Good book as a general overview of how to sort out your finances, no matter if you just want to be prepared for retirement in your 60s, or move up that date of not-having-to-work to some time earlier than that.
Basically, JL Collins just says:
- Spend less than you earn. Invest the rest. Ideally, you save and invest 50% or more of your income.
- Simply pour your savings in the cheapest and broadest stock market product there is. In the US, it's Vanguard's Total stock market index.
Things that were not "perfect":
- Very US-centric. A handful of chapters do not apply to people outside of the US, because he talks about tax-efficient retirement plans which we do not have in Germany.
- Most reported yields used numbers that were taken from the optimistic end of the range of historic market returns. I wonder why. This strategy does not require any magic sauce to make the maths work. 5-8% of stock market returns are perfectly fine if you have your savings rate and spending habits in check.
Why I think this was great:
- Target audience was JL Collins' daughter who does not care for finances. His language was clear, to the point and had a friendly tone.
- A significant part of the book was supposed to teach you to "not panic". Stocks are risky only in the sense that they are volatile. Understand that crashes are part of the deal, and just invest calmly.
- One chapter talked about the "safe widthdrawel rate": You can withdraw 4% per year from a stock portfolio and can (pretty much) live on it forever. I only knew this blog-compressed version of the rule, when in reality the original study goes in depth a lot more. The book even sported 4 full pages of numerical calculations. Loved it! And it helped my understanding of how this works.
If you don't want to read the book, you can find a lot of overlap in his free blog series: https://jlcollinsnh.com/stock-series/ -- OR, for an overview, simply watch this talk that he gave when invited to speak at Google: https://www.youtube.com/watch?v=T71ibcZAX3I