Road to FIRE

Taking a scroll on our social media pages these days, there seems to be a new ongoing trend around millennials and the Gen-Zs. It is no longer the 5Cs (Car, Credit Card, Children, Condominium and Country Club Membership) that we used to talk about in our social study classes. Instead, this new trend seems to be spreading like wild-FIRE!

What is FIRE?

FIRE in short, stands for Financial Independence, Retire Early.

Financial independence in this case refers to having sufficient income to pay for living expenses without having to be employed or dependent on others.

Hmmm sounds familiar ? Yes, that is actually another term for retirement isn’t it. But what exactly Is this “FIRE Movement” all about ?

Being in this movement, people have the idea of living a low maintenance lifestyle while investing aggressively and also finding ways to generate more income and savings so as to achieve what they termed as “FIRE” at a desired age. Simply put, having to achieve an early retirement.

Planning For FIRE

If the idea of an early retirement sounds like a plan for you, here are some tips that might help you in this financial journey to achieve FIRE!

1- Knowing our desired lifestyle

As we plan to achieve financial independence, it will be good to ask ourselves the kind of lifestyle that we desire during retirement.

Whether or not we plan to retire at age 30 or 62, we will need to know the expenses that we will incur from our ideal retirement age to the rest of our life.

Our desired lifestyle can then be used to calculate our monthly expenses to sustain such a lifestyle which will thus be used to calculate the total amount of money we need to work towards before we can truly achieve FIRE.

2- Building an Emergency Fund

In addition, we can’t just go about thinking about retirement without an emergency fund.

As you take on this financial journey to achieve FIRE at a desired age in mind, it is also important to build an emergency fund that provides you with the financial stability in emergency situations such as the loss of jobs, unexpected big purchases or even during medical emergencies.

This fund should never be touched and if it’s saved in a high interest savings account, it should be highly “liquid”, giving you the access to these funds at any time.

3- Getting Insured and Covered

As we mentioned about medical emergencies on our previous tip, it is also worth noting the importance of insurance and coverage.

In an unpredictable world that we live in, it is important for us to get insured for unforeseen circumstances. One example could be accidents or hospitalisation. Anything could happen and the cost of medical or hospitalisation bills could go really high and critically affect your retirement funds or plans.

Insurance and coverage acts as a financial safety net for your financial portfolio. Hence having the assurance that should anything happen to you after retirement, your retirement will not be compromised due to any unexpected events.

4- Get Invested

Achieving FIRE will not be easy, and with the rise in cost of living on top of inflation, our retirement savings might be depleted even before we retire. Hence this comes the importance of investing.

Investing can come in many forms, (If you haven’t already read, here’s an article on the different investing strategies) and can also be done personally or professionally.

However, if you are working towards getting covered like we’ve mentioned in our previous point, you might be interested in getting an Investment link insurance policy to start off your investing journey while also being covered.

With an Investment link Insurance policy, the premiums you pay are used to pay for units in one or more sub funds available from the insurer. Some of the units that you purchased are then sold to pay for your coverage and other charges while the rest remain invested. Hence it is the idea of both savings and coverage at the same time.

However, you might also prefer separating the two. In cases like this, investing into Exchange Traded Funds(ETFs) or actively managed funds can also be one of the few alternatives.

5- Building on Other Incomes

To achieve FIRE, many would only consider the saving aspect to achieve financial independence.

However, on top of getting invested, it can also be useful to generate more streams of income both actively and passively on top of the main sources of income. This can come from a side hustle / side geek such as providing tuition or doing part time deliveries just to name a few.

The extra generated income can then be used to invest and save that can be snowballed to help reach FIRE with a lesser amount of time.

FIRE or No FIRE ?

Is it time to start FIRE-ing ? Hmm, it is really up to one’s goals and we really can’t give an answer to that. However, whether or not you choose to take upon the FIRE movement, we can first start off with planning for our retirement.

Even if you don’t plan to retire early, it will be easier to achieve our retirement goal with a longer time horizon, and the best time to start is now!

Feel free to contact any of our team members for a consultation today to help you with your financial journey ! It can always be overwhelming facing these financial terms, but we are here to help and educate.

C x D

Learning about financial literacy can also be fun and easy ! Stay with us in this financial journey one post at a time to find out how !

If you haven’t already, you can check out our other work down below too, happy learning and reading !

Curious about different investing strategies ? Find out here!

https://www.janeongdistrict.com/post/everyone-can-reap-the-benefits-of-active-investing-here-s-how

Plan to save more ? Here’s how to get started 🤨

https://seedly.sg/opinions/plan-to-save-more-here-s-how-to-get-started