins | 149

Episode Transcript

Popular Podcasts

Crime Junkie

24/7 News: The Latest

Stuff You Should Know

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}The Godfather of FI Talks Fatherhood | JL Collins | 149