Debt: The Unacceptable Burden

The author treats debt as the chief enemy of wealth building and objects to borrowing being sold as a normal part of life. Credit cards and car loans are on the wrong side of his line. As a rough rule, he would clear loans above 5% interest as fast as possible and pay down loans under 3% slowly.

Why You Need F You Money

F You money is enough savings that no boss, client or crisis can force your hand. The author credits the phrase to a James Clavell novel, and he says his own savings let him stay calm through a layoff. Freedom, in his view, is the most valuable thing money can buy.

Can Everyone Really Retire A Millionaire?

Collins uses assumed returns and decades of contributions to illustrate compounding. It is not a promise that everyone can retire with a million dollars. Income, essential spending, health, care responsibilities, investment losses and inflation affect what is possible. Spending less than income is a useful relationship to examine, but a shortfall is not proof of poor discipline.

How To Think About Money

The author asks readers to see each dollar as a worker that can earn more dollars. Spending it loses the dollar and everything it would have earned. His example is a $20,000 car. Invested at an assumed 8% instead, that money would earn about $1,600 in the first year alone, and more after that.

Investing In A Raging Bull Or Bear Market

Whether stocks sit at record highs or are falling, readers ask if they should wait. The author’s answer is that timing the market means being right twice, on when to get out and when to get back in. He would invest a lump sum now and keep adding. If a 50% drop would make you sell, he suggests holding more bonds rather than waiting.

There’s A Major Market Crash Coming!!!! And Even Famous Economists Can’t Save You

Crashes are a normal part of owning stocks, and no expert can reliably say when the next one will hit. The chapter grew from the author’s 2012 reply to MIT finance professor Andrew Lo, who had argued that buy and hold no longer worked. The author’s answer: the real problem is investors who panic. Expect crashes, ignore forecasts and keep buying.

The Market Always Goes Up

Collins points to long-run US market history and the way indexes change their membership. That historical argument does not guarantee future growth, even over decades. An index follows its rules; company replacement does not prevent losses or remove country, valuation and concentration risks. Money needed soon has a different job from long-term stock holdings.

Why Most People Lose Money In The Market

The author lists the usual mistakes: selling in a panic, believing you can pick winning stocks, and trusting active fund managers. Most of those managers trail the index over time. He compares daily prices to the foam on a beer. The beer underneath is the real businesses, which keep working and growing while the foam jumps around.

The Big Ugly Event

This is the author’s worst case: the 1929 crash and the Great Depression, when the Dow lost roughly 90% of its value. A buyer at the 1929 peak waited about a quarter century to break even on price alone. His lessons: never buy stocks with borrowed money, and grow wary when ordinary people are getting rich on margin.

Keeping It Simple: Considerations And Tools

Before choosing investments, the author has readers weigh three things. Are they building wealth or preserving it? How much volatility can they stomach, and how long must the money last? Then he offers three tools. A broad stock index fund drives growth, a bond index fund smooths the ride and hedges deflation, and cash covers emergencies.

Index Funds Are Really Just For Lazy People, Right?

The author turns the jab around. Index funds do not win because their owners cannot be bothered. They win because most active managers trail the index once fees and trading costs are paid. Every point cut from costs, he notes, is a point added to return (our Investment Fee Calculator shows the sum over decades). He also points out that Warren Buffett has recommended an index fund for the money he will leave his wife.

Bonds

Bonds are loans to governments or companies. For a conventional fixed-rate bond, a rise in market yields generally lowers its price, all else equal; longer duration usually increases sensitivity. Credit, inflation and liquidity risks also matter. A bond fund can lose value and does not guarantee that stock losses will be offset. Collins uses broad bond exposure to moderate his portfolio’s swings.

Portfolio Ideas To Build And Keep Your Wealth

For the wealth building years, when fresh money arrives from each paycheck, the author suggests putting it all in one broad stock index fund. For the preservation years, when the portfolio must pay the bills, he adds bonds and some cash. He keeps the number of funds small because, in his view, complexity works against investors.

Selecting Your Asset Allocation

The author links the stock and bond mix to your stage of life rather than your age. His own preservation mix was 75% stocks and 25% bonds, which he calls aggressive; 60/40 or 50/50 suits people who want a smoother ride. He rebalances about once a year, ideally inside tax advantaged accounts to avoid capital gains tax.

International Funds

The author long argued that US investors do not need a separate international fund, while readers outside the US should use a world fund. In February 2026 he said he had moved his own IRAs into a total world fund, citing a weaker dollar and trade policy. That left him about 15% international overall. Staying all US, he added, is still fine.

TRFs: The Simplest Path To Wealth Of All

Target retirement funds, often called target date funds, hold a mix of stock and bond funds in one package. You pick the year you expect to retire and keep adding money; the mix shifts toward bonds as that year nears. For more stocks, the author suggests a later date than your real one. One drawback: in a taxable account, rebalancing can trigger taxes. He gives them his seal of approval.

