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Got a question?

by 181 Comments - Updated:

This one is going to be very brief.

I’m putting together a FAQ.

If you have a question you’ve always wanted to ask, drop it in the comments below.

Keep in mind this is for a general FAQ

Thanks!

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Comments

    • vorlic says

      My view, JL permitting.

      No.

      AI (whatever it means, and whatever it means in the context of passive whole index investing) cannot build houses, rockets, computer programs which do what they’re supposed to do, etc.

      Or, in short, there will always be a need for walls, made by builders who drive, eat, watch telly, have kids.

      Reply

    • Ross says

      I am betting AI will make the S&P companies more profitable in the future, since these blue-chip companies will have AI integrated into every facet of their businesses and it will make everything smoother and more efficient for lower cost. It will give them a massive advantage over their smaller competitors that can’t use AI at the same scale. So my humble opinion is buy buy buy.

      Reply

  2. babybbbbYT says

    Not sure if this counts as “general” but what is the one bucket list item you enjoyed doing the most and would recommend others to do/try? Sorry if this doesn’t qualify.

    Reply

  4. Alexis says

    Is vtsax or a similar fund still your recommendation or would you suggest more international or small cap mix options? Are you still bearish on home ownership? Sorry that’s two questions.

    Reply

  6. Jack says

    How to stay motivated to stay on course and indexing? This can sometimes be boring, stressful (as the results take longer).

    Reply

  7. Ted says

    What would you recommend for those who have reached FI (like yourself) to help protect the wealth you worked your entire life to build? For example, what liability limits do you recommend for auto insurance, homeowner’s insurance, etc. and why? Do you recommend an umbrella policy, trusts, or any other protections? Also, would your answer change if you were recommending these limits to a family with a net worth of $20M vs. a family with a net worth of only $1M?

    Thanks!

    Reply

    • Cline Hall says

      I’m in insurance, the basic rule is protect your wealth. Easy enough if you are worth 1 million, have a 1 mil umbrella. Very easy to have a 1 million liability claim with an auto accident. If you’re worth 20 mil? Probably not going to have a claim that would wipe that out unless you are P Diddy, 5 million would let me sleep. BIG thing, increase un/underinsurance to at least 1 million.

      Reply

    • MD says

      I have the same question. To elaborate, if one takes social security at 62, the benefits are lower but if the money is properly invested, it could yield the standard VTI/VTSAX return with paying only capital gains taxes. The returns would almost certainly be higher than what one would get if one took the benefits later.

      If one takes the SS payments later (say at age 67), while one gets a larger amount, one pays ordinary income tax and one misses the returns that might have resulted from investment. Of course, the stocks could go down.

      I realize this differs from person to person. I’m looking for how to run the numbers and what did you (JL) and others do. Thanks very much for all that you do.

      Reply

    • jesse says

      Hello fellow Canadian, this depends on you. Do you think or feel that US will continue to grow? Personally, I invest 50% VFV and 50% VEQT. I know that this is overlapping in the US but I love the US economy and believe it will continue to grow strong. Even when the market drops, i have 20 years to invest and will gladly add more of my hard earned loonies into these two funds at a cheaper price. Also, i love both books by JL.

      Reply

  10. Stefan Novak says

    Is your method of earning wealth unrealistic for younger people, seeing as how the world is dramatically different from the USA of the later 1900s.

    Reply

    • Ross says

      Not trying to speak for JL but they were saying the same thing in the late 1990s during the dotcom bubble. I didn’t start my investing until 2002 and I retired early in 2019.

      Reply

      • Stefan Novak says

        Yeah but 2002 is dramatically different to today. We have never had such disproportionate gaps between income and cost. Ask anyone in their 20s and 30s today to put away 50% of their income and you’ll be treated as if you told them they were going to be human sacrificed, it’s insane. We need like 70% just to live these days. That’s why I believe this was the best way of building wealth, in the past. It’s not feasible for those starting from nothing today, life is too expensive.

        Reply

        • Dicey says

          If you don’t mind my saying so, your last sentence is mighty defeatist. Life is expensive, but life has always been expensive. There are still plenty of ways to economize. Figuring out how to game the system is key to retiring early.

          Reply

          • Adria says

            But it IS actually more expensive to live now. According to census.gov, half of renters are spending more than 30% of their income on housing. That’s why younger people can’t afford to save. You combine that with entry-level salaries not keeping pace with inflation, and the problem that people are delaying retirement longer and longer (leaving no room for younger people to rise), and you end up with a pretty dark situation. This is not a “you spend too much on lattes” problem, this is a “you don’t earn enough money and you can’t get a better-paying job” problem.

  11. Jasmin says

    All the books I’ve read recommend a Roth IRA, but after research I’m above the income requirements. What’s is a similar option?

    Reply

    • Yyzguy says

      HSA if you qualify. If not through your employer, you can access a no cost HSA through Fidelity. If you have one through an employer, it’s better to use it and transfer the money to Fidelity. Why? Because if you use payroll deduction your contribution is exempt from FICA as well as income tax. If you contribute directly to an HSA at Fidelity you don’t get the benefit of reducing your FICA tax.

      Reply

  12. Mike Pascale says

    I would love to hear your thoughts regarding the repeal of WEP/GPO (H.R. 82 – Social Security Fairness Act).
    Personally – I’m thrilled with it as my wife is a teacher with 2 years left. My wife worked in the private sector for 15 years as well contributing to SS. She has been a teacher the last 20 years. WEP reduced SS by $557 / mo. GPO reduced. Spousal benefit to $0 and Survivor benefit was reduced by $2000. Bottom line is if she never became a teacher- she would have received full SS benefits. WEP and GPO were very unfair to public service workers who had paid into SS previously thru private sector jobs. Thank God it was repealed.

