SpaceX IPO and Index Funds: Should You Be Concerned?


The Simple Path to Wealth

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

June 23, 2026

Amazon Prime Day cometh, and The Simple Path to Wealth will be a part of the festivities.

Today, the bible of financial independence is available on Amazon for the lowest price ever. That's both the physical book and the Kindle version! If you've been meaning to pick up a copy or share one with a friend, this might just be your moment!

THE SIMPLE NUMBERS

This year, the U.S. stock market will see an unprecedented spree of massive initial public offerings (IPOs). SpaceX has already gone public and zipped to upwards of a $2.5 trillion valuation without yet showing profits. It briefly surpassed Microsoft's market capitalization, CNBC reports, and lived among companies like Amazon (which brought in 38 times more revenue than SpaceX in 2025) until the share price slid this week.

The stratospheric valuation is tied to future potential, much like it will be with two other firms set to go public this year: OpenAI and Anthropic. The latter recently overtook the former to reach a $965 billion valuation, while OpenAI was pegged at $852 billion after a private fundraising round in March. If the SpaceX phenomenon is anything to go on, both firms will rocket higher once they IPO.

What does all this mean for those of us on The Simple Path? Below, we'll hear from JL, who answered a reader question just before the SpaceX IPO.

SIMPLE PATH OF THE DAY

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

"The typical investor is prone to panic and poor decision-making, especially when all the cable news gurus are lining up on window ledges."

ASK JL

Q: So, the SpaceX IPO is about to happen. With the AI-in-space announcements, this feels like one of the greatest cons of all time. And as it happens, many people who have put their money in various funds may not even have a say, as active managers are sure to try and buy some of this pie. Even VTSAX may be impacted due to the sheer size of the new entrant. Thoughts on this? —Shyam H. on JL's blog post, "You, too, can be conned"

Hi Shyam,

The fact you posted this where you did brought a smile to my face.

SpaceX is projected to have around a $1.75 trillion market cap if the IPO goes as planned. This would suggest that it would make up around 2% of an index ETF like VTI. This would make it one of the largest companies in the index, and that is what has folks concerned—or at least what makes the headlines.

But here’s the thing: VTI tracks the CRSP US Total Market Index. Other total stock market ETFs track similar indexes in building their funds.

These funds base their holdings on float-adjusted market-cap weightings, rather than just raw valuations.

SpaceX is projected to have 4% to 5% of its shares available for trading on the market. Simple math (4% to 5% x $1.75T) indicates it would be treated as a $70 to $90 billion market cap company when it goes into the index.

My take:

Even at the full 2% of the index, it is not that big a deal. If you were an active stock picker looking to add a high-risk stock to your portfolio, the typical advice would be: “Fine, but be sure it's not more than 5% of your portfolio.”

This is how the indexes work, and the "self-cleansing" process I often refer to will sort it out as the market decides what the value of SpaceX is. As with Tesla, this will be a subject of great debate: Is the valuation stupidly high, or does it genuinely reflect the future of the firm?

I don’t know, the pundits don’t know, and you don’t either. But that is the beauty of index investing: We don’t have to.

—JL

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

WHAT WE'RE READING

📚 Over at the ChooseFI newsletter, Brad Barrett is calling it "The Tuesday Project." It's not about some bucket-list vacation: Financial freedom buys you the Tuesday of your dreams.

📚 The Rule of 55 is a retirement tool that most people overlook, The Wall Street Journal reports.

📚 The Mad Fientist extols the virtues of ProjectionLab, a software program built specifically for people seeking financial independence.

THE BIG QUESTION

Do you have concerns about companies like SpaceX entering index funds soon after their supercharged initial public offerings (IPOs)?

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

Last time, we asked whether you make a habit of telling young people in your life about
The Simple Path, and whether graduation season is a big time of year for it. Here are a few of your answers...

I didn’t learn about compounding until the end of medical school, when I went to a lecture on financial basics before graduation (mostly to get a free dinner). Then my best friend’s dad gave me a copy of The Simple Path and it changed my life. I started investing in my retirement fund at 24 years old, when I started residency. I paid off my private undergrad and med school debt in four years by living within my means. Now, in my fifth year out, I was able to quit a toxic job and take time off to try something new.

I tell all my medical students about The Simple Path and take every opportunity to show them there’s a different way. I bought a stack of the books and give them to students whenever they seem interested or eager. —Viv M.

When I read about this couple gifting every grad they know a copy of The Simple Path, I smiled because we do exactly that ourselves. What if we'd gotten this info then??! Wow! We are so thankful to have "met" JL and that he made sure others can follow his financial success. We started late (around age 50) but even so, we now have cash reserves and peace in retirement that would not otherwise have been there. The book has life-changing material. —Jackie B.

I gave each of my kids a copy of The Simple Path at the holidays this year. I feel good knowing that I’m setting them up as future “simple” investors with the ability to meet any big goals ahead of them. —Diana E.

I make a habit of sharing The Simple Path to Wealth every chance I get, especially with young people. It has genuinely changed my trajectory and gives me a sense of security about my future, whatever that looks like. —Christie R.

It is really important to me that my kids learn firsthand how powerful index investing is at an early age. Upon graduating from high school, I helped them open Vanguard accounts and gifted them $2,000 into taxable VTSAX accounts while they contributed $1,000 of their own savings. I made sure they started doing small automatic contributions into the account twice a month for the price of a coffee.

My son has since graduated from college, opened a workplace Roth, and increased his taxable account contributions. He has helped numerous friends open their own investment accounts. My daughter is still in college but she's proud of her small but growing balance and plans to let that money ride for decades. They have each weathered highs and lows and are building up their tolerance for stock market fluctuations. I’m incredibly proud! —Diana E.

I use The Simple Path to Wealth as a test. Anyone who asks me about finance, young or old, I send a copy. After a couple weeks, I ask about how they liked the book. If they tell me they have read it, we continue our talks. If they haven't read it, I don't waste another minute of my time with them. —Sally F.

My son is 20 and working as a lifeguard and coaching the swim team. I made him open a Roth IRA and make sure he contributes the max. I tell him to tell his friends to do it as well. Most don't listen, but some do. I wish I had read your book when I was 20. Boy, I would have a lot more money! —Virginia M.

I'm certainly telling my sons about The Simple Path. My oldest recently turned 16 and I gave him a copy for the occasion, with a message from Dad on the overleaf about how the book changed my own financial life. The upshot? Start now, do the things no one told your old man about at that age, and reap the rewards.

To that end, he's now contributing a modest sum every two weeks from his summer job paycheck to a Roth IRA invested in the Vanguard Total Stock Market ETF. —Roger S.

The graduation topic is timely! I bought The Simple Path to Wealth for my great nephew, who just graduated high school and started his first job. That's Part One of his gift.

Part Two: We'll set a date to discuss the book after he reads it, at which time I'll give him the second half of his gift, which is the Roth IRA account I'm setting up for him with an initial $1K—and an offer to match any contributions he makes up to $500 every year.

You can lead a horse to water, but you cannot make them drink. I'm hopeful that this will inspire him to establish good financial habits now. I sure wish I hadn't waited! —Val E.


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The Simple Path to Wealth

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