FIRE stands for financial independence/retire early. It’s a term used to describe a recent movement of many individuals who’s goal is to achieve financial independence and retire early through savings and investment. Enter your total savings, expected yearly return rate, additional contributions, and yearly cost of living expected at retirement to see how long you need to save for.
How to retire early
How to retire early?
F.I.R.E at it’s core, is a philosophy in frugality to the most extreme. There are 4 key aspects of FIRE that need to be followed in order to achieve financial independence.
- First, the planning needs to start now.
No matter what your age, if you want to retire earlier than normal (65 years of age), you must come up with a plan today. A great place to start, is with the calculate above. That way you can plan how much you need to save in order to retire at a certain age.
- The next step is to figure out ways to save more.
The first aspect of this is is to reduce your expenses to the bear minimum. This includes moving to a cheaper apartment, eating cheap through meal prep, and not spending money on going out ect.
- Once you’ve figured out how to cut back costs and increase income, you must put that extra money to work by investing in the stock market.
You need to put your money to work for you, otherwise you will never retire early.
- After you’ve cut back expenses, you need to increase income.
This includes picking up a separate job. In general, anything below a six figure income will not yield an early retirement.
The most common answer is an index fund. They have the most consistent returns with little downside. Investing in individual stocks or securities can results in huge gains, but also large losses that could crush any chance of FIRE.
The first step is to start demanding more income from your current employer. It’s estimated that 45% of the time an employee asks for a raise, they receive it. After that avenue has been explored, finding a second job is the next step.
Live more frugally than you ever thought possible. Your meals should consists of cheap meat, rice, and veggies only. Your rent should be as low as possible. DONT GO OUT!