    At any rate – it effects lots of people and is retroactive to 1/1/24.

    Reply

    • Daniel Steve Villarreal says

      Do you have any thoughts for retirees who are receiving a pension and will have to take a required minimum distribution on investments vis-à-vis how to invest part of that income to hedge their bets for the future?
      –Mike, I got up at 5:00 AM to watch the President sign the bill, and I was cheering in my tiny apartment in Taipei, Taiwan! What I’m not certain of is if this will also protect me from being penalized when I receive Taiwan’s teeny-weeny equivalent to US Social Security.
      Dan V
      Happy new SS retiree

      Reply

    • Jeffrey Heng says

      I’m a big fan, Bill. As well, a financial planner I met with recently said that’s their go to for indexing and low cost.

      Reply

  14. Jen A. says

    When you are selling a business that is an S corp, what can be done to minimize the tax pain if you do not need the money from the sale right away?

    Reply

  15. Monica Aurora says

    It it worth having and/or maximizing a 401K? Does it make a difference if it’s an Individual 401K (where I am the employer and employee)?

    Reply

  16. Roberto Caprio says

    I had a look at the comments in the page for those investing from Europe, the last one is from November last year and the original post is from 2020. I am not asking for a comprehensive update as it would probably take a lot of time and effort but at least know if you think the principles outlined are still valid today. Obviously I wouldn’t be unhappy if you came up with some amazing breakthrough or even just a couple of suggestions to choose an ETF over here in the old continent.

    Reply

  17. TJ Homes says

    Given the Crazy Valuation and concertation of MAG 7, Do you still consider Total Market Index or S&P500 Index as long term investment vehicle?

    Reply

    • Ross says

      This is far from the first time that the indexes were heavily weighted towards one industry. Any imbalances get corrected and cleansed eventually.

      Reply

  18. Anthony Cavanagh says

    Hi JL,

    Happy New Year to you and your family.

    I’m 58, in the UK, and I have £300,000 (approx $375,000) I can invest. I am very late to the stocks / shares party so perhaps don’t have longer term (25-30 years) index tracker investment options, (do I?). Can you please share thoughts on where how I should best invest this for optimum return over 10 – 20 years.
    Many thanks for your thoughts, and kind regards,
    Anthony

    Reply

  19. Nate says

    What helped you find the courage to leave your job when you were mathematically able to? At 45 with 3 kids, it seems like there are too many variables even if things look ok on paper.

    Reply

    • Ross says

      I retired 5 and a half years ago at what I calculated was a healthy 4% margin. Nowadays my portfolio value is 70% higher than it was when I retired despite me living on it the entire time. I now can’t seem to spend anywhere near even 3% of the value of the portfolio. Last year since I made so much money I decided to splurge for Christmas/Birthdays and bought my wife and I everything we wanted. Which included a new TV and I built a new gaming PC. My total for the end of the year was a tad over 2.5%. So if you are mathematically able and want to retire I would recommend you put in your two weeks notice and do what you gotta do to leave your job on good terms. If you need to go back to work you always can.

      Reply

  20. Brad Seymour says

    When should I take my RMD’s? Early in the year, Monthly, Quarterly, End of the Year and should I have 20% withheld for Uncle Sam?

    Reply

  21. Jeffrey Heng says

    How best to navigate an inheritance from a Tax offset / Investment / Dollar cost averaging vs one time investment ‘event?’

    Lawyer? Tax planner? Financial planner? I’ve learned these folks stick within their silo and can’t provide comprehensive guidance. Thank you.

    Reply

  22. Jess G. says

    What are your thoughts on leveraging tax optimization strategies for purposes of growing your assets and overall wealth? What strategies have you generally relied on?

    Reply

  23. Rdsgcc says

    HNY to you and yours.
    Even though you’ve been financially independent for many years, do you still consider yourself an “FU Money” person at heart?

    Reply

  24. Nik says

    All I’ve done so far is max my trad. IRA with the bonds fund in 2024. If I have not yet bought VTSAX should I do it now or wait for a better entry into my Roth for my initial accumulation of vtsax? Would you Recommend buying long dated puts as a hedge for buying vtsax at all-time highs?

    Reply

  25. Nick P says

    Hi JL, thanks for all your work in the community. Wanted to ask if you had any refreshed thoughts on the world of crypto? I always stayed away due to the Bogle concept of investment vs speculation but if you polled the results today I’d be losing the argument with the price of Bitcoin. Still VTSAX and chill?

    Reply

  27. Stephanie P says

    would love an idea of change to percentages of the stock index funds/bond index fund investments as you get closer to retirement to reference in the FAQ. You are appreciated!

    Reply

  29. Anne says

    Why is rental property considered an investment when primary home is not? Don’t they have all the same costs? If you lose money on your home, why don’t you on rental property – is it just higher rent?

    Also, I love the simple path to estate planning idea!

    Reply

  30. RK says

    Would you recommend to buy a house someone in late 40s or early 50s but already FI with travel on their mind for next few years?

    Reply

  32. John Demetre says

    Bonds have certainly not performed very well over the nearly 10 years since The Simple Path to Wealth came out (VBTLX/BND down ~11%). Clearly this is an unusual stretch for bond performance (and has absolutely been no hedge against inflation), but 10 years is a pretty significant period of time. Given that I have heard you mention in recent(ish) interviews that you’re still 100% equities (VTSAX, of course!), would you change your advice regarding bonds/cash allocation? Thank you!

    Reply

  34. Matt says

    Would love your take on whether a broad bond fund is still you recommendation to “smooth the ride”, and if so, why?

    Reply

  35. DMB says

    With all the talk about a looming recession and a new president taking office, would your investment advice still be to stick with stock based index funds or shift a greater percentage into the bond or real estate market as a means of diversification?

