034 | This podcast is Part 2 of the Stock Series discussion with JL Collins, author of The Simple Path to Wealth and the website JLCollinsNH; we discuss the Great Depression and the mindset you need to be a successful long-term investor, plus how to allocate between equities and bonds. Money managers are expensive always, and it’s very rare to find a good one. So I highjacked Doc G’s podcast. I was curious about kind of like, how does it help society and individuals? For your money manager, it is always a bad idea for you to pay off your mortgage, because by definition, that takes capital, that that person is managing for you and getting paid on away from your portfolio and into the bank, paying off that mortgage. About 20 years ago, it was outpacing the market. Well, I would love to dive into what really matters, in terms of how to get there. I think he actually bought a house, without visiting it, just completely online. Don’t do it. But a more astute person would have had their eyes wider open and said, oh, wait a second, this way has worked out okay, but this is a better way, and they would have seen that sooner. Maybe we got that sense of each other as we were dating without the conversation. JL Collins is on Facebook. Have you sold? JL Collins argues that dedicated exposure to ex-US stocks is unnecessary because U.S. companies do business overseas. JL Collins joins me on the Financial Independence Podcast to talk about stocks, bonds, real estate, and his brand new book - The Simple Path to Wealth! JL: Yeah, no, you’re right. Steve: I’m going to bundle up the next few because they’re around VTSAX, but basically it’s buy VTSAX, embrace the fact that is part of this equation, and it’s going to go down 30%, 40% some years, and shoot for living off of 2%. They’re not willing to stay the course and appreciate the benefit. I saw you joined Twitter. If you want to be financially independent, if you want to have a F-you money, if you want to be free and have the widest possible choices in your life, you have to buy that freedom, and that you do by saving money. There is a lot of rationalization going on, but there’s like a famous financial advisor. Podcast: JL Collins — The Simple Path to Wealth October 15, 2020 by Steve Chen Episode 48 of the NewRetirement podcast is an interview with JL Collins —a best-selling author and financial independence guru — and discusses the what, why, and how of Financial Independence as well as Collins’ book, “ The Simple Path to Wealth ”. Steve: All these index measures. JL: Then I look back at the first year and the second year and found in both those years, that was also true. JL: Now, as to the formula as to what financial independence looks like, I think I referenced a little bit early in the conversation, the 4% rule, and that’s simply suggests, and it’s more a guideline in my mind than a rule that if you have enough money, that 4% of that is equal to, or greater than your annual expenses, you are, by definition, financially independent. Being surprised by this is like being surprised by hurricanes if you live in Florida, or snow storms if you live in New Hampshire. JL: Well, that’s an interesting question. Steve: Yeah. JL: Yeah, it’s an interesting question because sometime in the mid-’80s, I had a friend of mine who was a financial analyst, and he was the one who first brought passive investing, which is to say index funds to my attention, and Vanguard and Jack Bogle. Once I did, it just became obvious that it was the better way. We've pulled out the key parts into 7 clips. Mr. Money Mustache is great. JL Collins) In this episode, we interview JL Collins, Author of the book “Simple Path To Wealth: Your Roadmap To Financial Independence and a Rich, Free Life." Steve: Yeah. The more interesting question is, will they? You can be sure those stories will appear at the moment they’re available. I just didn’t want to have to do it all the time. But if you’re willing to tolerate the stock market volatility, it will give you the best, most powerful wealth building tool that you have. NGPF Podcast: Tim Talks to JL Collins About Financial Independence and Investing. I think because I didn’t have to do it all the time, because I could step away whenever I chose, that’s probably one of the reasons I enjoyed it as much as I did. JL Collins of JLCollinsNH.com shares why your house is a terrible investment. This podcast is Part 2 of the Stock Series discussion with JL Collins, author of The Simple Path to Wealth and the website JLCollinsNH; we discuss the Great Depression and the mindset you need to be a successful long-term investor, plus how to allocate between equities and bonds. Are they earning that money? The stock market is up, then down, then down, then up. Right? We offer tools for this, and then if you want to talk to an advisor, you can, but we only charge for time, any of that stuff. I can imagine few things that would be more discouraging, that it’d be married to somebody, and while you’re diligently saving and investing and trying to build your F-you money and financial independence, they’re out squandering it. Terms of Use: Your use of this site constitutes acceptance of the Terms of Use. I don’t see that as being secure income. Chautauqua sits out 2020. by jlcollinsnh 15 Comments. I don’t mean to suggest that there are not, and kudos to those that are because they’re providing an incredibly important service, because most people, as I said earlier, goofs on their money. So, I let my lifestyle increase as my income increased, but only at 50% of whatever that income was. This Saturday, we're kicking off our weekend with coffee and conversation with the legendary, JL Collins, author of "The Simple Path to Wealth" and JLCollinsnh.com. Steve: Did you make her go Dutch when you were having your first dates and she got a sense. If you made it this far, I encourage you to check out jlCollinsnh.com, his Google talk as well, and his book, The Simple Path to Wealth. Now, back in those days, stepping away