Common Questions (and Answers) about FIRE

FIRE means having enough wealth to live off the income derived from it such that your living expenses are covered and that you no longer need to work. When you reach FIRE, work becomes optional. You probably will want to continue to work in one way or another, but earning money from how you spend your time working will no longer be the primary driver.

FIRE stands for: Financial  Independence Retire Early. 

You’ll also likely see references to FI around the interweb, which is just the first part of the acronym. Some people are more interested in reach FI rather than retiring early. On the MMG site we use FIRE when talking about the combination of reaching FI and then actually retiring from work, and FI when only referring to the financial independence side of the equation.

If you have a zero net worth then its possible to reach FIRE in a 10 year period. It may take a little longer if you have to clear debt first, or less time if you have a higher net worth already. What is most important is your savings rate, the higher it is, the quicker your FIRE journey will be.

Absolutely not! I can’t deny that saving more is less difficult if you have a high disposable income, however the beauty of FIRE is that its different for everyone. Someone earning $100K per year after tax but who spends $90K is going to need a much larger investment pot to live off than someone earning $50K after tax and who saves $15K. This is because of how your FIRE number is calculated (25 x yearly expenses), for the higher earner above, their pot will need to be $2.25m to sustain their current lifestyle, whereas the low earner only needs $875k.

There are two main ‘levers’ which you can pull to get to FIRE more quickly:

1. Income: increasing your income through side hustles, starting a business, moving jobs or getting a big bonus or promotion; and
2. Expenses: decreasing your spending and cutting waste.

Most things you read about FIRE focuses on cutting your expenses. After all, if your expenses are lower, the amount you need in your investment pot will also be lower (remember you need 25 x annual expenses). However a lot of people in the FIRE community neglect to focus on the increased income lever; to me, this is just as or more important.

This is totally different for everyone, but its easy to work it out. You can retire when you have 25 x your annual living costs invested.

For example: so if you spend $50,000 a year on living costs, you will need a pot of $1,250,000.

This amount of money seems ludicrous but its very much achievable if you follow FIRE concepts.

Most people on a FIRE journey will invest in low cost index funds. An S&P index fund will (generally) yield 8-10% over a 10+ year period. Its hard to beat this consistently. I personally also hold a small amount of individual shares.

I personally own a modest apartment in a London suburb which used to be my home. It yields a healthy monthly profit.

I really dislike real estate investing. Its far too active (vs passive investing in index funds) and when things go wrong, they really go wrong. Yes you can get amazing capital gains (perhaps harder these days) but it keeps your capital tied up in an illiquid asset, comes with lots of responsibility and when untenanted, can be a nightmare.

If you invest in real estate, you need to be prepared to run it as a business. If you are cool with that then go for it! It’s just not for me.

I’m currently based in Singapore.

I’m an (extremely) unconventional lawyer.

The ideal amount for me is 6 months of living expenses. This is the maximum amount of time I think it would take me to move countries (I’m an expat), settle into my new home and find a new job.

The MMG blog is an accountability tool for myself to keep me focused on my FIRE journey. I was reading a lot of information and sharing it with my friends, family and colleagues and I thought it would be helpful to keep it all in one place. I get really excited about life hacks such as FIRE and love talking about them and learning from others.

Who knows, maybe one day I can run this blog full time when I actually reach FIRE!

That’s an easy one. As a general rule of thumb I do my best to:

1. increase my earnings year on year;
2. spend (much) less than I make
3. max out tax advantaged wrappers (pension pot/super/SRS/401K equivalents etc.);
4. invest the rest in low cost index funds (I aim for a 70%+ savings rate)