    Reply

  36. vorlic says

    Is there a crash coming, and if so, when exactly? I have a large wodge of cash I want to invest and I would prefer to do it at the bottom. Thanks.

    😉

    Reply

  37. Steve says

    Do our investments HAVE to be with Vanguard? If so, what’s the benefit to using Vanguard over Fidelity, Schwab, etc?

    The only thing I’ve heard is a rumor the way vanguard has their money they’re a patent on something that legally allows tax free events and only they do that. Have you heard this?

    If not, can I just do the Fidelity equivalent of VTSAX and VBTLX?

    Reply

    • Frugal Steve says

      To add on to this one. I think it would be nice to have a recommended list of all of the basic index funds (i.e. S&P 500, Total Market, Nasdaq, Total Bond, International, etc…) with the corresponding equivalents for each major provider (Vanguard, Fidelity, Schwab, etc…) and their corresponding expense ratios. I imagine someone has probably already done this, so it may be as easy as providing a link.

      Reply

  38. Mo Mohan says

    Vanguard’s BND fund’s returns are similar to an Intermediate bond index fund. Your opinion on whether one should invest in BND or VBILX?

    Reply

  39. planedoc says

    What is optimal strategy for couples of significantly different ages? (say, 25 plus years difference in age). Obviously, there are multiple factors, but most advice is for couples who are close in age.

    thank you.

    Reply

    • Jgriff says

      I would also be interested in this question. Currently early retired (me) at age 46 and not as early retired (spouse) age 63. Lots to consider as we navigate using a mix of post-tax brokerage account money and my spouse’s IRA and Roth IRA funds to live off and consider the biggie of “when to take social security” for my spouse.

      Reply

    • dnf98 says

      Another vote for this topic. My spouse is retiring in 2 weeks (63) and I hope to join in retirement by the end of the year (53).

      Reply

  40. Frank Corso says

    Which cost basis method do you use when withdrawing funds from your vanguard brokerage account? Which do you think is best ? How do you feel about investing in an index fund that tracks the Nasdaq 100 vs VTSAx? Thank you Jim

    Reply

  41. Frank says

    Which cost basis method do you use when withdrawing funds from your vanguard brokerage account? Which do you think is best ? How do you feel about investing in an index fund that tracks the Nasdaq 100 vs VTSAx? Thank you Jim

    Reply

  42. Noah Steele says

    Currently reading through your book for the first time (and I’m thoroughly enjoying it), so I apologize if you maybe answer my question at some point throughout.

    In the early chapters of your book, you discuss how buying a new car can significantly reduce your potential returns compared to investing that money in the stock market. For many people, including myself, owning a car is essential for both personal and professional reasons. What advice do you have for managing these substantial purchases responsibly?

    Reply

  43. Will Telfer says

    Hi JL, firstly, thank you for providing me and my family with a simple path to follow.

    Are you planning on travelling to England anytime soon? I’d love to meet you and exchange a few words over a coffee.

    Why don’t they teach a simple path in schools around the world? Like your daughter (was), my children are too young to understand, but I’ve already started their education. Plus I invest £100 per month in the S&P 500 for them since birth.

    All the best,
    WT

    Reply

  45. Eric says

    For young investors with a high risk tolerance and a time horizon of 20+ years:

    a) Would you recommend allocating 10-20% of their equity portfolio to a tech sector index fund like VGT?

    b) What are your thoughts on investing 2-5% of their portfolio in emerging digital assets, particularly Bitcoin ETFs like IBIT or FBTC?

    Thanks!

    Reply

  46. Douglas A PROPP says

    If one wanted to compare the net return (after taxes) between investing in a tax deferred account (e.g, 401k), or paying the taxes up front and investing in a taxable account, is it clear that the tax deferred return will be higher if the investment time periods are the same?

    Reply

  47. Mis says

    After disastrous couple of years holding vbtlx, do you have any more insights on portfolio picking strategy? Thanks!

    Reply

  48. Mike says

    Why not inflation protected bonds instead of vbtlx or at le as at along side it? It seems clearly better having one less risk to deal with (inflation) and it’s only 1 more fund.
    Thanks

    Reply

  49. Bill says

    Has your daughter become the person you hoped she would, at least in terms of financial literacy and good decision-making? She was the impetus behind your blog and now that she’s an adult, I wonder if your hard work paid off.

    Reply

  51. James J Zeeb says

    Bonds have been terrible…drain on the performance of my retirement portfolio. I follow-up the simple path as long as I could but getting tired of getting killed with poor bond performance. What’s an updated, more appropriate simple path to wealth if one choses not to own bonds to “smooth out the ride”?

    Reply

  52. David says

    When investing for retirement some popular financial people suggest to invest at least 15% of your income. Does this number fluctuate for someone that has a pension? For example, 6% of my paycheck goes into my pension which I will receive back when I retire (annuity check). Does this cut into what needs to be invested outside of that?

    Reply

  53. ken tobin says

    should we teach our adult children pre marriage the basics of finance and how to manage finances cooperatively with your spouse so if there is divorce they have a handle on the money in the marriage

    Reply

  54. DRC says

    Thank you for all your guidance over the years!

    Question: if US legislation were enacted to tax long term capital gains at the same rate as ordinary income, how (if at all) would your investment and withdrawal strategy change?

    Extra credit: what is your opinion on the ethics of investment income currently getting taxes at a lower rate than sweat (labor) income?

    Reply

  55. ken tobin says

    Do you think for young adults in to the work force and a solid job a 100% Total Stock is appropriate as Nick Murray suggests in his book Simple Wealth

    Reply

  56. Jordan says

    If i contribute to a 457 Roth, upon separation from service can I roll it over into a Roth IRA and still have access to the contribution portion prior to 59 1/2?

