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“this is The Simple Path to Wealth I created for my then-teenager: Put all your eggs into one large and diverse basket, add more whenever you can, and forget about it. The more you add, the faster you’ll get there. Job done.”
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
“Put all your eggs in one basket and forget about it. The great irony of investing is that the more you watch and fiddle with your holdings, the less well you are likely to do. Fill your basket, add as much as you can along the way, and ignore it the rest of the time. You’ll likely wake up rich. Here’s the basket: VTSAX.”
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
“Don’t worry about things you have no control over. Concentrate on changing what you can change and leave the worries to everybody else.”
― Leading an Inspired Life
― Leading an Inspired Life
“if you are willing to do a bit more work, you could slightly smooth out the wild ride and possibly outperform over time by adding 10%–25% in bonds. If you do, about once a year, you will want to rebalance your funds to maintain your chosen allocation. You might also want to rebalance any time the market makes a major move (20%+) up or down. This means you will sell shares in whichever asset class has performed better and buy shares in the one that has lagged.”
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
“The three tools Once you’ve sorted through your three considerations, you are ready to build your portfolio, and you’ll need only these three tools to do it. See, I promised this would be simple! 1. Stocks: VTSAX (Vanguard Total Stock Market Index Fund). Stocks provide the best returns over time and serve as our inflation hedge. This is our core wealth-building tool. (See Chapter 17 for variants of this same fund.) 2. Bonds: VBTLX (Vanguard Total Bond Market Index Fund). Bonds provide income, tend to smooth out the rough ride of stocks, and serve as our deflation hedge. 3. Cash: Cash is good to have around to cover routine expenses and to meet emergencies. Cash is also king during times of deflation. The more prices drop, the more your cash can buy. But when prices rise (inflation), its value steadily erodes. In these days of low interest rates, idle cash doesn’t have much earning potential. I suggest you keep as little as possible on hand, consistent with your needs and comfort level. Typically, money market funds pay slightly more than bank savings accounts, but not always. And while money markets are considered to be extremely safe, they don’t offer the FDIC insurance (up to $250,000) found with bank accounts. At various times, we’ve kept our cash in our local bank or in our online bank. But normally, I slightly prefer the money market option, and at the moment here in 2025, ours is in Vanguard’s VMRXX (Vanguard Cash Reserves Federal Money Market Fund). So that’s it. Three simple tools. Two index mutual funds and a money market and/or bank account. A wealth-builder, an inflation hedge, a deflation hedge, and cash for daily needs and emergencies. As promised, the combination is low cost, effective, diversified, and simple. You can fine-tune your allocation in each investment to meet your own personal considerations. Want a smoother ride? Willing to accept a lower long-term return and slower wealth accumulation? Just increase the percentage in VBTLX and/or cash. Want maximum growth potential? Hold more in VTSAX. In the coming chapters, we’ll talk about index funds and bonds. Then we’ll explore a couple of specific strategies and portfolios to get you started and take a look at how to select the asset allocation best suited to your needs and temperament.”
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
― The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life
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