JL Collins Part 1: The Simple Path vs. The "Optimal" Path
#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
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Q&A: “Help! My Mom’s Financial Crisis Is Becoming Mine!”
#623: An anonymous caller feels trapped in a no-win situation with her financially reckless mother. She has the means to bail her out, but it doesn’t feel right. What should she do?
Shannon is excited about investing in several companies overseas. But she can only access them using American Depository Receipts. What are they, and how do they work?
Jennifer calls back with an update on putting a vacation on a credit card and playing the rewards game.
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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First Friday: Why Americans Are More Pessimistic Than Ever
#622: #622: The headlines said America added 147,000 jobs in June. The reality? Private companies actually cut 33,000 positions.
Grad students just lost access to unlimited borrowing. Parent PLUS loans now cap at $65,000. And tariffs are about to jump as high as 70 percent.
Everything is changing at once — taxes, tariffs, student loans, and immigration policy. And data from the University of Michigan says that consumers feel more pessimistic than they did six months ago.
Welcome to the 4th of July First Friday episode. On America's 249th birthday, we unpack these economic stories.
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) Introduction
(1:19) Historical trivia about the Declaration of Independence
(2:28) Three presidents died on July 4th — statistical improbability explained
(4:24) Trump signs domestic policy bill extending 2017 tax cuts
(6:13) Student loan changes — borrowing caps and repayment plan eliminations
(8:53) Tariff pause expires July 9th, new rates announced
(12:00) Original tariff rates and Lesotho example breakdown
(16:26) June jobs report headlines versus private sector reality
(22:54) ADP reports private job losses while government hiring grows
(26:46) Consumer confidence drops 18 percent since December
(30:59) Inflation expectations versus actual 2.4 percent rate
(34:19) Fed takes wait-and-see approach amid policy uncertainty
(36:58) Labor market stagnation mirrors Federal Reserve strategy
For more information, visit the show notes at https://affordanything.com/episode622
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Q&A: Which Investments Should Go Into Which Accounts?
DOWNLOAD the FREE Cheat Sheet: ASSET LOCATION MADE SIMPLE at affordanything.com/assetlocation
#621: Jared is attracted to the favorable terms of the annuity plan that his employer offers, but he’s hesitant to pay the opportunity cost of locking up his money now. What should he do?
An anonymous caller is struggling to find the efficient frontier with only three funds to choose from in his Thrift Savings Plan. Is there any hope for him?
Jack feels great about the funds in his portfolio, but he’s losing sleep over how to apportion them between his taxable, pre-tax and Roth accounts. What’s the best tax strategy for him?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it at https://affordanything.com/voicemail
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The Hidden Cost of Replacing You at Work, with “Money with Katie” host Katie Gatti Tassin
#620: You probably think your value to your employer equals your paycheck. Katie Gatti Tassin has news for you — you're worth way more than that.
The host of "Money with Katie" recently joined us to break down a framework that could change how you negotiate forever. Her formula is simple: Your worth equals your market rate plus what it costs to replace you, raised to the power of your unique skills.
Most people focus only on market rate — what similar jobs pay in your area. You can find this through salary transparency laws, LinkedIn data, or job postings. But that's just the starting point.
The real eye-opener? Replacement costs. When you leave, companies face recruiting fees, interview time, onboarding expenses, and lost productivity. For mid-level roles, recruiters charge 15 to 25 percent of your first-year salary. Senior positions cost even more — headhunters for executive roles charge 25 to 35 percent of total compensation.
A company replacing an $80,000 employee might pay $20,000 just in recruiter fees. For a $200,000 executive, that jumps to $70,000. Add training time and the productivity gap while they search, and replacement costs can hit 50 to 200 percent of annual salary.
Then there's your "special sauce" — the unique value you bring. Maybe you have deep client relationships, specialized skills, or institutional knowledge that would take months for a replacement to develop.
Katie learned this framework through her own career pivots. She started as an ad copywriter but shifted into user experience writing after working closely with a UX designer who told her the pay was much better. That internal pivot positioned her for an external move that doubled her compensation from $70,000 to $140,000.
Katie had to catch a flight — she visited our New York studios during her book launch tour — but the conversation covers practical tactics for earning more and building wealth.
For more information, visit the show notes at https://affordanything.com/episode620
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You can afford anything, but not everything. We make daily decisions about how to spend money, time, energy, focus and attention – and ultimately, our life.
How do we make smarter decisions? How do we think from first principles?
On the surface, Afford Anything seems like a podcast about money and investing.
But under the hood, this is a show about how to think critically, recognize our behavioral blind spots, and make smarter choices. We’re into the psychology of money, and we love metacognition: thinking about how to think.
In some episodes, we interview world-class experts: professors, researchers, scientists, authors. In other episodes, we answer your questions, talking through decision-making frameworks and mental models.
Want to learn more? Download our free book, Escape, at http://affordanything.com/escape. Hosted by Paula Pant.
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