    Reply

  57. Rocco Stevens says

    When expense ratios are so critical to the success of the Simple Path to Wealth investing philosophy, why not use funds such as FXAIX (0.015%), VTI (0.03%), and FNILX (0.00%), all of which have lower expense ratios than VTSAX’s 0.04%?

    Reply

  58. R McDonald says

    I would be interested in a discussion of tactical asset allocation. I have a minimum ~5% nominal interest rate in fixed income (Treasury and Agency bonds preferred for tax advantages). During history of 0+/-% interest rates, we exhausted and did not replace the rungs of our fixed income ladder. During periods of interest 3.5-5% or higher, we would rebuild the ladder seeking to maximize rate and duration. For us, that is up to 30 yrs. Our investment timeline is intergenerational. Sources of income have reduced dependence/desirability of interest income, so we are aggressive growth (FNILX). JL discussion of 17% fixed income available during 70s as offering (short-term) real rate of return seemed to ignore the likelihood of locking in an enviable long-term real rate of return. Likewise, we saw overcommitment to fixed income in the US and moreso in Japan and Germany lead to 2 decades of underperformance for those limiting themselves to fixed income. This is the greater context for my request for a discussion of tactical allocation of fixed income based on a minimum rate of return dependent on a person’s investment timeline and historical context.

    Reply

  59. Liz says

    Should a 22 year old get a credit card to “build credit”? My 22 year old daughter insists that it is what all of her friends are doing. I say stay away from credit cards for as long as you can.

    Reply

    • Jackie says

      Building credit is a great idea and if your daughter is responsible then I would say 100% do it. It will definitely help her in the future. If you’re worried, I would just monitor the spending. My mom did this for mine when I turned 21 and it really forced me to budget. I would also recommend getting her set up with a budgeting app like Monarch money or YNAB. Forces young people to be aware of how much they are spending and on what. I’m 28 now and could tell you my average annual expense for any category

      Reply

  60. Penny Price says

    1. Assuming you’re 10 years from retirement….what could-maybe-should take the place of the 20% of bonds in your overall portfolio? High-yield savings? Mutual funds? Some portion HSA? CD ladder? TIPS? Utility fund? Or….nothing should take the place of bonds?

    2. Traditional 401k or Roth 401k?

    Reply

  62. Jacob says

    I have $1M saved, mostly in a 401(k) and a regular brokerage account. I’m approaching the point where I can use a mega backdoor Roth. I’ve read materials from Mad Fientist but am still confused: Should the ‘final destination’ for the funds be a Roth IRA or a Roth 401(k)?

    Reply

  63. Kevin Greisiger says

    JL- how do you deal with sequence of returns risk when it is a down market for a few years in a row?

    I know you are a believer in indexing which I am as well- What is your take on investors that own a bulk in Berkshire Hathaway as a long term strategy with its record vs. indexing?

    Reply

  64. Yogi Miraje says

    Given that the top 10 holdings now account for nearly 30% of VTSAX’s total assets, primarily in large-cap technology companies, how does this increased concentration affect the fund’s diversification and risk profile?

    Does this change anything for folks in wealth accumulation phase who only invest in VTSAX?

    Reply

  65. Vasili Goulichuk says

    Pls. writ your thoughts on Bitcoin investing and if you think it is “Rat Poison” like the late Charlie Munger said it was.

    Reply

  66. Omkar Panhalkar says

    please write on selling house after moving out vs keeping it forever. Trying to understand average gains in Stocks vs real Estate

    Reply

  67. Carissa Barrett says

    If my teen is wanting to start saving, where would be the best place to start given the young age? Brokerage account, Ira or Roth?

    Reply

  68. Daniel Steve Villarreal says

    Do you have any thoughts for retirees who are receiving a pension and will have to take a required minimum distribution on investments vis-à-vis how to invest part of that income to hedge their bets for the future?

    Reply

  69. Christine says

    In Ed Slott’s latest book, he suggests using life insurance as a way to pass more of your estate to your heir without it being taxed. The life insurance proceeds would be federal income-tax-free when they are paid to the beneficiary. Do you think it’s a good idea? Seems to make sense. Thanks!

    Reply

  70. Vijay says

    1. What is your opinion on prenups?
    2. I am an investor in India holding index funds in India, USA, and the UK. I am worried that one or more of these countries may go the route of Japan/Germany in the long term and the index stagnates for a long period. How does one insure against country risk when indexing?

    Reply

  71. Bruce Crane says

    Here’s the first that popped into my mind. Where can I find information about how to start and the benefits of using a taxable brokerage account in conjunction with tax-deferred accounts? I’ve heard of but not really researched tax loss harvesting. Do you have links for that? If so, where?

    Thank you!

    Reply

  74. Maximilian Park says

    If recessions are routine, integral part of the economic machine – and will stay around as long as humans make financial decisions with emotion – so always, why not buy the inevitable big dip. As a 24 yr old, I wonder if I should live below my means, saving a mountain of cash stored neatly in a HYSA, then buy like crazy during the next Great Recession when everyone claims once again the world will end. I know you’ll give me a slap on the wrist for trying to predict the market, but the emotional part of my brain will alas have its eyes blinded by the green.

    Reply

    • Hannah says

      I second this. Now that we’re dipping, is there some kind of schedule/advice for buying in? I heard you should buy incrementally as things start to dip so you don’t miss out by trying to time the market. I plan to do that but I’m wondering how… I imagine I just need to pick a schedule and stick to it (10% of my cash per month or something) but would like to hear any suggestions.

      Reply

  75. The Crusher says

    Using the 4% Rule as a guideline for retirement planning purposes appears conventionally prudent. However, I personally know of no retiree who is rigidly executing a retirement plan year after year based on the 4% Rule itself (spending 4% of assets, adjusted annually for inflation).

