For those of you who conform to the stereotype of retiring after the age of 65, this might just be a bias. A well-organised retirement plan should not depend on your age, but instead your financial wellbeing!
Recently, there has been a rising trend called F.I.R.E in the investing world, equivalent to “financial independence, retire early”. This aims to encourage investors to improve their financial conditions thus achieving early retirement.
The pro-F.I.R.E investors urge retirements between age 30 and 40. Might be tempting as it sounds, but is it truly do-able? So let’s dwell on this and see whether F.I.R.E is the right plan for you.
Utilizing F.I.R.E conveys that youngsters would be actively undergoing saving and investing, which dominate approximately 50-70% of their earnings. There are 3 main ways to adopt this theory – Fat FIRE, Lean FIRE and Barista FIRE. Investors are able to opt for the one that suits them best, thus making their plans more personalized.
The Fat-FIRE-people wish to retire without compromising their quality of life. Hence, they would be needing the most proactive and aggressive saving & investing strategies.
The Lean-FIRE-investors prefer a minimal lifestyle, for which they would minimize spending during their retirement. As such, their saving & investing strategies are as well relatively more unassertive.
A Barista FIRE style lies somewhere between the above 2 strategies. Those investors prefer a simple retirement life whilst eager to earn some extra income, e.g. through doing part time jobs. Compared with the other strategies, Barista LIFE is a moderate method that strikes a balance between the two.
As we have different goals, it is not surprising that we should also have various investment plans. Remember to find the method that truly leads you to financial independence!