FIRE

FIRE stands for Financial Independence, Retire Early. It is a lifestyle movement aimed at achieving financial independence and, consequently, retiring early.

The path to financial independence involves saving a significant portion of your income, reducing expenses, and investing wisely to generate passive income streams that can cover your living expenses.

FIRE enthusiasts often strive to save at least 50% or more of their income.

A common guideline used in FIRE is the 4% rule, which suggests withdrawing no more than 4% of your total portfolio value annually to maintain a sustainable retirement income.

While higher incomes can make the journey to FIRE faster, achieving financial independence and early retirement is possible at any income level with proper planning and disciplined saving.

The time required to achieve financial independence varies based on individual circumstances. It can range anywhere from a decade to several decades.

Investing plays a crucial role in FIRE by allowing your saved money to grow over time through compound returns. It helps accelerate wealth accumulation and generates passive income.

Common strategies include adopting frugal living, pursuing side hustles to increase income, investing in low-cost index funds, and occasionally pursuing geo-arbitrage by moving to areas with a lower cost of living.

Retiring early is not mandatory after achieving financial independence. FIRE can also mean having the freedom to pursue your passions, work on passion projects, or take up part-time work without being dependent on a traditional 9-5 job.

Some challenges include maintaining discipline and sticking to the savings plan, dealing with market volatility and investment risks, and potentially encountering societal pressure or skepticism about the unconventional path you're taking.