    Is it a logical approach for a retiree to annually re-run several higher quality retirement planning calculators base on their most recent portfolio data and adjust their spending when the calculator outputs indicates they could do so (increasing or decreasing spending over the following years)? It would seem to me that fundamentally they would be re-evaluating their financial life as if they retired that very year. Logical?

    Reply

  76. Lee says

    Did you have a goal or FI number while working and investing? Or did you just stick with your 50% savings rate, do work you enjoyed and see how big you could grow your net worth?

    Reply

  77. Tom Mannion says

    Hi JL,
    Thanks a million for your invaluable advice since I first stumbled onto your path in 2019.
    My wife and I transferred everything into Vanguard to take advantage of their super low cost investment platform.
    As UK residents we were unable to invest in VTSAX as you recommended but we did go 100% into VUSA which is the nearest Vanguard UK equivalent and that has worked out brilliantly as we approach retirement.
    Do you still recommend that going 100% into VTSAX is the best way to go?

    Reply

  78. Moezer says

    My kids range from 17-10, I have opened a ROTH IRA that I’m dumping money into through my business up to a few thousand bucks (yet always under the Minimum Taxable Amount). It’s through Vanguard and it’ll be all VTI (or equivalent).

    Is it literally let it sit and watch what happens? That’s my plan & the plan I’ve instructed my kids this one is for – some reassurance is always welcomed. #ThisIsTheWay

    Reply

  79. Julie Thomas says

    At what age do you start an IRA to ROTH conversion? Is it 5 years before your retirement date or when you retire? My question comes from a 54 y/o retiring at 60.

    Reply

  80. Jenny says

    I know you vouch for front loading JL, but if the market has been up the past two years 26.3% and 23.31%, would you dollar cost average the next year?

    (I got laid off in December and my roll over 401K was reverted to cash – so now I have about $60K to invest.)

    *Also anyone reading this – awesome surfer girl looking for flexible work that still allows me to surf when the wind and tides are right. Muahaha. Thanks all.

    Reply

  81. Jim says

    Hey JL,
    You mentioned that you were not moving to cash, despite Trump being a disruptive force to the market. However, does that mean you will continue to invest any cash you come across (eg. income, etc), or are you keeping what you have in the market but any new income will stay cash? I may have misunderstood you so I’m just looking for clarification.

    I’m currently investing in VTSAX while also keeping a high yield savings account. So I’m wondering if I should keep what I have in VTSAX while continuing to feed it, or if I should keep still VTSAX but instead feed the high yield account.

    Thanks,
    Jim

    Reply

  82. Kyle says

    You’ve previously laid out why you think that investing in international funds is unnecessary (currency risk, accounting risk, higher expense ratios, and US companies being substantially global). That said, we don’t know what the future holds, and for those of who are planning on being invested for many decades to come, these factors might change in such as way as to favor diversification globally, or at least in particular regions of the world outside of the US.

    With that in mind, my question is: under what set of possible future circumstances would you change your mind about investing internationally? For example, how low would the expense ratios need to get, or how much would the US need to pull away from global trade (or another country to dominate it), etc.?

    Reply

  83. Vivek says

    Is it better to write a check for life insurance premium, or instead put it into regular contributions for an S&P500 fund and look for ‘self-insurance’?

    Reply

  84. Greenie says

    How do we hit a moving target? Let’s say we need $40k per year to live on. So to be financially independent, we’d need about $1 million invested to be able to draw $40k p.a. (if applying the 4% rule, which seems prudent). And let’s say that we anticipate we would be able to hit the $1 million target in 20 years’ time. But, by that time, even if we are as frugal as we are now, we’re going to need about $72k per year to live on, thanks to inflation (assuming 3% p.a.)… which means we’d actually need to have $1.8 million invested, which is going to take even longer to get there… and by the time we do, we would have had more inflation, and the figure would rise again! What do we do?

    Reply

  85. Lee says

    Do you have any advice for people who don’t like their job and are looking to find something that fits them better?

    Reply

  87. Dave says

    Any thoughts on whether I keep VTIAX (international) in taxable vs tax advanced accounts? Pros vs cons of each?

    Reply

  89. Arshid Mahmood says

    Your thoughts on what will happen if USA Dollar is no longer the reserve currency of the world. If China becomes the dominant power of the world, will index funds still continue to do as well? As then it won’t be a capitalism, democracy, causing the growth?

    Reply

  90. Bob says

    Do you have any concern about having all investment assets at one firm, like Vanguard? To hedge risk, does it make sense to open, say, three accounts, one at each of Vanguard, Fidelity and Schwab, and then invest in each of their total stock index funds? Or is that just paranoid?

    Reply

  92. Noah S says

    I’m a new investor (almost 25) and I’ve been contributing to a 401(k) for just over 2 years. My account is current valued around $15k. According to my account I earned about a 12% return from January-September last year. I’m invested in Dodge & Cox Income I (DODIX), Loomis Sayles Investment Grade Bond Admiral (LSIGX), Morgan Stanley Global Fixed Income Opportunities (MGFIX), T. Rowe Price Large Cap Value (TRCVX), William Blair Large Cap Growth I (WLGIX), Allspring Special Small Cap Value I (EISIX), Disciplined Growth Small Cap Growth (DGSCG), DFA International Value Portfolio (DFIVX), and ClearBridge International Growth A (LCGAX). These selections were made automatically based on my “aggressive” risk acceptance.

    I’ve been reading your book, and looked to see what options I have for investing on my own through my 401(k). To my delight, I noticed VTSAX is one of the options. My question is, do I move all my current investments to VTSAX and change all future investments to go there, or should I just change future investments to go to VTSAX and leave what I’ve earned so far? I am a very novice investor, and could really use some guidance on what would be best in the long run.

