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

Afford Anything

Paula Pant | Cumulus Podcast Network

Entrepreneurship, Business, Investing

4.6 • 3.4K Ratings

🗓️ 11 July 2025

⏱️ 55 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

#624: JL Collins doesn't know what the efficient frontier is. The author of "The Simple Path to Wealth" — the guy synonymous with VTSAX and chill — admits this right off the bat when we challenge him with advanced investing concepts. Collins joins us for Part 1 of a two-part series where we skip the basics and dive straight into the complex stuff. We grill him on whether his simple approach actually beats more sophisticated strategies, and his answer might surprise you. He concedes 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, 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) JL admits he doesn't know the efficient frontier (2:00) Simple vs optimal but complex paths (4:30) Paul Merriman's four-fund portfolio vs VTSAX (6:00) JL concedes Merriman's approach is mathematically superior (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 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

Click on a timestamp to play from that location

0:00.0	If you're a long time listener of this podcast, you already know J.L. Collins, the author of A Simple Path to We're going to interrogate him today.
0:09.5	Welcome to the Afford Anything Podcast, the show that understands you can afford anything but not everything. This show covers five pillars.
0:16.0	Financial psychology, increasing your income, investing, real estate and entrepreneurship. It's double-eye fire. I'm your host,
0:22.3	Paula Pant. I trained in economic reporting at Columbia. Welcome, J.L. Thank you. Thanks for having me.
0:27.9	It's a pleasure to be here with you, Paula. It's great to be here with you. This is your second time on the show.
0:32.6	I know. And since this audience already knows you, we're going to skip over the basics because we talked about that in your first appearance.
0:40.0	Yeah, that works.
0:40.7	And we'll put a link in the show notes for anybody who doesn't yet know you or your material.
0:46.4	We'll put a link in the show notes to the first interview that we did so that people who are newer to this community or who are unfamiliar with your work can get briefed on the basics
0:55.5	there. But we're going to dive right in and start grilling me from the get-go.
0:59.7	Exactly. Yeah. And we're going to go at advanced level right from the start. You're Mr. VTSAX
1:05.2	and chill is how a lot of people regard you. Are you familiar with the efficient frontier?
1:11.2	No. You're frontier? No.
1:11.9	You're not?
1:12.8	No.
1:13.7	Okay.
1:14.3	Really, you've never heard the phrase?
1:15.9	I think I've heard the phrase, but I can't tell you what it is, so I can't speak to it.
1:21.0	Oh, interesting.
1:21.7	But if you can brief me quickly, we can delve into it.
1:24.7	Essentially, the concept is that what you teach is the simple path,
1:30.3	which is different from the most optimal path, that there is a distinction between what is simple
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Paula Pant | Cumulus Podcast Network, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Paula Pant | Cumulus Podcast Network and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.