What If You Can’t Buy VTSAX? Or Even Vanguard?

The fund in the title is the author’s own choice, Vanguard’s total US stock market index fund. If a workplace plan or brokerage does not offer it, he says other options do the job. An ETF with the same holdings works, as does an S&P 500 index fund or another firm’s total market fund. Broad coverage and low cost are what matter.

What Is It About Vanguard?

This chapter sets out why the author favors Vanguard, the home of his own investments. He credits its low costs and the index fund ideas of its founder, Jack Bogle. Treat it as his preference: StockEducation does not recommend any provider. The author himself says total market or S&P 500 index funds from other brokerages work just as well.

The 401(k), 403(b), TSP, IRA And Roth Buckets

These are US accounts, with eligibility and tax rules that vary by account and year. Traditional contributions are not always deductible. Qualified Roth withdrawals can be tax-free; not every withdrawal qualifies. IRS Publication 590-B explains Roth IRA conditions, including a five-year rule and age or other qualifying circumstances. Collins’s ordering is the author’s framework, not a universal household prescription.

RMDs: The Ugly Surprise At The End Of The Tax Deferred Rainbow

Required minimum distributions make owners of traditional retirement accounts withdraw, and pay tax on, a slice each year once they reach a set age. A large tax deferred balance can mean big forced withdrawals and a higher tax bracket. The author’s remedy, which he says he uses himself, is converting some money to a Roth account in low income years before RMDs begin.

HSAs: More Than Just A Way To Pay Your Medical Bills

HSA contributions require eligibility, including qualifying health coverage and restrictions on other coverage and Medicare enrollment. Tax-free distributions require qualified medical expenses; recordkeeping and reimbursement conditions matter. IRS Publication 969 sets out these rules. The author’s invest-and-pay-bills-separately strategy also requires enough other money to cover care costs and exposes invested funds to losses.

A Couple Of Case Studies

The author applies the plan to specific households, following the money from paycheck to debt, savings, account choice and allocation so the earlier chapters fit together. The 2025 edition adds a new case titled What It Looks Like When Everything Financial Goes Wrong, his own account of a plan surviving setbacks rather than a run of good years.

Why I Don’t Like Investment Advisors

The author argues that an advisor’s interests are structurally opposed to the client’s. Commissions, sales loads and yearly fees on your assets reward selling costly, complex products. A fee on assets also discourages advice to pay off debt or withdraw money. His answer: learn to manage a simple index portfolio yourself. For readers who insist on help, he sees an hourly, fee only planner as the least conflicted choice.

Jack Bogle And The Bashing Of Index Funds

Jack Bogle, the founder of Vanguard and creator of the modern low cost index fund, is the author’s personal hero. This chapter defends index funds against the bashing they still attract. The long run data on this page back him: most active funds trail the index. The magic beans of this part are products and promises that claim to beat a plain index fund.

Why I Can’t Pick Winning Stocks And You Can’t Either

The title sums up the argument: picking winners consistently is beyond almost everyone, the author included. In a 2021 blog post he recalled buying Mariah International, a small gold mining stock, around 1990. Analysts at his firm had researched it deeply, yet it collapsed to pennies. Professionals mostly trail the index too, as the SPIVA data below show.

Why I Don’t Like Dollar Cost Averaging

Here the term means drip feeding a lump sum into the market. The author sees it as market timing in disguise: markets usually rise, so each slice tends to cost more. Our count from Damodaran’s data: the S&P 500 gained in 72 of the 98 years from 1928 to 2025, as our returns by year table shows. And once the last slice is in, the crash risk is the same. Investing each paycheck on arrival is different.

How To Be A Stock Market Guru And Get On CNBC

The author’s tongue in cheek recipe starts with predicting a huge short term swing, up or down. Note the date, and repeat until one call comes true. Then announce that the market did just what you said, and clear your schedule for interviews. His point: some expert is always forecasting every possible outcome, so a lucky call gets mistaken for wisdom.

You, Too, Can Be Conned

The author tells of warning a friend’s widow who had inherited $2 million and believed she could never be fooled. His example is a classic con: letters that call a stock’s move right, again and again. The trick: half the list is told a stock will rise, half that it will fall, and only the lucky half hears again. His first rule: everybody can be conned.

Withdrawal Rates: How Much Can I Spend?

The usual 4% illustration starts with 4% of the initial portfolio, then adjusts that dollar withdrawal for inflation; it is not a fresh 4% of the current balance every year. Suppose the initial portfolio is

Withdrawal Rates: How Much Can I Spend?

Withdrawal outcomes depend on retirement length, asset mix, return order, costs, inflation and spending flexibility. Neither 4% nor 3% guarantees that savings will last. An early market fall while taking withdrawals can be especially damaging; past US studies do not establish a universal safe rate.