    Side Note: After reading your chapter about HSAs, I’ve already started investing my HSA funds and am going to make it a goal to max out my contributions on that account this year. I wasn’t able to invest in VTSAX on that account, but I was able to invest in VFIAX (which seemed like the best alternative for the options I was presented). Thank you so much for your help so far!

    Reply

  93. Phil Ryan says

    I’m 57 and looking to retire in a few years I am invested at 100 percent equities. If I adhere to the 4 percent rule can I stay that way even when I’m retired

    Reply

  94. Steve Poling says

    Let’s suppose that you will eat beans and rice before selling equities in a down market. And let’s also suppose that you have rental properties throwing off cash each month. What’s the downside of having 100% in large cap index funds?

    Reply

  95. Spike says

    My question is about retirement. I’ve read a lot about amassing a nest egg but not much about retirement. My wife and I got a late start on saving, but we now have a reasonable amount of total-stock funds, and she has a small pension. So my question is, as we move into our 60’s and retire, what do we do with our stocks? Do we keep them in total-market stock funds, which seems risky, or should we move a large portion into bond funds or treasury bonds or something else?

    Reply

  100. LRW says

    My son is into simplicity and is not keen on technology and quite frankly anything that has too many steps (he’s 19 and seems like he would prefer the 1950’s). What platform is best to get him started with very simple investing? Looking for the “set it and forget it” approach.

    Reply

    • jackie says

      1. go to Fidelity or Vanguard .com
      2. Create an log in for your son
      3. Open a brokerage account
      4. Link his checking account, set up automatic monthly withdrawals to buy VTSAX
      5. Go back to watching tv
      – He obviously should check it every once and a while, but if he has the income, there really is nothing else you need to do besides setting up the automatic investments. My parents did this for me when I was 18 and started my first job. I didn’t even have the login until I was 21! lol

      Reply

  101. Dani says

    On this episode of the Rational Reminder podcast: https://rationalreminder.ca/podcast/229

    They present evidence that the actual safe withdrawal rate may be closer to 2.7% rather than the 4% that’s popularized in FIRE and even mainstream personal finance advice.

    This means that someone whose goal retirement income is 40,000 would have to save nearly 1.5M rather than the typical 1M that gets quoted.

    What do you make of this? Based on the evidence presented in that podcast, would you advise people to use 2.7% as their SWR? Why or why not?

    Reply

  102. Bill says

    In your book ‘The Simple Path to Wealth’, thank you for writing this, you prescribe to 2 index funds; VTSAX for stocks and VBTLX for bonds as all one really needs to carry in their portfolio.
    Are you still of this mindset after all these years, or should we also perhaps consider an international index fund and/or a small cap index fund as well?

    Reply

  103. Francisco Cano says

    Im 64 yrs old, just started investing. I can contribute about $1000/month. What would be the best statagy to use at this point in my life? I love what I do and don’t plan on retiring yet, im fairly healthy. I’m not young and don’t have wealth built up yet so I can’t use the two strategies mentioned in your book. (I’m at chapter 14).

    Thank you
    Francisco

    Reply

    • Frugal Steve says

      Find a way to double that to $2k per month, put it all into a cheap total market fund and maybe 20-30% in bonds (don’t worry about Roth, your taxes will be less when you retire. Use extra tax savings to increase your contribution) . Work until your 70 and delay SS until then. Then live off of SS and the least amount you can withdraw from your savings. (preferably less than $2k per month from savings) Hopefully your house is paid off or you have cheap rent.

      Reply

  104. Anthony Perry says

    You mention that, once one has hit their number, you wouldn’t simply set a 4% withdrawal rate and forget about it, but would adjust as the market dictates. It’s easy to know when the market is doing badly (just turn on a TV), but hard to know when the market is doing well and when we might take a bit more out. Can you get some practical examples?

    Reply

  105. Edward Draiss says

    Bonds dont appear to be smoothening out athe bumpy ride. What include them if they do not appear to be providing any value?

    Reply

  106. Timothy W says

    Appreciate your book.

    You slightly promote the total market index fund over the S&P. When I looked and compared on Vanguard, the S&P appears to consistently outperform Total Market (albeit slightly).

    What am I missing?
    Thanks

    Reply

  109. Lise Larsen says

    As a Danish reader, and first-time investor, it seems like a bit of jungle to find the equivalent to VTSAX. (Vanguard is not available in Denmark).
    So, what could have been the simple path to wealth, feels like a complicated path to wealth.
    Could you speak a bit more to the most simple international path to go down, when you are in the Wealth Accumulation Stage and want to focus on stocks?

    Reply

  110. Edward Draiss says

    Is investing in the total market still viable with so much of the market owned by the FAB5 and Magnificent7?

    Reply

  111. Rebecca says

    Slightly out of your area but wondered if you had any books or experts you would recommend when thinking about entering the property market. Like the stock market, it’s a minefield and I’m looking for a book as good as yours but for the property market when thinking about getting on the ladder and buying my first home.

    Reply

  112. Stephanie Diamond says

    I just started trying to educate myself on financial literacy at 46 years old. I’ve been investing in a 403b and a Roth with National Life Group and they have had very little growth. I came across your book and am very thankful for it and also super sad about all the years lost with NLG.

    Reply

  113. Bret Kent says

    Knowing that you are a big proponent of Vanguard, I am curious about your thoughts on the companies that are now offering matching IRA’s (Robinhood, SoFi, and Acorns). With those offerings, does it tip the scale enough?

    Reply

  114. Sethu says

    In taxable account which one is more tax efficient. VTSAX or VOO? Tax efficient from any capital gains distribution and then dividend distributions. Thanks.

