A Beginner’s Guide To FIRE

Tuesday 16 February 2021

Here are 3 key concepts, 2 key resources, and 1 key action, to help you understand the FIRE movement, and get you started investing.

In this week’s G.S.I episode, we had Candice on – an Equity Mates community member, who is pursuing FIRE. So here’s our take on FIRE.

  1. What is the FIRE movement?

    FIRE stands for Financial Independence Retire Early. The aim is to build financial independence so you can retire early – like, really early – in your 30’s & 40’s.
  2. How does it work?

    In practice, there are many ways to achieve FIRE – some more frugal than others. At its core, it’s about setting up an aggressive saving and investing plan to build a portfolio. In some instances, saving and investing up to 70% of your income. 

    The idea is to invest so that your portfolio will provide enough annual income (from dividends or interest) for you to live off and retire early.

    In order to achieve this, some people lead a frugal, minimalist life in their 20’s and 30’s to save as much as possible.
  3. Is it for me?

    Financial independence means different things to different people. For some, it means living off $40,000 a year, cutting out consumerism and enjoying a minimalist approach. For others, it means having the flexibility to continue working knowing you’re not reliant on the paycheck.

    We like that FIRE encourages people to invest often, and as much as they can. At the end of the day, we all want to build wealth through the stock market. It’s about finding what works for you and finding your balance.
  1. Check out this blog-post explaining
    • what the FIRE movement is
    • major lessons we can take from it
    • why it might not be for everyone
    • an example roadmap to early retirement
  2. The Aussie Firebug is perhaps the most well-known Australian millennial chasing early retirement. Here is his anonymous blog and podcast to follow his journey. 

If you do want to take FIRE seriously, and retire early, you are going to need to know how much you’ll need to live.

The general rule of thumb is you’ll need to save 25x your annual expenses to build a portfolio big enough to support you. If you spend $40,000 a year, you’ll need to save and invest $1,000,000 to generate enough income later on. 

Best place to start is to work out what your FIRE number is – and then get saving!

Community Call Out

Get Started Investing – is all about helping beginner investors break down barriers. The best way to work out what those big hurdles are, is to hear it directly from you, the beginner investor.

So, we’re asking for you to share your story with us. It’s really simple – leave your details or a voice message here, so we can get in touch about being on the show. 

We really want to hear from you, so don’t be shy – and remember there’s no such thing as a stupid question. 

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