Simple Path to Wealth Portfolio
The Simple Path to Wealth is a lazy portfolio proposed by JL Collins in his book The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life. The author suggests holding only one total market fund while building wealth and adding a total bond fund to the portfolio while preserving wealth.
Asset Allocation
| Position | Category/Sector | Target Weight |
|---|---|---|
BND Vanguard Total Bond Market ETF | Total Bond Market | 25% |
VTI Vanguard Total Stock Market ETF | Large Cap Growth Equities | 75% |
Performance
Performance Chart
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The earliest data available for this chart is Apr 10, 2007, corresponding to the inception date of BND
Returns By Period
As of May 21, 2025, the Simple Path to Wealth Portfolio returned 1.38% Year-To-Date and 9.64% of annualized return in the last 10 years.
| YTD | 1M | 6M | 1Y | 5Y* | 10Y* | |
|---|---|---|---|---|---|---|
^GSPC S&P 500 | 1.00% | 12.45% | 0.40% | 11.91% | 15.04% | 10.82% |
| Simple Path to Wealth Portfolio | 1.38% | 9.44% | 0.72% | 10.77% | 11.81% | 9.64% |
| Portfolio components: | ||||||
VTI Vanguard Total Stock Market ETF | 1.06% | 12.79% | 0.34% | 12.64% | 16.14% | 12.12% |
BND Vanguard Total Bond Market ETF | 1.87% | -0.12% | 1.43% | 4.65% | -1.06% | 1.45% |
Monthly Returns
The table below presents the monthly returns of Simple Path to Wealth Portfolio, with color gradation from worst to best to easily spot seasonal factors. Returns are adjusted for dividends.
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Total | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2.42% | -0.89% | -4.36% | -0.45% | 4.90% | 1.38% | |||||||
| 2024 | 0.80% | 3.65% | 2.69% | -3.86% | 3.98% | 2.53% | 2.01% | 1.96% | 1.85% | -1.18% | 5.32% | -2.72% | 17.94% |
| 2023 | 6.02% | -2.47% | 2.69% | 0.96% | 0.03% | 5.02% | 2.72% | -1.62% | -4.23% | -2.36% | 8.18% | 4.87% | 20.74% |
| 2022 | -5.06% | -2.14% | 1.70% | -7.83% | 0.03% | -6.52% | 7.59% | -3.50% | -8.01% | 5.78% | 4.82% | -4.68% | -17.80% |
| 2021 | -0.47% | 1.98% | 2.46% | 4.00% | 0.38% | 2.10% | 1.59% | 2.10% | -3.62% | 5.02% | -1.06% | 2.76% | 18.32% |
| 2020 | 0.45% | -5.55% | -10.51% | 10.53% | 4.29% | 1.90% | 4.68% | 5.18% | -2.78% | -1.60% | 9.15% | 3.58% | 18.74% |
| 2019 | 6.69% | 2.70% | 1.52% | 2.94% | -4.45% | 5.58% | 1.10% | -0.89% | 1.18% | 1.66% | 2.85% | 2.11% | 25.03% |
| 2018 | 3.61% | -3.11% | -1.31% | 0.13% | 2.22% | 0.52% | 2.48% | 2.76% | 0.02% | -5.77% | 1.65% | -6.28% | -3.63% |
| 2017 | 1.44% | 2.93% | 0.03% | 1.00% | 0.94% | 0.72% | 1.51% | 0.32% | 1.72% | 1.62% | 2.26% | 1.02% | 16.62% |
| 2016 | -3.98% | 0.22% | 5.44% | 0.60% | 1.30% | 0.71% | 3.14% | 0.08% | 0.17% | -1.88% | 2.72% | 1.60% | 10.26% |
| 2015 | -1.44% | 3.90% | -0.74% | 0.38% | 0.85% | -1.54% | 1.50% | -4.64% | -1.92% | 5.97% | 0.37% | -1.65% | 0.59% |
| 2014 | -1.99% | 3.73% | 0.34% | 0.25% | 1.84% | 1.99% | -1.57% | 3.39% | -1.72% | 2.24% | 2.07% | -0.01% | 10.86% |
Expense Ratio
Simple Path to Wealth Portfolio has an expense ratio of 0.03%, which is considered low. Below, you can find the expense ratios of the portfolio's funds side by side and easily compare their relative costs.
Risk-Adjusted Performance
Risk-Adjusted Performance Rank
The current rank of Simple Path to Wealth Portfolio is 44, indicating average performance compared to other portfolios on our website. Here’s a breakdown of how it compares using common performance measures.
