From the shelf · 102 money books
Does The Simple Path to Wealth hold up?
The Simple Path to Wealth by JL Collins is one of the 102 money books on The Money Shelf. The shelf links it to 3 of the 22 claims that the book tests against official records from the United States, the United Kingdom and Australia. Each verdict below comes from that test.
Claim 1 · The book makes this claimCompound interest: start early
HoldsIn every case above the 40-year saver ends with more than the 30-year saver for the same monthly sum, by a factor that depends only on the return and the number of years, and the first ten years of deposits supply 41 to 54 per cent of the final balance.
Read the full test →Claim 4 · The book makes this claimIndex funds: own the index
HoldsOver every period of five years or longer, at least 83 per cent of US large-cap funds, at least 92 per cent of UK large- and mid-cap funds and at least 81.6 per cent of Australian equity general funds lagged their index, and the one figure below 80 per cent over those periods, UK small-cap funds over 10 years at 76.62 per cent, is still a majority.
Read the full test →Claim 20 · The book makes this claimThe 4 per cent rule: withdraw about 4 per cent a year in retirement
Holds with conditionsThe 4 per cent rate held for at least 33 years in the American record of 1926 to 1992 that Bengen examined, in charts built on a portfolio with 50 per cent in shares.
Read the full test →The Simple Path to Wealth raised the question. The records take it further: every figure dated, every source named, and the arithmetic worked through for three countries.
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