The Simple Path to Wealth

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

October 28, 2025

“But at my back I always hear / Time’s winged chariot hurrying near.”

—Andrew Marvell

THE SIMPLE NUMBERS

A few weeks back, we looked at how Gen Zers are refreshingly aware they need to start investing early.

To buttress the point, a report from TIAA and Georgetown University's McDonough School of Business last year found that 34% of young adults "are putting money into savings when they can, and another third (31%) are saving on a regular basis." The remaining third say they aren't saving because they're just trying to make ends meet (21%) or they're paying down debt (14%).

48% say they're saving in a workplace retirement plan, 13% report they've got an individual retirement account they set up on their own, and 11% say they've got both.

However, these folks are also concerned about future "global challenges," and quite a few are pessimistic about whether they'll ever truly be able to retire. 51% of Gen Z respondents in the survey said that thinking about those big looming problems "makes them want to live for today."

SIMPLE PATH OF THE DAY

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

"Stop thinking about what your money can buy. Start thinking about what your money can earn. And then think about what the money it earns can earn ... If you had invested $1,000 at the end of 1974 and just let it ride, it would have grown to $344,319 as 2025 dawned."

ASK JL

Q: I talk with a lot of young firefighters about the importance of investing early on. We currently have access to good low-cost index funds through our 457b (both Roth and deferred). There is a pension of 50-75% of their base salary after 20-30 years of service.

What do you think would be a good elevator-pitch number for me to recommend they start with? We can automate a percentage or fixed dollar amount each month. Currently, I try to start them at 20% and encourage Roth contributions. —Scott D.

Hi Scott…

First, I commend you for trying to offer them some guidance. In my experience, this will most often fall on deaf ears. You should be prepared for that and not let it bother you. Focus on the few ready to hear what you have to offer. People will — and have a right to — live their own lives. Very few will follow this path to FI.

That said, I think the biggest obstacle is that people see this as a path of deprivation. They have to put aside money they could otherwise be spending and enjoying. I don’t see it that way.

Pursuing FI simply means spending your money on something different. You are buying your freedom. Freedom from financial worries, the freedom of owning your time, the freedom of working only when and for whom you choose. Personally, there has never been anything I’d rather spend my money on.

—JL

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

Firefighters battling a large blaze with intense flames. — You don't want to be putting out fires in retirement.

WHAT WE'RE READING

📚 For more good news about the young folks, the New York Times reports that "Gen Z, it turns out, is great at saving for retirement."

📚 CNBC has a new story on how investors lose around 15% of their returns through buying and selling at the wrong times: “The less transacting you have to do, the better off you’re going to be.”

📚 How many individual stocks outperform the broader market index? Ben Carlson looked into it last week over at A Wealth of Common Sense.

THE BIG QUESTION

Have you had success convincing the young people in your life to start saving and investing? To follow the Simple Path? What's your favorite success story?

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

Last time, we asked where your investments are — 401(k), Roth IRA, etc. — and whether you planned it that way or it's just how things shook out. Here are a few of your answers...

I got my first real job in 2007. On January 1, 2008 I was eligible to contribute to the 401(k) plan. The storms of 2008 taught me well, as JL says, to tie myself to the mast. On advice from a financial advisor, I opened a Roth IRA with their particular company. It took me a few years of high fees and wasted time to roll that into a Vanguard account, but I got there in 2015. When I did, I opened one for my wife as well. During the early pandemic, our expenses dropped. As a compromise with my wife, who was worried about having ready cash on hand, I opened a brokerage account rather than maxing out our Roth accounts.

Today, our investment pie just happens to shake out at 6% HSA, 7% Roth, 9% after-tax brokerage, and 78% 401(k)/rollover IRA. Given our likely meager tax liability in retirement, this should work out just fine. And in the current economic climate, with neither of our jobs as secure as they were before the federal sector got thrashed, having a couple years' worth of living expenses available in a brokerage account is a great comfort! —Adam W.

The ballpark breakdown is roughly: 50% taxable, 40% in my 401(k), 10% Roth. It kind of just shook out that way. With the Roth, I'm limited in how much I can put in there. Same with the 401(k), I max it out every year. Due to how much I end up saving each year, my taxable account gets a heavy contribution. So, it's less planned, and more just the way the numbers shook out. —Michael N.

Since we made the decision to save aggressively and retire early, my husband and I each contributed the max allowed by the federal limit to our pre-tax 401(k)s to lower our tax burden. Post-tax money went into Vanguard VTSAX. I’ve only contributed a little to a Roth 401(k) (about 5%), and looking back, maybe I should have contributed more. We have 62% of our money in 401(k)s.

My plan has always been to use IRA conversion ladders to move money, wait five years, and live on that without paying the penalty. The other money we have saved in VTSAX (17%) and bonds is to provide income and bridge the five-year gap. Now that we are retired and buying health insurance off the ACA marketplace, maintaining a low income is key to maximizing the subsidy. Having to move 401(k) money increases our taxable income, which drives up health insurance premiums. I didn’t think about this when aggressively saving into the 401(k). I’m not sure what we could have done differently, but it’s a factor that I’m only now realizing should be considered. —Elisabeth B.

Retirement: 48% (Roth IRA: 6%, 401(k): 34%, Roth 401(k): 1%, HSA: 7%)

Brokerage: 48%

Cash: 3%

I am 43 years old and want to retire in another eight-to-nine years. I started investing six years ago and am refining my strategy as I go. I have been able to invest 50% of my income during this time. I would have liked to put more of my savings in Roth, but I do not qualify for Roth contributions, so I use backdoor and mega backdoor strategies. Every time I read something, I run my numbers and modify my strategy. I may have a lower contribution in Roth right now, but I am glad I am on the right track. —Zalak G.

My current investments are split about 59% in workplace 401(k) & 457(b), 34% in Roth IRA, and the remainder is in an HSA & cash. I started my Roth IRA at age 23, which was 2007. I saw my "portfolio" decline in 2008-2009, if you could call it that based on the small balance at the time. The recession wasn't really something that I dwelled on, since I was partaking in the 20-something lifestyle at the time and didn't lose a lot to start with. Considering my fortunate starting point for funding my Roth IRA, it has done pretty well for itself over the years now that I'm 41. Compounding does work wonders, folks, and it's even better when it's all tax-free. —Adam W.