Risk-Adjusted Performance Indicators
This table presents a comparison of risk-adjusted performance metrics for positions. Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
| Sharpe ratio | Sortino ratio | Omega ratio | Calmar ratio | Martin ratio | |
|---|---|---|---|---|---|
VTI Vanguard Total Stock Market ETF | 0.63 | 1.04 | 1.15 | 0.67 | 2.53 |
BND Vanguard Total Bond Market ETF | 0.89 | 1.19 | 1.14 | 0.34 | 2.05 |
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Dividends
Dividend yield
Simple Path to Wealth Portfolio provided a 1.91% dividend yield over the last twelve months.
| TTM | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 1.91% | 1.87% | 1.85% | 1.90% | 1.40% | 1.62% | 2.01% | 2.23% | 1.92% | 2.07% | 2.13% | 2.02% |
| Portfolio components: | ||||||||||||
VTI Vanguard Total Stock Market ETF | 1.28% | 1.27% | 1.44% | 1.66% | 1.21% | 1.42% | 1.78% | 2.04% | 1.71% | 1.92% | 1.98% | 1.76% |
BND Vanguard Total Bond Market ETF | 3.77% | 3.67% | 3.09% | 2.60% | 1.97% | 2.22% | 2.72% | 2.81% | 2.54% | 2.51% | 2.57% | 2.79% |
Drawdowns
Drawdowns Chart
The Drawdowns chart displays portfolio losses from any high point along the way. Drawdowns are calculated considering price movements and all distributions paid, if any.
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Worst Drawdowns
The table below displays the maximum drawdowns of the Simple Path to Wealth Portfolio. A maximum drawdown is a measure of risk, indicating the largest reduction in portfolio value due to a series of losing trades.
The maximum drawdown for the Simple Path to Wealth Portfolio was 43.49%, occurring on Mar 9, 2009. Recovery took 467 trading sessions.
The current Simple Path to Wealth Portfolio drawdown is 2.22%.
Depth | Start | To Bottom | Bottom | To Recover | End | Total |
|---|---|---|---|---|---|---|
| -43.49% | Oct 10, 2007 | 355 | Mar 9, 2009 | 467 | Jan 12, 2011 | 822 |
| -26.82% | Feb 20, 2020 | 23 | Mar 23, 2020 | 92 | Aug 3, 2020 | 115 |
| -22.92% | Dec 28, 2021 | 202 | Oct 14, 2022 | 320 | Jan 25, 2024 | 522 |
| -14.75% | Sep 21, 2018 | 65 | Dec 24, 2018 | 66 | Apr 1, 2019 | 131 |
| -14.54% | Feb 20, 2025 | 34 | Apr 8, 2025 | — | — | — |
Volatility
Volatility Chart
The chart below shows the rolling one-month volatility.
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Diversification
Diversification Metrics
Number of Effective Assets
The portfolio contains 2 assets, with an effective number of assets of 1.60, reflecting the diversification based on asset allocation. This number of effective assets suggests a highly concentrated portfolio, where a few assets dominate the allocation, potentially increasing the portfolio's risk due to lack of diversification.
Asset Correlations Table
| ^GSPC | BND | VTI | Portfolio | |
|---|---|---|---|---|
| ^GSPC | 1.00 | -0.16 | 0.99 | 0.99 |
| BND | -0.16 | 1.00 | -0.16 | -0.07 |
| VTI | 0.99 | -0.16 | 1.00 | 0.99 |
| Portfolio | 0.99 | -0.07 | 0.99 | 1.00 |
AI Insight on Diversification
The portfolio is highly concentrated, with limited diversification benefits. The correlation matrix shows that the portfolio has an extremely high correlation of 0.99 with VTI, indicating that VTI dominates the portfolio's behavior. This suggests that the portfolio's returns closely mirror those of VTI, which is likely a broad U.S. equity index fund. On the other hand, BND, which is typically a bond index fund, has a low and slightly negative correlation with the portfolio (-0.07) and an even more negative correlation with VTI (-0.16). This low correlation between BND and the equity component (VTI) provides some diversification benefit by reducing overall portfolio volatility. However, since the portfolio's correlation with BND is near zero and almost perfectly correlated with VTI, it implies that the portfolio allocation is heavily weighted toward VTI, with only a minor allocation to BND. Therefore, the portfolio is more concentrated in equities and does not fully leverage the diversification potential that bonds could provide. To improve diversification, increasing the allocation to BND or other lowly correlated assets would be beneficial.