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

Collins introduces Target Retirement Funds (TRFs) as the ultimate hands-off investment strategy for those seeking simplicity. He explains that Vanguard’s TRFs—each tailored to a target retirement year—automatically adjust asset allocations over time, becoming more conservative as retirement nears. These “fund[s] of funds” combine US and international stock and bond index funds (124), offering diversified exposure and ease of use with minimal effort. Though slightly more expensive than VTSAX, TRFs are still low-cost and effective. For readers who want greater or lesser risk, Collins suggests adjusting by selecting earlier or later-dated funds.

Collins’s advocacy for TRFs reflects his core value of simplicity in wealth-building, especially for investors uninterested in actively managing portfolios. He balances praise with mild critique, noting his preference for the two-fund approach due to lower fees and more control over tax efficiency. His endorsement assumes a US-based retirement structure (401(k)/403(b)) and access to Vanguard or equivalent low-fee providers, which may limit applicability for global readers. Nonetheless, his emphasis on behavioral ease over theoretical optimization aligns with his broader message: Long-term success often lies in avoiding complexity, not chasing perfection.

Collins addresses a practical concern: what to do if readers cannot access his preferred funds—VTSAX and VBTLX—or even Vanguard itself. He clarifies that what matters most is not the fund name but the underlying portfolio: total US stock market and total bond market index funds. Collins outlines various alternatives available within Vanguard (Investor Shares, ETFs, Institutional Shares) that replicate the same holdings with slight differences in minimum investment and fees. For readers whose employer-sponsored plans don’t include Vanguard, he advises seeking low-cost index fund equivalents or using TRFs with caution around fees.

Collins’s message is inclusive, extending his investment philosophy to those outside the US or in restricted plans. He recommends exploring global index funds like VTWSX or VT (ETF) while warning against “ex-U.S.” funds that exclude American stocks. The chapter reaffirms his core principles—simplicity, low cost, and broad diversification—without rigid brand loyalty. His US-centric perspective does shape some assumptions (e.g., the importance of US market exposure), but he accommodates international readers by offering workarounds that retain the essence of his investing path.

Collins explains his strong recommendation for Vanguard by focusing on its unique structure. Unlike other investment firms that are privately owned (like Fidelity) or publicly traded (like T. Rowe Price), Vanguard is investor-owned. When someone invests in a Vanguard fund, they effectively become a partial owner of the company itself. Collins argues that this structure eliminates the conflict of interest faced by traditional firms, which must serve both fundholders and profit-seeking owners. By operating “at cost,” Vanguard avoids marking up fees to generate profits. Collins supports this claim with data: Vanguard’s average expense ratio is 0.18%, compared to an industry average of 1.01%. He uses this contrast to frame Vanguard as a rational and efficient choice for long-term investors.

To address common concerns, Collins clarifies that even in the unlikely event of Vanguard’s collapse, the investments would remain safe due to legal separation and regulatory oversight. Collins also pre-empts potential skepticism about his endorsement by stating that he receives no financial benefit from recommending Vanguard. By grounding his preference in organizational logic, cost efficiency, and regulatory safeguards, Collins positions Vanguard as an objectively superior option for investors who prioritize simplicity, low fees, and transparency.

Collins explains that retirement accounts like 401(k)s, IRAs, and Roth IRAs are not investments but “buckets” that hold investments, each with distinct tax rules. He divides them into ordinary (taxable) and tax-advantaged buckets and stresses that proper placement—tax-efficient assets like VTSAX in ordinary buckets, tax-inefficient ones like bonds in tax-advantaged buckets—can enhance long-term returns. This framework is practical but assumes stable income and access to US-specific options, limiting its relevance for global readers.

Collins reinforces that these accounts defer tax rather than eliminate it, emphasizing that withdrawals will be taxed later, and outlines strategies like Roth conversion ladders to manage this. These tactics, drawn from FIRE (“Financial Independence, Retire Early”) blogs like Mad Fientist and Go Curry Cracker, reflect Collins’s alignment with early retirement values and skepticism of high-fee financial institutions.

