JL Collins Part 1: The Simple Path vs. The "Optimal" Path

24 snips

Jul 11, 2025

JL Collins, author of 'The Simple Path to Wealth,' dives into the world of investing with an emphasis on simplicity over complexity. He admits that while a four-fund portfolio might mathematically outperform his one-fund strategy, execution is key for most investors. Collins shares why index funds are 'self-cleansing' and discusses his preference for VTSAX versus VTI. His quirky comparison of Tabasco and Cholula showcases how personal tastes can influence investment decisions. This engaging conversation reveals the practical side of investing for everyday people.

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INSIGHT

Simple Beats Optimal in Practice

JL Collins argues that a simpler investment path outperforms more complex, mathematically optimal paths in real life.
Execution discipline matters more than theory because most can't stick with complex strategies long term.

INSIGHT

Mathematical Superiority vs Execution

JL Collins concedes Paul Merriman's four-fund portfolio is mathematically superior.
Yet, most people fail to execute that approach faithfully over decades due to human nature.

ANECDOTE

Jack Bogle's Birthday Email

JL Collins received a birthday email from Jack Bogle praising his book.
This was a meaningful personal moment for him as Bogle is a hero and pioneer of index funds.

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#624: JL Collins, author of "The Simple Path to Wealth" — the guy synonymous with VTSAX and chill — joins us for Part 1 of a two-part series where we skip the basics and dive straight into the complex stuff.

We ask him whether his simple approach actually beats more sophisticated strategies, and his answer might surprise you.

He says that Paul Merriman's four-fund portfolio probably outperforms his one-fund approach mathematically. But Collins argues that execution trumps optimization every time.

Most people can't stick with complex strategies for 20 years, he says, especially when those strategies require selling winners to buy losers – something that goes against human nature.

Collins prioritizes what works in real life over what looks good on paper. He calls index funds "self-cleansing" because they automatically rotate out failing companies and sectors while rotating in the new winners. You don't need to predict which companies will dominate next – you'll own whatever rises to the top.

The episode covers his thoughts on VTSAX versus VTI, international diversification, and why he'd rather put Tabasco than Cholula on his eggs — his quirky way of explaining personal preferences in nearly identical investment options.

Resources Mentioned: Episode 31, Interview in 2016 with JL Collins

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(0:00) Intro

(1:00) The efficient frontier

(2:00) Simple vs optimal but complex paths

(4:30) Paul Merriman's four-fund portfolio vs VTSAX

(6:00) JL says Merriman's approach is mathematically superior but not behaviorally

(7:30) Risk parity investing discussion

(8:30) Sequence of returns risk and retirement bonds

(12:30) JL's birthday email from Jack Bogle

(15:00) VTSAX vs VTI

(17:00) Total stock market funds across brokerages

(23:30) Mag 7 concentration risk

(27:00) Sears story and self-cleansing index funds

(30:30) International diversification and US dominance

(39:00) World funds versus separate international

(45:00) When to shift to world fund

(47:30) Bond allocation timing strategies

(48:30) Target date funds

(50:30) One-fund vs two-fund approach

(52:00) Historical diversification and Nifty 50

For more information, visit the show notes at https://affordanything.com/episode624

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