    Reply

  116. Patrick says

    Do you still prefer traditional Index Funds (VTSAX) to their ETF equivalents (VTI)? As expense ratios continue to drop on ETFs, I must admit I’ve been tempted to make the switch.

    Thanks for your many years of writing. Your work has had a profound effect on me, and has been very useful anytime someone asked me what they should read when they wanted to learn about investing.

    Reply

    • Jeff DT says

      I would love to know the answer to this as well! I switched from index funds to their ETF equivalents a few months ago, before I read SPW, so I would have loved more detail about why he doesn’t recommend them! But still need to scour the blog for posts about it.

      Reply

  117. Cristian says

    Where do you stand on opening an investing account for a newborn and make regular contributions to it? (Pro: many years of compunding, your child will have a great nest egg. Con: a 21 year old with a bunch of money at their disposal.)

    Reply

  118. Oscar says

    Hi JL,

    It’s awesome to have a chance to ask you here.
    I’ve just finished “The Simple Path to Wealth”, and love it. Yet, I am finding ways to apply for myself, and how I can apply it in my country, Cambodia. I like when you make it simple by dividing in two stages for ages which are Wealth Accumulation Portfolio, and Wealth Preservation Portfolio stages.
    I am now in early 30s, I want to build Wealth Accumulation Portfolio. I have a full time job and good paid. I also have debt in which I project to get out of it in 2 years by calculation of my current savings.

    To let you know, unluckily, at least as of today, there is no such or similarity thing to Vanguard yet. So, my question is “Should I grab some parts from saving, and turn it to start some investment or FX trading” so that If I am luckily enough, I would have benefits and clear the debt in 1.5 years or even earlier. But if it’s not going well, it may drag me to 3-4 years.

    I know the answer might not be exactly Yes or No, so I would love to hear your advice and recommendation.

    Regards,
    Oscar

    Reply

  119. Shelly says

    I know this is banking more than investing, but I see them as interdependent. Now that we are looking at the FDIC likely going by the wayside, what can the average person do to ensure that their bank is on solid footing in case of a collapse?

    Reply

  120. LiVi says

    Any suggestions of how a late career can make the most of TSP? I have 7-10 years to invest. You mention 100% C-fund but how about when you’re late to the game?

    Reply

  121. Karthik says

    Please share your thoughts on Direct Indexing for Tax Loss Harvesting. Direct Indexing seems to have gained popularity in the recent years. The white paper study indicates that Direct Indexing closely matches the returns of VOO or SPY while providing benefits of Tax Loss Harvesting.

    Reply

  123. Jopo90 says

    Do you have any recommendations for ethical investing, or ESG funds? I’m based in the UK and have found the VANGUARD ESG DEVELOPED WORLD ALL CAP EQUITY INDEX and I’d be interested to know your thoughts

    Reply

  124. dnf98 says

    Hi Jim, in your retirement, I would love to know if, how, and when you utilized VBTLX (or bonds in general) because of what was happening in the economy (used VBTLX for a withdrawal).

    Reply

  126. Andrew says

    I’ve read that you recommend for international readers to invest in a total world fund, but then you reccomend US based investors to invest in a total US fund. If the total US fund is all we need for equities and in your opinion the best, why not tell international readers to invest in the total US fund as well?

    Reply

  128. Kashan Tariq says

    You suggested two formulas to use as a thumb rule for buying a house. If both suggest we should rent. Would you rent or still would go for itemized cost comparison between buying and renting?

    Reply

  129. Kashan Tariq says

    As a practicing Muslim I cannot buy VTSAX because majority of holdings contain industries that invest in non islamic businesses such as banking, pork production and alcohols. That said there are Islamic law compliant funds (SPUS and HLAL) that track S&P meaning they take out these businesses and invest in rest. They do have slightly lower returns (7 percent inflation adjusted) and are not offered by Vanguard, Fidelity or Schwab. There are expense ratios are also slightly high at 0.5 % given the extra layering of making sure stock holdings are compliant.
    I am 35 and reached 30 percent savings rate but goal is to reach 5o percent savings rate and invest this much. Over long term do you think If I consistently save and invest more in SPUS that matters the most or saving more and investing in VTSAX.

    Reply

  130. Liz says

    You had mentioned in 2016 the thought of cashing out of the market completely. Given your retirment timeline and the new administrations in my opinion) much more aggressive agenda with affects likely seen worldwide, have your thoughts of cashing out( just holding in a money market account etc..) again surfaced ?

    Reply

  132. Luis Perez says

    Dear Mr. Collins, these are undeniably challenging times for anyone pursuing a sound financial path. Your insights have been invaluable to so many of us. Given the unprecedented nature of the current economic landscape, your perspective on what we should anticipate and how to navigate it would be immensely helpful and deeply appreciated.

    Reply

    • Elliot M. says

      I came here to ask this!
      While I think many of us could somewhat predict the answer we might get (no one’s crystal ball is working any better now than it was a year ago, so strategy shouldn’t change: continue to buy, save, and hold), I would still be interested to hear from Mr. Collins. Like you say, Luis, these are unprecedented political and economic landscapes. It makes me want to reduce risk any way I can (maybe concentrating more on global indexes?); it’s very hard not to feel like this is seismic shift in America.

      Reply

      • Brad says

        It’s the same question I was going to ask. It seems like diversifying into more global index funds is smart, but I’m not sure.

        Trust is gained in drops and lost in buckets, and it feels like America has lost so much global trust that it will have negative ramifications for the dollar over the next decades.

        Reply

        • Christina says

          Same question. I don’t have the same confidence in US stocks as I did before. I keep talking myself out of cashing out, but it’s a daily struggle.

          Reply

  134. Jen says

    I’m wondering if this is still your sentiment (hold everything) today…? I’m largely in S&P index funds (mostly Vanguard) but not entirely. Most things still up but that can easily change, and this week or next, I suspect.