Collins also outlines employer-based options (401(k), Roth 401(k), TSP) and personal accounts (Traditional, Roth, and Non-Deductible IRAs), recommending a funding sequence that prioritizes employer matches and tax-deferred growth. His discussion of Roth IRAs highlights a trade-off: tax-free withdrawals versus the upfront tax cost of contributions, a point often misunderstood.

While the advice is clear and actionable, it leans toward a financially literate, middle-class US audience and assumes tax policy stability. Nonetheless, the emphasis on aligning different investment types with the most tax-efficient account structures offers a practical framework that readers can adapt to their own financial systems.

The chapter addresses the financial impact of Required Minimum Distributions (RMDs), which begin at age 70.5 for tax-deferred retirement accounts like 401(k)s and traditional IRAs. Collins explains that while tax deferral helps grow wealth over time, these accounts eventually trigger forced withdrawals that can push retirees into higher tax brackets. Using a projection example from Fidelity’s calculator, he shows how RMDs can grow significantly, especially for those who’ve saved diligently.

To illustrate potential tax consequences, Collins lists real income thresholds and explains how tax brackets apply progressively, not as flat rates. He also introduces a planning strategy: using low-income retirement years before 70.5 to withdraw funds at lower tax rates or convert them into Roth accounts. This approach allows readers to manage their tax exposure proactively.

Collins maintains his emphasis on practicality while warning readers not to overlook this “ugly surprise.” He links the discussion to earlier chapters on tax-advantaged buckets and encourages readers to revisit their withdrawal strategies as they near retirement. By combining hypothetical numbers, current tax data, and planning options, Collins reinforces his theme of anticipating long-term consequences rather than reacting later.

This chapter explores Health Savings Accounts (HSAs) as more than just tools for paying medical expenses. Collins outlines their triple tax advantage: Contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also untaxed. These features make HSAs uniquely flexible, especially for those with high-deductible health plans. He contrasts HSAs with FSAs, emphasizing that unlike FSAs, HSA funds do not expire and can be invested.

To support his case, Collins draws on real-world tax provisions and policy examples from 2016, presenting HSAs as a hybrid of Roth and traditional IRAs when used strategically. He proposes an approach where individuals fund HSAs, invest them in index funds like VTSAX, and pay out-of-pocket for expenses, allowing the account to grow tax-free while keeping receipts for future tax-free reimbursement.

This framing transforms the HSA from a short-term spending tool into a long-term wealth-building vehicle. Collins acknowledges legal uncertainties about RMDs for HSAs but remains focused on their investment potential. His practical walkthrough reflects his ongoing emphasis on autonomy and simplicity in financial planning, encouraging readers to leverage tax laws to their advantage with minimal administrative burden. However, like other elements of the work, it presupposes disposable income, particularly for those already managing one or more health conditions (as Collins advises paying medical expenses out-of-pocket). HSAs are also unique to the United States, although some countries, like Singapore, have similar systems.

Collins presents a real-life case study of a 26-year-old reader seeking to simplify his finances and build wealth. The young man, debt-free with a $70,000 salary and a $35,000 investment account set up by his grandparents, is already saving 24% of his income and wants guidance on how to transition his investments to VTSAX and plan for the future.

Collins praises the reader’s strong financial foundation and outlines a clear plan using the core principles from earlier chapters: simplify, lower costs, and maximize tax-advantaged accounts. He recommends investing in VTSAX through the employer’s 403(b), a deductible IRA, and then placing any remaining funds in a taxable brokerage account. Two saving scenarios are explored—one with a 24% savings rate, another with 50%—both showing the compounding benefits over time. The emphasis is on fully utilizing tax shelters, automating contributions, avoiding lifestyle inflation, and committing to long-term investing.

This case serves as a blueprint for how real readers can adapt the book’s principles to their own circumstances. It reinforces key ideas like keeping investing simple, prioritizing low-cost index funds, and aiming for high savings rates while acknowledging the practical challenges and trade-offs involved. That said, Collins’s case study presumes both a middle-class salary and some generational wealth, potentially overlooking the structural barriers that make accumulating wealth challenging for certain demographics, such as working-class people and people of color).