FIRE is an acronym for "Financial Independence, Retire Early"
It is a movement by a community of individuals/families which do not want to wait till the societal norm of age based retirement(ex. ~60 years - India) to retire from their job. People who follow this movement primarily focus on two things:
1. Increasing their investments to generate income(or returns).
2. Decreasing their expenses(non-essentials) significantly to further increase the investment capability.
There is no concrete data to confirm when the movement originated. Also, it doesn't matter that much. As per various blogs, articles and websites, FIRE gained a lot of momentum in the western countries specially among the millennial(those born between 1980-2000). Within last few years, it has started gaining popularity in India as well.
It would be unfair to not take a reference of Peter Adeney better known by the pseudonym of Mr. Money Mustache who retired from his job as a software engineer in 2005 at age 30 by achieving financial independence. He runs a successful website -> http://www.mrmoneymustache.com/ to share his experiences and suggestions to attain financial independence. All his posts are supported by facts and figures. While I highly recommend the website to get insights on investing, simple-living, DIY(do it yourself) etc., it does not fit accurately in the Indian economy due to difference of currency, lifestyle and policies to name a few.
A is your current total family expenses.
B is income generate from your investments.
You can plan to retire early if 'B > A' throughout your retirement life.
The most important term in above scenario is 'throughout'. Some of the reasons to explain it :-
- Inflation : Your family expenses will continue to increase due to the rise in prices of everything that is required to live. Ex. Food, groceries, fuel, medicines etc. Petrol is around Rs 81 in Gurgaon today. I remember it to be around Rs 30 when I got my first bike in class 11th.
- Expenses for children : In most cases of early retirement, a family would have small kids or yet to do family planning. The expenses for a child's upbringing, education and higher studies would also increase the family expenses.
- Emergency : Its recommended to plan for emergencies which can eat up significant amount of your investments. These can be in form of critical or long-term sickness of self or family member, damage to property due to natural disasters. Buying insurance policies(medical, term etc.) are a must-do if you plan for retirement.
Retiring is not stopping work
My idea of retiring early is to leave a job where one works primarily for money. Once you retire early , do you really want to do nothing for the next 30-40 years ? Imagine how boring and monotonous life would that be.
People who retire early don't stop working. Rather, they stop working for money and indulge themselves in activities to keep the mind, body and soul working. These can be a passion(singing, travelling), a hobby(painting, gardening), social service(teaching, NGOs) or interests(blogs etc). Many of these activities can generate income too.
Have questions or feedback, please do share in the comments section.
Ending the blog with a beautiful view of Gorson Bugyal, near Auli, Uttarakhand
It is a movement by a community of individuals/families which do not want to wait till the societal norm of age based retirement(ex. ~60 years - India) to retire from their job. People who follow this movement primarily focus on two things:
1. Increasing their investments to generate income(or returns).
2. Decreasing their expenses(non-essentials) significantly to further increase the investment capability.
There is no concrete data to confirm when the movement originated. Also, it doesn't matter that much. As per various blogs, articles and websites, FIRE gained a lot of momentum in the western countries specially among the millennial(those born between 1980-2000). Within last few years, it has started gaining popularity in India as well.
It would be unfair to not take a reference of Peter Adeney better known by the pseudonym of Mr. Money Mustache who retired from his job as a software engineer in 2005 at age 30 by achieving financial independence. He runs a successful website -> http://www.mrmoneymustache.com/ to share his experiences and suggestions to attain financial independence. All his posts are supported by facts and figures. While I highly recommend the website to get insights on investing, simple-living, DIY(do it yourself) etc., it does not fit accurately in the Indian economy due to difference of currency, lifestyle and policies to name a few.
For beginners, FIRE is a simple number game
Let's suppose:A is your current total family expenses.
B is income generate from your investments.
You can plan to retire early if 'B > A' throughout your retirement life.
The most important term in above scenario is 'throughout'. Some of the reasons to explain it :-
- Inflation : Your family expenses will continue to increase due to the rise in prices of everything that is required to live. Ex. Food, groceries, fuel, medicines etc. Petrol is around Rs 81 in Gurgaon today. I remember it to be around Rs 30 when I got my first bike in class 11th.
- Expenses for children : In most cases of early retirement, a family would have small kids or yet to do family planning. The expenses for a child's upbringing, education and higher studies would also increase the family expenses.
- Emergency : Its recommended to plan for emergencies which can eat up significant amount of your investments. These can be in form of critical or long-term sickness of self or family member, damage to property due to natural disasters. Buying insurance policies(medical, term etc.) are a must-do if you plan for retirement.
Retiring is not stopping work
My idea of retiring early is to leave a job where one works primarily for money. Once you retire early , do you really want to do nothing for the next 30-40 years ? Imagine how boring and monotonous life would that be.
People who retire early don't stop working. Rather, they stop working for money and indulge themselves in activities to keep the mind, body and soul working. These can be a passion(singing, travelling), a hobby(painting, gardening), social service(teaching, NGOs) or interests(blogs etc). Many of these activities can generate income too.
Have questions or feedback, please do share in the comments section.
Ending the blog with a beautiful view of Gorson Bugyal, near Auli, Uttarakhand
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| Gorson Bugyal, near Auli (https://en.wikipedia.org/wiki/Auli) |
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