How Do I Pull My 4%?

Collins emphasizes keeping the process simple and adjusting spending after difficult periods. The inflation-adjusted initial-portfolio method differs from spending a fixed percentage of the remaining balance, as shown above. Review the withdrawal amount alongside required expenses, retirement length, cash needs, taxes and portfolio risks. Income and care responsibilities can limit saving and spending choices.

Social Security: How Secure And When To Take It

Collins discusses delaying his own claim in an older personal example. Under SSA rules, retirement benefits can earn delayed credits after full retirement age up to age 70. Spousal benefits and survivor benefits are different; a living spouse does not automatically switch to the worker’s full larger benefit. Claiming choices depend on the applicable benefit, health, household income and eligibility, not an assumed guarantee of future policy.

How To Give Like A Billionaire

The author gives through a donor advised fund, a small scale version of a billionaire’s foundation. He funds it with cash or shares that have risen in value. He takes the tax deduction that year and owes no capital gains tax on the shares. The money stays invested while he recommends grants to charities over the years.

The market always goes up: through crashes, depressions and wars, the US stock market has kept rising over long periods (Part 2).

We compounded the annual S&P 500 returns, with dividends, published by Aswath Damodaran of NYU Stern (1928 to 2025, updated January 5, 2026). Money grew about 10% a year, and all 79 rolling 20 year stretches ended ahead. The worst, 1929 to 1948, still gained about 2.4% a year. But the path was brutal. The index lost 64.8% over 1929 to 1932 and 36.55% in 2008 alone. The 10 year stretches 1929 to 1938 and 2000 to 2009 both lost money. The claim holds over very long horizons, but the word always overstates it for anyone investing for 15 years or less. It describes one country’s past, not a guarantee.

Verdict: Partly holds up. NYU Stern, Aswath Damodaran: Historical Returns on Stocks, Bonds and Bills

Low cost index funds beat most professionally managed funds over time, and costs are the main reason (Parts 2 and 3).

S&P Dow Jones Indices published its midyear 2026 SPIVA U.S. Scorecard with data to June 30, 2026. Over 15 years, 90.49% of actively managed US large cap funds trailed the S&P 500. Over 20 years, 92.61% did. Only 36.52% of the large cap funds that existed 20 years earlier were still operating, the survivorship problem in plain sight. Short runs are less one sided: 67.18% trailed in the first half of 2026. SPIVA measures results, not their causes, but the gap is consistent with the cost drag the book describes. The data strongly back the book, though an index fund still takes the market’s full fall in a crash.

Verdict: Holds up. S&P Dow Jones Indices: SPIVA U.S. Scorecard, midyear 2026 (PDF)

ETF Overlap and Fee Drag

Worked example: fees depend on both rates and portfolio weights

Use hypothetical funds A and B, not current quotes: A charges 0.03% a year and B charges 0.15%. On $10,000 invested entirely in A, the first-year expense estimate is $3; entirely in B, it is $15. A 50/50 split has a weighted fee of (0.03% + 0.15%) ÷ 2 = 0.09%, or $9. That is $6 more than A alone. Simply adding the two percentages would overstate the fee for this split. Balances can change, and trading costs, spreads, taxes and other charges are excluded.

Open ETF Overlap and Fee Drag. For an interface exercise only, choose VTI as First ETF and VOO as Second ETF and enter $10,000. Press Calculate. Record the available weight coverage for each fund and the stored-fee estimate. The current tool assumes a 50/50 split. The shared-weight percentage uses partial stored holdings with no holdings date; it is not full portfolio overlap.

Then compare a different available pair and explain what the records can show and what they cannot establish. A low partial result does not prove strong diversification, and two funds do not automatically double your fees. Check complete dated holdings and current expense ratios with the fund providers before drawing conclusions. The named pair is a learning example, not a recommendation to buy.

Open the ETF Overlap and Fee Drag

Question 1

What does the book suggest for new money during the wealth building years?

1. One broad, low cost stock index fund
2. A handful of carefully picked growth stocks
3. Mostly bonds until a crash arrives
4. Cash until the market looks cheap

Question 2

Why does the author call a stock market index self cleansing?

1. Regulators remove companies whose shares fall
2. Index funds sell every stock after a loss
3. Failing companies shrink and drop out while winners can keep growing
4. Crashes clear out investors who borrow on margin

Question 3

How does the book treat the 4% withdrawal rule?

1. As a guarantee that savings will last forever
2. As a guide, with flexibility in bad years as the real safety
3. As outdated advice that no retiree should use
4. As a rule meant only for all bond portfolios

The Little Book of Common Sense Investing

John C. Bogle, whose advice Collins leans on, makes the full case for owning the whole market through a low cost index fund. He also explains why costs decide long run results, deepening the fee argument behind the one fund plan.