FIRE

Imagine having the financial flexibility to retire decades earlier than your friends, family and peers, and what you could do with the time and freedom that retiring this early would provide you. This is the goal of the FIRE movement, which promotes building your portfolio as early as possible, to reap the rewards later. 

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So, what is FIRE? Well, first things first, what does FIRE actually stand for? FIRE is short for Financial Independence, Retire Early. As the name suggests, it is a movement that encourages individuals to achieve financial freedom as early as possible, often aiming for independence in your 30s or 40s. 

 

As you might expect, given the very aggressive target, the philosophy emphasises frugality, mindful spending, and maximising your income through side hustles or career advancement. By prioritising saving - with the aim often to save more than 50% of your income - participants in the FIRE community seek to build a substantial investment portfolio that generates passive income, allowing them to pursue passions and interests without the constraints of a conventional job.

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People (likely including you, if you are reading this blog) are drawn towards the idea of having enough financial freedom to retire early enough to really make the most of the free time that retirement will provide. This is especially true given the uncertain economic conditions and the likelihood that the state pension age in the UK will continue to increase as people live longer.

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In this section, I’ll look at various areas of FIRE, such as:

- The background and core principles of the movement

- The main types of FIRE - Lean, Fat, Barista and Coast

- The maths behind the movement, and how to calculate your FIRE score

- The practicalities and challenges of following FIRE

- A reflection on whether FIRE is for you, looking at case studies of people who have done FIRE

- A summary of the section and some further information if you are interested in learning more