The Simple Path to Wealth

Your roadmap to a rich, free life — in just five minutes per week.

December 23, 2025

One last reminder that a book makes a great last-minute holiday gift, especially when it carries the tools for someone in your life to win their financial freedom.

A fresh college graduate? A friend seeking a new course in midlife? The Simple Path to Wealth is still on sale over at Amazon!

THE SIMPLE NUMBERS

If you've read The Simple Path, you know that over the long term, the market always goes up. That means more dollars for you, the investor. But prices go up, too, which means a dollar is worth less because it buys less.

That's inflation, and it eats into your "real returns." In September, Investopedia looked into those and found that while the average annual returns for the S&P 500 over the last century were around 10.11%, they fell to 6.84% once you adjust for inflation.

That hurts, but imagine how much more it would hurt if you'd stashed those dollars under the mattress instead of investing them to earn more of them:

SIMPLE PATH OF THE DAY

A slice of timeless wisdom from The Simple Path to Wealth:

"The good news for our VTSAX wealth-building strategy is that stocks are a pretty good inflation hedge. As we’ve discussed, in owning stocks, we own businesses. These businesses have assets and create products. Their value rises with inflation, providing a hedge against the falling value of the currency."

ASK JL

Q: I am concerned about our national debt. Any thoughts on this topic? —Helena W.

Hi Helena,

I share your concern and, candidly, I don’t know how this will play out.

My best guess is the government will use increasing inflation to reduce the relevance of the debt by deflating the owed dollars. This is a sneaky way to cheat the holders of our debt by paying them back with cheaper dollars.

Productive assets, like ownership in good companies, is one of the best ways to survive and even prosper from rising inflation. VTSAX serves this purpose well, one of the many reasons it is my go-to.

The harsh truth is, those who own assets weather inflation far better than those who do not. One more reason to be on The Simple Path.

Of course, if the government screws up and triggers hyperinflation, all bets are off.

There is no way to mitigate all risk, and no one can see the future. That said, The Simple Path is as close as I've come to an approach that has the best chance to weather potential storms.

—JL

Got a money question keeping you up at night? Reply to this email and we'll get it over to JL.

Stacks of hundred dollar bills are shown. — You can't control what Congress or the Federal Reserve will do.

WHAT WE'RE READING

📚 If you're worried about inflation, last week Ben Carlson backed JL's view that stocks remain the best inflation hedge we've got.

📚 Bestselling author and friend of The Simple Path, James Clear, is out with The Atomic Habits Workbook, a companion to the worldwide phenomenon Atomic Habits.

📚 Back in 2012, Mr. Money Mustache went long on "The Practical Benefits of Outrageous Optimism."

THE BIG QUESTION

How do you grapple with those big, global factors like the national debt — the threats to your portfolio that are beyond your control?

Reply to this email and we'll feature some of your responses in upcoming issues!

Last time, we asked whether you've decided on what your withdrawal rate will be in retirement, and whether you've comfortable with it based on what you've got saved. Here are a few of your answers...

I'm a 37-year-old mom with one child, we're hoping to have more, and my husband and I max out our 401(k)s every year. We set aside money weekly in VTSAX, as well as a bit in an Alaska 529 for our son. We're operating — for better or worse — in the mindset of "do the max and think about it later."

I haven't determined a withdrawal rate for us because I'm so worried that it will be difficult to determine what our expenses will be. Having preschoolers without any family help and with full-time working parents feels like such an expensive endeavor, so it's hard to know how much to plan for when our current life just feels so completely different to what it would be in retirement. I'd love to hear how other parents with young children are thinking about their retirement and how much they believe they'll need. —Allison Z.

My withdrawal rate has only been going down in the last 10 years, and it is now dangerously close to 1%. I need to do something about it. My target would be more like 4%, with the added flexibility that you suggest. One way to get closer to a reasonable WR would be to start traveling. I value my wings more than my roots, but I have kept my wings tied behind my back for too long. —Bruno B.

This year, I realized we'd been under-planning our required nest egg. We forgot about taxes. The IRS will not. So this is what we came up with to account for that. In short, it projects our net annual income from TSP, annuity, Social Security, and VA benefits after taxes and growth:

22% tax rate
50% of TSP will not be taxed
85% of SSI will be
VA income is tax exempt
2% pension growth
3% costs growth
4% safe withdrawal

A $2,597,462 nest egg might average a $141,258 net income. —Charles N.