from a job for several months or, on occasion, several years was not very well accepted, and so I had to be creative with my resume at times to account for those gaps, so to speak. JL: Well, you think to yourself, well, if I just buy the good ones, then I can surely outperform the index, but of course, today’s good ones are tomorrow’s Enrons. At the very least, solo investors should call the support line for their online brokerage.. right? That means that a money manager, to do best by their client is frequently called upon to do things that are not in their own personal best interest. For what? I think our worldview is the same, like we’re sitting here cranking out this planning software out of our garages. The truth is I knew about indexing long before I was smart enough to embrace it, so there’s another dirty little secret, as long as we’re airing them. The easiest part of that question to answer is the individual. Favorites. 1989 was the beginning of the longest of those would stretch out five years. But yeah, how do you define FI? Steve: In Idaho. But even more importantly, over the years, it will happen once your money’s invested. They are, but you shouldn’t be surprised by them. Guest on BiggerPockets Money Podcast, The Meaningful Money Persona…, ChooseFI, and Financial Independence Podcast. What I needed was guidance from someone without an agenda. It doesn’t try to predict which companies are going to do better than other companies, it buys them on a market cap, weighted fashion, and we can talk about that if we need to, but it buys them without predicting what they’re going to do. I knew the more I had, the more power I had, if you will, more freedom I had, the bolder I could be in my choices, but I actually achieved financial independence without even being aware of the concept, but that allowed me to periodically step away from jobs and take sabbaticals. It all start with education and kind of making your own decisions and being a critical thinker. JL Collins is one of the undisputed heavy weights of the personal finance industry. ‎My Podcast is going to be about my life, Trials and tribulations I faced growing up, Sports, Music album reviews ,relationship experiences and personal feelings JL Collins from jlcollinsnh.com and author of "The Simple Path To Wealth" joins the show today to talk about the essentials of investing! By Dante StevieJ Collins. JL: I think to the extent that people are free to choose what they want to do, what they’re really passionate about without worrying about paying the bills, which is what financial independence gives you, you’ll probably get happier, more productive, more effective people. Steve: Yeah. That’s him above. Right. Most people will never take it on, most people are not even aware that it is a possibility or an opportunity. How JL Collins Started Investing for Financial Independence. I actually was. Then regarding volatility, that’s one of the most important points to remember, is the way people lose money in the stock market is, when it takes one of its periodic drops, and it does on a regular basis, they panic and they sell, and then they lick their wounds and they’ve lost money, and they say, man, I’m never doing that again. The answer to that question is yes, I think almost everybody can do it. So, as I say, it just permitted me the opportunity to make a bolder choice than it had then if I had been living paycheck to paycheck and worrying how I was going to pay the rent. It’s possible that your timing could be bad, and the next day you wake up and the market’s down 30%. It was huge.d it wasn’t necessarily that it was huge, but now the more active oriented firms are feeling this, so you’re starting to see passive index is really growing and active fund managers and families are losing assets, so they’re feeling it. On today's show, I chat with JL Collins about index fund investing, personal finance principles, and the road to financial independence. Yeah, I think that what’s interesting is the whole financial services industry is typically paid in a non-transparent way. And the answer to that question is no. Steve: Nice. Listen to BiggerPockets Money Podcast episodes free, on demand. At least the silly people will. Escucha y descarga gratis los episodios de PHIL COLLINS. A great example, real quickly of what I mean by those conflicting interests is let’s suppose you sit down with your money manager and your question is, should I pay off my mortgage? I don’t think most people will ever be financially independent, but I think almost everybody could if they were aware of it and were willing to choose it, because of course, like any choice you make in life, when you choose buying your freedom, you have to divert money from buying other things. Or what about the debt for starting a business or those kinds of things? How about for your career? JL picks up the phone and we still had a few conversations. The Marriage, Kids and Money Podcast is dedicated to helping you do just that. I think also, within that, if you do that, theoretically, you can achieve financial independence in 14 years, is that right? You could potentially use debt to subsidize those low income years as well, as a way to finance this. If you’re willing to tolerate blizzards, there’s nice living in New England. 