The Simple Path to Wealth: Your road map to financial independence and a rich, free life

“There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and to work for whom you respect.”

“A parable: The Monk and the Minister Two close boyhood friends grow up and go their separate ways. One becomes a humble monk, the other a rich and powerful minister to the king. Years later they meet. As they catch up, the portly minister (in his fine robes) takes pity on the thin and shabby monk. Seeking to help, he says: “You know, if you could learn to cater to the king, you wouldn’t have to live on rice and beans.” To which the monk replies: “If you could learn to live on rice and beans, you wouldn’t have to cater to the king.” Most all of us fall somewhere between the two. As for me, it is better to be closer to the monk.”

“You own the things you own and they in turn own you.”

“It’s not hard. Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn.”

“Here are a few key guidelines to consider: Spend less than you earn—invest the surplus—avoid debt. Do simply this and you’ll wind up rich. Not just in money. Carrying debt is as appealing as being covered with leeches and has much the same effect. Take out your sharpest knife and start scraping the little bloodsuckers off. If your lifestyle matches—or god forbid exceeds—your income, you are no more than a gilded slave. Avoid fiscally irresponsible people. Never marry one or otherwise give him or her access to your money. Avoid investment advisors. Too many have only their own interests at heart. By the time you know enough to pick a good one, you know enough to handle your finances yourself. It’s your money and no one will care for it better than you. You own the things you own and they in turn own you. Money can buy many things, but nothing more valuable than your freedom. Life choices are not always about the money, but you should always be clear about the financial impact of the choices you make.”

“Look again at those people around you. For most, debt is simply a part of life. But it doesn’t have to be for you. You weren’t born to be a slave.”

“Here’s the simple formula: Spend less than you earn—invest the surplus—avoid debt”

“But the simple truth is this: the more complex an investment is, the less likely it is to be profitable. Index funds outperform actively managed funds in large part simply because actively managed funds require expensive active managers. Not only are they prone to making investing mistakes, their fees are a continual performance drag on the portfolio.”

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

“I may not have owned a Mercedes, but I owned my freedom. Freedom to choose when to leave a job and freedom from worry when the choice wasn’t mine.”

“Avoid fiscally irresponsible people and certainly don't marry one.”

“Simple is good. Simple is easier. Simple is more profitable.”

“If you intend to achieve financial freedom, you are going to have to think differently. It starts by recognizing that debt should not be considered normal. It should be recognized as the vicious, pernicious destroyer of wealth-building potential it truly is. It has no place in your financial life.”

“If your goal is financial independence, it is also to hold as little debt as possible. This means you’ll seek the least house to meet your needs rather than the most house you can technically afford.”

“Wisdom comes from experience. Experience is often a result of lack of wisdom.” —Terry Pratchett”

“As individuals we only have one obligation to society: To ensure we, and our children, are not a burden to others.”

“Inflation certainly played a role. Using the CPI (consumer price index), what cost $1 in 1970 took $6.19 to buy in 2014. A six-fold increase.”

“Governments love a little inflation. They can add money to the system, keep the economy humming and not have to raise taxes or cut spending to do it. In fact, it is sometimes called “the hidden tax” because it erodes the buying power of our currency. It also allows debtors, like the government, to pay back their creditors with “cheaper dollars.”

“There are pervasive and powerful marketing forces at work seeking to obscure the idea that such a choice exists. We are relentlessly bombarded with messages telling us that we absolutely need the latest trinket and that we simply must have the most fashionable of currently trending trash. We’re told that if you don’t have the money, no problem. That’s what credit cards and payday loans are for.”

“Bonds are in our portfolio to provide a deflation hedge. Deflation is one of the two big macro risks to your money. Inflation is the other and we hedge against that with our stocks.”

“Try saving and investing 50% of your income. With no debt, this is perfectly doable.”

“Everybody makes money when the market is rising. But what determines whether it will make you wealthy or leave you bleeding on the side of the road is what you do during the times it is collapsing.”

“The Three Considerations You’ll want to consider: In what stage of your investing life are you? The Wealth Accumulation Stage or the Wealth Preservation Stage? Or perhaps a blend of the two? What level of risk do you find acceptable? Is your investment horizon long-term or short-term?”

“Sound investing is not complicated. Save a portion of every dollar you earn or that otherwise comes your way. The greater the percent of your income you save and invest, the sooner you’ll have F-You Money. Try saving and investing 50% of your income. With no debt, this is perfectly doable. The beauty of a high savings rate is twofold: You learn to live on less even as you have more to invest. The stock market is a powerful wealth-building tool and you should be investing in it. But realize the market and the value of your shares will sometimes drop dramatically. This is absolutely normal and to be expected. When it happens, ignore the drops and buy more shares. This will be much, much harder than you think. People all around you will panic. The news media will be screaming Sell, Sell, Sell! Nobody can predict when these drops will happen, even though the media is filled with those who claim they can. They are delusional, trying to sell you something or both. Ignore them. When you can live on 4% of your investments per year, you are financially independent.”

“Money can buy many things, but nothing more valuable than your freedom.”

“The lines between need and want are continually and intentionally blurred. Years ago, a pal of mine had bought a new video camera. It was the best of the best and he was filming every moment of his young son’s life. In a burst of enthusiasm he said: “You know, Jim, you just can’t raise a child properly without one of these!” Ah, no. Actually you can. In fact, billions of children have been raised over the course of human history without ever having been videotaped. And horrific as it may sound, many still are today. Including my own.”

“Three things saved us: Our unwavering 50% savings rate. Avoiding debt. We’ve never even had a car payment. Finally embracing the indexing lessons Jack Bogle—the founder of The Vanguard Group and the inventor of index funds—perfected 40 years ago.”

“It’s a big beautiful world out there. Money is a small part of it. But F-You Money buys you the freedom, resources and time to explore it on your own terms. Retired or not. Enjoy your journey.”

“Simplicity is the keynote of all true elegance.” —Coco Chanel”

“Everything you want is on the other side of fear.” — Jack Canfield”