ChooseFI Logo

034 | The Stock Series Part 2 | JL Collins

This podcast is Part 2 of the Stock Series discussion with JL Collins, author of The Simple Path to Wealth and the website JLCollinsNH; we discuss the Great Depression and the mindset you need to be a successful long-term investor, plus how to allocate between equities and bonds.

Podcast Episode Summary

  • Part 2 of the Stock Series conversation with Jim Collins
    • If you have not yet listened to Part 1 you can listen to it here
    • Be sure to check out the associated Friday Roundup here for Brad and Jonathan’s take-aways
  • A discussion of what happened during the Great Depression and the Crash of 1929
  • A large portion of the crash was due to many people buying stock on margin
  • Jim’s explanation of leverage and buying stocks on margin
  • Jim’s Four Lessons to watch out for
  • Making peace in your mind when a crash/correction happens. What caused it?  Psychology or something legitimate?
  • Unless you believe the US economy has permanently collapsed, then “the market always goes up” over time according to Jim
  • Jim says the best thing that can happen to a young investor is a market crash as you get to purchase stocks “on sale” for potentially years
  • Savings rate is the most crucial aspect for the FI community since it allows you to continually invest in good markets and bad
  • Bull markets and bear markets are a part of life. We need to toughen up mentally to prepare for both
  • Jim’s explanation of the 40 year period starting in 1975 showing the calamities that happened and yet how far the market increased
  • Nobody knows what the next 40 years will hold, but we have a dynamic economy
  • What stage of investment life are you in? It varies depending on your age
  • Wealth building and wealth preservation stages and the discussion surrounding both
  • When you’re in the wealth building stage you need to have your psychology correct: Keep pumping money into the market and take advantage of sales when the market goes down
  • 100% equities in the wealth building stage per Jim
  • When you stop working for money you are in the wealth preservation stage
  • What percentage should you have in stocks and bonds in the wealth preservation stage
  • The more you have in bonds the smoother your ride will be, but the lower your return will be
  • Your tolerance for volatility will determine your percentage in equities and bonds
  • Would Jim ever consider going back to 100% equities?
  • Mathematically you are always better off in stocks than bonds over the long-term
  • Even Jim contemplated selling during recent market plunges, so everyone is susceptible to this

Listen to Brad and Jonathan’s thoughts about this episode here.

Links from the show:

Books Mentioned in the Show:

Related Podcast

Subscribe To The FI Weekly

Action, accountability, inspiration, and community. Join the movement. Get started on your Path to FI

More To Explore
Investing
What to do with $2.5 Million & Real Estate Update | Scott Trench | Ep 426

When you begin your FI journey, you may feel like you must follow a certain path or plan in order to achieve your desired outcome. However, the longer you are this journey the more you realize that it is a personal one that requires adaptability when so many factors can affect your bottom line. This week we are back with Scott Trench from BiggerPockets as he shares his insights on investing and looking at your portfolio from an “outset” perspective, as well as touch on the shape of the real estate market. It is important to remember that there is a lot of push and pull on this journey, and it is not meant to be perfect. While you may have expectations for your portfolio and your long term plans, there will be times where you will have to make tradeoffs. Just as the markets change and may signal uncertainties to come, remember that flexibility while maintaining your long term goals will allow you to feel more equipped to move through these times.

Read More »
Mindset
Mindset
Turning the Tables on Brad | Ep 425

Because we have put so many leaders, members, and experts in our community on the hot seat here at ChooseFI, we figured it was finally time we played fair and put Brad on the hot seat himself! With the assistance of Aaron Lee, a longtime listener, friend, and host of “The Next Generation Leader Podcast,” we ask Brad all the burning questions related to his FI journey. If you’ve ever been curious how Brad discovered FI, what led Brad to begin his FI journey, or what lessons Brad learned along the way, listen along as we re-live the path that helped form this amazing community!

Read More »
You Might Be Interested in...
Share This Post
Share on facebook
Share on linkedin
Share on twitter
Share on email
Share on pinterest