1975 was the very first year I ever invested in anything. Then they were like, where could I move that’s completely different and brand new? Most people, it’s their last priority and somehow never makes the list at the end of each month. Now, you can debate whether or not it’s a good idea, but he couldn’t get any advisor, and he talked to a number of them who were all fiduciaries to say, “Hey, this could work.” Instead, they wanted to do bond ladders or other kinds of fixed income strategy that they would manage the money, and he felt like they had a conflict of interest, but they weren’t calling that out clearly. JL: Yeah. Almost, anyway. I heard the F-you money very early on in my career too. That's exactly what's happening to Robinhood investors... we'll unveil yet another issue at the troubled brokerage during our headlines segment.In our second headline: day-traders are often ignored by long term investors, but new research indicates these very-same day-traders could be a driving force behind market fluctuations, including the market rebound this year. JL: Yeah. But again, I was never in a situation where I had to worry about paying the rent or the mortgage or putting food on the table because I’d always save 50% of my income, and it built up this pile of F-you money that gives you a lot of freedom, a lot of power. I know Vanguard published on this. I’ve had financial advisors say to me, “I’m only doing what my customer is most comfortable with,” and there’s some truth to that. We do read them and try to adapt as we go. So, if you believe that the United States has a future, and I do, then that’s about as good a bet worldwide as you can get anywhere. Well, we’d surveyed our users and we saw the same thing. F-you money, in my mind, wasn’t enough to never work again. Episode 14 - The Simple Path To Wealth (feat. I think, even if I had been aware of that concept, I don’t think that would have appealed to me. Then finally, we’re trying to build the audience for this podcast, so any reviews are welcome. It wasn’t years later, until years later, when I came across the 4% rule and the idea of financial independence, and I put those numbers to it that I realized, oh yeah, that’s what happened back then. JL: Well, thank you, Steve. Steve: Oh, it gets important as they get … there’s a forcing function in people’s lives, where they get older, and eventually they’re probably going to stop making money from work, and they’re going to be faced with how are they going to finance a long, hopefully a long period of time post career. JL: I wouldn’t even hazard a guess. So, most people insured are goofs with their money. Copyright © 2020 Apple Inc. All rights reserved. They can rationalize a whole lot of things. Then of course, so the underlying fees of whatever investments they put you in, so it can be really, even worse than we’re talking about. JL: No, I can’t say I ever did that, but that was a different era too. The interesting thing there is that they can certainly rise 100%, but they’re not limited to that. Just have to understand a couple of very simple things, get those right, put it on autopilot, which is basically buy VTSAX whenever you can, as much as you can. Is it much ado about nothing? That’s him above. As you alluded to the market, goes up 75% of the time. Nice. How to Retire Happy, Wild and Free tackles the very important and often neglected area of retirement psychology and mental health.Having been translated to over 15 languages and sold hundreds of thousands of copies, Zelinksi is a very popular author. You should be buying the least expensive house that meets your need and taking on the least expensive debt in order to accomplish that. JL: I happen to think that the narrower the actively traded part of the market becomes, the smaller it becomes, the easier it will be to out perform. JL: Yeah, it’s coming up. JL Collins spent most of his career in the publishing business, but that is almost completely unimportant. There is so much nonsense swirling around COVID-19, right down to the correct name, I was starting to get lost sorting it out. One of the biggest destroyers of wealth is divorce. What is an investor to do?Today we bring JLCollins from JLCollinsNH.com back to the show to calm our fears and help us understand what is happening with the stock market.The market is falling. That translates into three out of four years. JL: But anyway, once that income’s gone and living off the portfolio, sure, we would certainly have any dividends that I currently have reinvested, I’d have them paid out into the checking account and then I’d sell whatever number of shares I needed to sell in order to pay the bills. It took me a long time, but now I’m just going to out it and ignore everything. Then the third option is where they charge by the hour. Doug was feeling generous today with his dino-trivia, and opted for multiple choice responses... enjoy! Today's guest talks about both the process of thinking about opportunities AND discusses how to weigh down markets. And, join our private Facebook Group to discuss this podcast, suggest topics and learn with our growing community. If you are spending $40,000 or less, you are financially independent. JL: The other thing I would say is that, while there’s a lot being written in the FI world today, we’re tiny drops in a huge bucket that mostly promotes commercialism, mostly promotes that you need a break today and you deserve this and you deserve that. As I type this, the S&P500 is down not quite 10%. Disclaimer: The content, calculators, and tools on NewRetirement.com are for informational and educational purposes only and should not be construed as professional financial advice. The other way to look at that 1%, so we talked about the 4% rule, which means you can comfortably pull 4% of your holdings each year to live on. ‎Show Everyday Courage with Jillian Johnsrud, Ep Demystifying Index Fund Investing with JL Collins - Apr 26, 2020 ‎Figuring out how to invest is a challenge for many, including Jillian. Written by. Well, first of all, I have a chapter in the book and a post on the blog, if people want to just read this on why I don’t like dollar cost averaging. JL: That’s the only way to deal with it, as we’ve talked about with just like, you’re going to have to live through hurricanes in Florida. JL: For somebody who is not a famous person, it’s doing pretty good. Now, it’s not my job, or even my position to tell anyone how they should spend their money, it’s their money, they can spend it however they choose. With that, JL, welcome to our show. JL is an accomplished consultant, speaker, and bestselling author of “The Simple Path to Wealth”. 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