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Financial Independence, Retire Early (FIRE)

FIRE means to save and invest aggressively in your 20s and 30s so that you can live the latter years of your life freely

FIRE has more to do with your current lifestyle. To implement FIRE, you save and invest up to 50-70% of your income in assets that can generate high returns and passive income.

Enough will never be enough

Types​

Lean FIRE​

Saving up to 25x their annual expenses and adhere to a strict budget.

  • Generates just enough passive income to fulfil basic needs
  • Builds the habit of a simple lifestyle
  • Can be a stepping stone for more comprehensive FIRE lifestyles

Fat FIRE​

Large post-retirement budget with investments that can produce aggressive returns and passive income.

  • Extravagant lifestyle planning
  • Secures financial futures of dependants
  • Accounts for bigger financial emergencies

Barista FIRE​

A combination of Lean and Fat FIRE, this one involves getting a part-time job after retiring early to fund post-retirement expenses.

  • Part-time income reduces stress and enables the gathering of a large corpus
  • Does not require you to sacrifice your lifestyle as much.

Coast FIRE​

Retiring with a part-time job and minimal post-retirement corpus

  • Choicest lifestyle, but with an eye on the future.
  • Opportunity to go back to full-time employment in case you exhaust your F.I.R.E budget due to unforeseen circumstances

Retirement Calculation with Variables​

How To RETIRE EARLY In Your 40s Using The F.I.R.E. METHOD? | Financial Independence | ET Money

Financial Independence (FI) ratio - passive income/expenses

FI ratio is simply your current net worth divided by your target net worth

Anything above 100 is good

https://thepoorswiss.com/financial-independence-ratio-fi

https://networthify.com/calculator/earlyretirement

  • Age - 30
  • Retirement Age - 50
  • Life Expectancy - 90
  • Monthly Expense - 1,00,000
  • Current Retirement Corpus - 1,00,00,000
  • Expected return on investment - 10%
  • Expense factor (Your post retirement expenses as a percent of your current expenses) - 100%
  • Inflation rate - 6%
  • You need to make a monthly investment of 1,85,122.36 to accumulate a corpus of 13,29,65,839.82
  • For age - 30, retirement age - 40, life expectancy - 100, You need to make a monthly investment of 5,72,678.39 to accumulate a corpus of 11,44,57,711.73

Retirement Planner Calculator India | Retirement Planning Calculator Online

Current Age (15-60 Years) - 30 YEARS Desired Retirement Age (Upto 70 Years) - 40 YEARS Life Expectancy (Upto 100 Years) - 100 YEARS Monthly Income Required In Retirement Years - ₹1,00,000 Expected Inflation Rate (%) - 6% Expected Return On Investment (Pre-retirement) - 10 % Expected Return On Investment (Post-retirement) - 5 % Existing Retirement Fund - ₹1,00,00,000 Annual Income Required Immediately After Retirement - ₹21,49,017 Additional Retirement Fund Which Needs To Be Accumulated Is - ₹14,85,57,191 Monthly Savings Required To Accumulate The Fund Is - ₹7,25,218

Retirement Planning Calculator - Plan your Savings Online

How much money you need to retire today?| FIRE RULE | EARLY RETIREMENT |...

Retirement corpus: How much Indians must save & withdraw ? Detailed Rese...

  • For 2024 1 lakh monthly expenses you would need 17 crore retirement corpus

Lifestyle upgrades​

  • 2 objectives that contradict each other, one objective is to achieve financial independence, other objective is to have lifestyle upgrade
  • Move from 2 wheeler, to AC car, to SUV to german brand car, bigger homes, etc
  • Keep the lifestyle upgrade urge in check, and not let it run away too much because then your target itself keeps moving up, which can hamper financial independence

Finance Gratitude​

  • Entitlement

rags to riches and back to rags stories of film stars, lottery ticket winners, and such other starkly high income earners who lost their wealth.

They would be surrounded by relatives and friends that systematically leached off the wealth or led them to poor quality investments. The man who won the first round of Kaun Banega Crorepati admitted that he bought houses for siblings and funded their businesses before losing his winnings and returning to his old job in a few years. Easy money belongs to everyone - that seems to be the credo.

  • Do not disclose your earnings, income or wealth. No one other than your spouse and children at an appropriate age need to know. What you give is always measured with respect to what you make. In itself, a gift of 50,000 at a relative's wedding is substantial. It might be bigger than what others gave. But if it is known that you earn Rs. 5 lakh every month, that is seen as too little.

  • Keep control and equity about who will receive your charities. Someone is not ahead of the queue only because they are related to you or your spouse. You make the decision because it is your money and you know who deserves it. Putting a dozen poor children through college is better than enabling a sibling to upgrade their car. You don't have to justify that decision.

  • Money given away to those around you who behave with a sense of entitlement, is almost never returned. You mostly lose the money and the relationship if you asked. Earmark an amount you can afford to write off. Limit your commitment to that amount and no more.

  • Do not respond to a request for funds with an immediate yes or no. The yes will be seen as too willing; the no will be seen as too rude. Try a response like: let me think about this and come back to you. That gives you the time and those that were taking a shot at asking may not come back. Just as we do not invest in a do-it-right-now investment option, giving also need not be an immediate response.

  • Do not try to use your money to buy friendships and relationships. A very common mistake that the moneyed make is to use the power of their wealth to be surrounded by followers and ego massaging yes men. These are poor investments. None of these last when your money is gone. You are aware of your importance in the family due to your wealth; learn to use it wisely.

  • Make rules that indicate how you will decide whom to support. Keep it equitable between both spouses. Discuss how you will support both parents; how you will contribute to old age support and hospitalizations; and so on. Identify specific causes like education and the limits you will go towards funding it. Allocate a percentage of your earnings and be gracious about it to the outside world, but clear and rule based within the household.

https://economictimes.indiatimes.com/wealth/save/set-limits-when-it-comes-to-helping-others-financially-5-ways-to-deal-with-the-entitled-lot/set-limits-when-it-comes-to-helping-others-financially-5-ways-to-deal-with-the-entitled-lot/articleshow/91556379.cms

Others​

  • DINK - Double Income No Kid
  • Double Income No Kids With A Dog/Cat (DINKWAD / DINKWAC)
  • FI-NP-RE / FINPRE - Financially Independent, not planning to Retire Early
  • HENRY - High Earning but Not Rich Yet