    Reply

  135. Penny Price says

    Wondering what to do with the feels you get when you’re about halfway to FIRE. Like a mid-life crisis feeling, I imagine? How do you recharge your batteries to stay the course, as friends and neighbors are living it up?

    Reply

  136. Taylor says

    I know you have recommended betterment for a robot-advisor. What’s your opinion on vanguard’s digital advisor offering?

    Reply

  137. Chris says

    Bonds or Money Market Fund in this environment? When to buy into bonds instead with interest rates so high?

    Reply

  138. Dori says

    I left a previous company and rolled my 401k into a rollover IRA. When the funds were transferred, they were set into a cash account. When I start allocating funds, should I just allocate all funds to VTSAX-like account in Fidelity? (This is before I knew about your method) Or should I slowly move a specific amount at a specific time until they are all in VTSAX? (Ex: 10% every week for 10 weeks)

    Reply

  139. Danny Orozco says

    I absolutely love your book! I listened to the audio book twice. Simple, practical, and life changing! I was invested in VTSAX until July 2024. All my investments since then have been making a conservative 4-5% in VFMXX. Everything is on sale with Tariffs. How would you recommend that I invest?

    Reply

  140. James says

    I would love a post focused solely on the self-employed. My wife and I are both self-employed so there are no matching contributions. A strategy based solely on IRA, Roth IRA, SEP, etc.

    We work hard to reduce expenses and maximize earning potential but we are personally limited in investment funds each year due to a family with 2 young children and have had recurring high medical expenses for the last couple years (and forseeable into the next 3-5) that cost us both financially and reduced earning abilities due to time away from work.
    Thank you.

    Reply

  141. L says

    Would you put together a summary of what to know about rebalancing?
    Once a year but also after market changes more than 10%?
    Pros and cons of having bonds in each type of account versus enough bonds in a target date fund.
    What to know to avoid a taxable action.

    Reply

  142. Asim Sheikh says

    Although I have been investing in a 70/30 portfolio split for a number of years, I am finding that as I get older, my risk tolerance has shifted to more of a 60/40 split, based upon several risk tolerance questionnaires that I have taken recently. However, given that the market is down currently from it’s high earlier in the year (as of 4/13/2025), and realizing that no one can time the market, I am struggling to leverage the right strategy in order to shift the portfolio from 70/30 to 60/40. Thoughts?

    Reply

  143. Simon says

    Now that Trump is in office and we are walking into a bear market, what do you think about borrowing money to seize this opportunity if the interst rate below 3%?

    Reply

  144. Gen Brady says

    Hi, thank you for your clear, well explained advice. I do not want to invest in tobacco companies or weapons companies. Is there a way I can invest that allows me to be true to my ethics please?

    Reply

  145. Mitchell says

    Once retired, how often do/should/is it advisable to look at our portfolio – monthly, quarterly annually? I want to strike the right balance between living my life and not ignoring my portfolio completely.

    Reply

  146. SisterTrue says

    Dear JL: I would love to hear your thoughts about LATE ENTRY to investing and whether late entry would change your general advice about VTSAX/VTI. More detail:

    I’m 62 years old. I’m wondering if I should invest all in VTSAX, VTI, etc. I have $300K to invest and need to live off of dividends (plus spending little). Here’s why:
    – I was financially solvent ($3M in savings, plus a fully paid off home, and zero debt) until a family tragedy occurred 4 years ago. I now have $300K to my name, no home and, for health reasons, have limited income-earning potential.

    So, my questions are these:
    A. Given my age and situation, would you still recommend that I invest $300K in VTSAX or another index fund – especially given that (1) banks are borrowing money from Feds and the possibility that this indicates a high chance of a true crash (50% crash, using JL Collins’ definition) and (2) the USA’s overall economic uncertainty and Trump’s threat of default?
    B. If not VTSAX or another index fund, how would you recommend I invest?

    Super grateful!

    Reply

  147. Mira says

    What would you recommend from Vanguard if my employer doesn’t offe rVanguard Total Stock Market Index Fund Admiral Shares?

    Reply

  148. Mark Deaton says

    First, I want to thank you for all the great advice and your book. Truly a manual for building wealth and financial independence.

    I have a more nuanced question regarding the mega backdoor Roth strategy and if it’s something to pursue as opposed to investing extra dollars in a brokerage account. Essentially from what I understand, if your plans allow, you can add post tax dollars up go ~73k (as part of your total allowed 401k) into the Roth 401k/IRA.

    I am in my mid 30s and lucky enough to have a good amount of Retirement savings in my 401k , Roth IRA and small brokerage for backup. I’ve maxed my pretax contributions and employer match. I can now add to my brokerage OR pursue this megabackdoor Roth. As I already have money in my brokerage, I don’t see downside to doing this besides the obvious of not having the gains accessible without penalty before 59.5. Benefits I see: tax free gains and no RMDs (assuming you role the Roth 401k into a Roth IRA upon leaving a company).

    Thanks for the education and advice!

    Reply

  149. Kevin Hoheisel says

    Does the Secure 2.0 act change to eliminate RMDs for Roth 401ks make it more attractive to convert sooner? Even if it pushes one into next tax bracket?

    Reply

  150. Von Pace says

    Hello, I just finished reading your book, and I really enjoyed it. The question I have is about whole life Insurance. Some advisors recommend buying whole life insurance and using it like a bank. As you build up cash value in the policy, you can then use it to purchase a car or for a business. Certain polices let you put extra money in the policy, and this way, when you use it, you still have your insurance. You then pay back or make payments to your policy instead of to a bank, and you don’t pay interest. You do have the cost of the insurance. Any thoughts on this I would find interesting. Thanks Von

    Reply

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