How to quit your 9 to 5 job? Financial Independence.

“FIRE” stands for fina“FIRE” stands for financial independence, retire early. Though it’s most often associated with early retirement – such as retiring by 35, 40, or no later than 50 – it’s probably more about financial independence than anything else.

The basic idea is to create a situation where you have sufficient income from your investments or other passive sources to enable you to quit your job at any time. That doesn’t necessarily mean you’ll quit your job, but rather that it will give you the option.

Many who achieve FIRE continue working, but often in very different occupations than they had early in life. Many others simply use the status to create an easier life, that affords more time for personal pursuits, family, and travel.

Still, others achieve FIRE, take a year or two off to travel the world, then come home and start new ventures. The point is, once you achieve FIRE all those doors will be open to you.

The FIRE concept has become so popular that it’s become a movement all its own. Though it seems most FIRE participants run a blog, website, or some sort of online business, there are many others also operating in the main street economy, or even holding regular jobs. FIRE

The basic idea in achieving FIRE is to live well beneath your means, save as much money as possible, invest it for a high rate of return, then retire or declare your financial independence once you reach a certain monetary goal.

How much money do you need to reach FIRE?
The first step in the FIRE process is determining how much money you’ll need to have in your investment portfolio to become financially independent. This is largely based on what’s known as the 4% rule.

The theory behind the safe withdrawal rate holds that if your portfolio is invested in a mix of stocks and bonds, you’ll be able to withdraw 4% of the portfolio each year without ever running out of money.

Based on the safe withdrawal rate, you can calculate the needed size of your portfolio to be 25 times your annual cost of living. For example, let’s say you need $50,000 per year to sustain the lifestyle you want. Using the safe withdrawal rate of 4%, you multiply $50,000 by 25, giving you $1.25 million.

That’s how much money you’ll need in your portfolio to produce the needed $50,000 annual income you’ll need in retirement.

Of course, getting to that portfolio size will require a series of strategies. Those strategies will include saving a large percentage of your income each month, then investing it at a rate that will produce the desired portfolio size.

Lower your living expenses
For most people, you’ll need to be able to save between 25% and 50% of your after-tax income to be able to retire in less than say, 20 years. The exact percentage will depend on how much you’ll need to reach your goal. Naturally, if you expect to retire in 15 years, the percentage will need to be higher.

To do that, you’ll need to cut your living expenses.

More likely, you’ll have to live in a home that’s much less expensive than you can afford. You’ll also need to drive a much less expensive car. And you may need to forgo expensive vacations, frequent restaurant meals, and hobby spending.

Increase your income
It may be that you don’t have sufficient income to save such a large percentage for early retirement. Or, you may simply prefer not to cut your living expenses so dramatically. You may even choose to increase your income to enable you to reach your FIRE goal ahead of schedule. You can do that by starting a side hustle to generate additional income.



As a spoiler alert, one of the best ways to reach FIRE is to use a combination of lowering your living expenses and increasing your income. If you can reach a point where you can save 50% or more of your after-tax income, you’ll reach your goal much more quickly.

Successful investing
If you’re going to reach your FIRE goal it won’t be enough to put your money into a safe bank account earning 1% or 2% on your money. Or worse, stashing it under the mattress earning no money at all.

You’ll need to hold some money in safe, income investments, but the majority will need to be invested in stocks.

Based on the S&P 500, stocks have returned about 10% per year on average, going all the way back to 1926. That kind of return is the reason why stocks will need to dominate your portfolio.

Naturally, there’s more risk when you invest in stocks than in safe bank assets. But the risk is minimized when you’re investing for a decade or more.

Investing platforms to help you reach FIRE
By dedicating up to 50% of income to savings, followers of the FIRE movement may eventually be able to quit their jobs and live solely off small withdrawals from their portfolios decades before the conventional retirement age of 65.1 Once their savings reach approximately 25to30 times their yearly expenses, often roughly $1 million, they may quit their day jobs or completely retire from any form of employment altogether.1

Видео How to quit your 9 to 5 job? Financial Independence. канала Vincent Roman