Personal Finance: How possible is the F.I.R.E retirement Strategy?
F.I.R.E
Every turn you take on any social media platform, you are sure to come across a personal finance expert, trying to teach a select demographic how to manage their income and finance. Around 2017, after I had gone back into full time work after having my children, I wanted to start investing in the stock market, but I did not know how to even start. I called some investment firms and was told that they only worked with clients who had a minimum of £50,000 to invest. I did not have that sort of money lying around.
A couple of months while later, I came across a video on YouTube about the F.I.R.E movement - Financial Independence Retire Early! It is a lifestyle and financial strategy where people aggressively save and invest 50% to 75% of their income. The goal is to accumulate enough wealth to quit traditional 9-to-5 jobs and live off investment returns decades earlier than the standard retirement.
One video led to another and soon the algorithm flooded my timeline with videos of individuals and couples who were on the F.I.R.E journey. It sparked an interest in us and, we considered the feasibility for us. Could we realistically invest a large portion of our income in the hopes of retiring early on dividends? Considering that we had just started out on our start up journey, (check out my series on My Husband and I Bootstrapped a SaaS Start-up and it Failed. Here is what I learned) where we poured all of our monies, going down the F.I.R.E journey was not possible at all.
Although we were not able to join the F.I.R.E journey, watching those YouTube videos, I learnt how to self invest on DIY (Do-It-Yourself) investment platforms, as they allowed individuals to build and manage their own portfolios without a financial advisor. Two main YouTube channels that I followed and watched their videos consistently to learn how the stock market worked, different products and how to invest were Our Rich Journey by Aman & Christina and The Humble Penny by Ken & Mary. These channels were run by couples who had figured out how to escape the rat race and shared most of their knowledge freely on YouTube. Both couples also have exclusive paid programs for further mentoring and teaching.
However, for where I was in my life, I learnt a whole lot just from their YouTube videos and went on to implement what I had learnt by opening individual investment accounts for myself, my husband and our kids. Couple of years on, I only wish I had started sooner. Compounding is really your best friend in the investment game. Personally, I would like to embark on the F.I.R.E journey, but the way our lives are set up now, it’s almost impossible to put away a large chunk of your income when you have teenagers. I think it’s easier to get on the F.I.R.E journey as a single person with no child, or young couple without children or with very young children. Which is actually what both couples did, they started on their F.I.R.E journey when their children were still really young.
So, how would it look like for a couple like us with teenage kids? Teenagers are expensive as most people have come to learn. The only way I see is by significantly increasing our earnings and investing all of the additional income sensibly into medium to high yield funds. This means we have to avoid lifestyle creep, which most people tend to fall into as their income increases.
