Simple Path to Wealth at a glance
Simple Path to Wealth is a fixed-allocation portfolio by JL Collins across US Equity, US Bonds, rebalanced annual. Backtested 1987-12-31 to 2026-07-03 (38.5 years): 10.0% CAGR, 0.89 Sharpe, -43.4% max drawdown, 13.5% volatility.
- Type
- Fixed Allocation
- Author
- JL Collins
- Rebalancing
- Annual
- Risk
- Aggressive
- Period
- 1987-12-31 to 2026-07-03
- CAGR
- 10.0%
- Sharpe
- 0.89
- Max Drawdown
- -43.4%
- Volatility
- 13.5%
Simple Path to Wealth — Fixed Allocation Portfolio
JL Collins' Simple Path to Wealth portfolio, the foundational text of the FIRE movement. Ultra-simple: 75% Vanguard Total Stock Market (VTI) and 25% Vanguard Total Bond Market (BND). Collins argues most investors are better off with just two funds than any more complex allocation.
Simple Path to Wealth: frequently asked questions
- What is Simple Path to Wealth?
- Ultra-simple 2-fund portfolio: 75% US total market, 25% bonds. Hugely popular in the FIRE community.
- Who created the Simple Path to Wealth strategy?
- Simple Path to Wealth was developed by JL Collins. It is based on Collins, JL. The Simple Path to Wealth (2016).
- What is the historical return and maximum drawdown of Simple Path to Wealth?
- Backtested from 1987-12-31 to 2026-07-03, Simple Path to Wealth returned 10.0% CAGR with a -43.4% maximum drawdown and a Sharpe ratio of 0.89. Past performance does not guarantee future results.
- How often is Simple Path to Wealth rebalanced?
- Simple Path to Wealth is rebalanced annual. BestFolio publishes the updated allocation signal each period.
- Is Simple Path to Wealth a fixed or tactical strategy?
- Simple Path to Wealth is a fixed-allocation (strategic) portfolio: it holds a set allocation and rebalances on schedule rather than rotating based on market signals.
Backtest Performance (1987-12-31 to 2026-07-03)
| Metric | Simple Path to Wealth |
|---|---|
| Compound Annual Growth Rate (CAGR) | 10.0% |
| Maximum Drawdown | -43.4% |
| Sharpe Ratio | 0.89 |
| Sortino Ratio | 1.25 |
| Annualized Volatility | 13.5% |
| Calmar Ratio | 0.23 |
| Total Return | 3813.0% |
| Backtest Period | 38.5 years |
Strategy Details
- Type
- Fixed / Strategic
- Rebalancing
- annual
- Risk Level
- aggressive
- Variants
- 2
- Author
- JL Collins
- Source
- Collins, JL. The Simple Path to Wealth (2016)
Asset Classes
- US Equity
- US Bonds
Categories
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