The Simple Path to Wealth

If you like the book and want to read more, consider buying it to support the author.👍

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💡 Key Takeaways

• Stocks are good during inflation.
• Bonds are good during deflation.
• VBTLX for bonds.
• Go Bonds 5-10 years before retirement.

✏ Top Quotes

Stop thinking about what your money can buy. Start thinking about what your money can earn.

Rule #1: Never lose money. Rule #2: Never forget rule #1.

Put all your eggs in one basket and forget about it.

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📝 Summary + Notes

Part I: Orientation

• Avoid debt at all costs.
• A house mortgage is a debt. You don’t need a house most of the time.
• Spend less than you earn—invest the surplus—avoid debt.

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Part II: How to harness the world’s most powerful wealth-building tool

• Index is good, avoid fees, you can’t pick stocks, and don’t let others manage your money.
• Deflation occurs when the price of goods spirals downward and inflation occurs when they soar.
• Bonds: VBTLX (Vanguard Total Bond Market Index Fund). Bonds provide income, tend to smooth out the rough ride of stocks and serve as a sour deflation hedge.
• Bonds pay interest, providing us with an income flow.
• When you buy a stock you are buying part ownership in a company. When you buy bonds you are loaning money to a company or government agency.
• Since deflation occurs when the price of stuff falls, when the money you’ve lent is paid back, it has more purchasing power.
• You are young. Be aggressive. Have 100% of your portfolio on VTSAX.
• You might start slowly shifting into your bond allocation 5 or 10 years before you are fully retired.
• ETF: VTI .05% (ETF=exchange traded fund). When buying or selling ETFs, just like a stock, commissions and/or spreads are frequently involved. These added costs can offset the savings in the expense ratio.