What the FAQ?

What Is FIRE?

There’s a few definitions but to keep it simple, it’s having sufficient income generated from assets that cover your living expenses. 

 

Example; You cut back on unnecessary, pointless spending and find you can live a decent, fulfilling life on $40k per year.

 

You work hard to earn, save and invest $1m into the share market. On average, this will return $40k per year worth of income. You can now choose to quit work and chase something more meaningful or continue to work part time in a less challenging role but gives you a whole lot more of your time back.

 

 

Is It Possible to Retire Before 30, 40, 50?

It certainly is but depends on a multitude of factors such as income, expenditure, age, savings rate, style of FI etc. You really only need to follow two simple rules in order to reach FI;

  1. Spend less than you earn.
  2. Invest the surplus

After following the above it’s simply a matter of patience. The more you save and the more you invest, the faster you will reach FI.

You can calculate your retirement date by using the awesome AFB Australian FIRE calculator

 

Why Chase FI?

To take control over the most valuable non-renewable resource you have- your time. You will also have greater control over your future, more freedom and flexibility to pursue your passions and interests and far more time to do housework!

How Much Do I Need To invest?

At first it will always seem like an impossible figure but if you keep focused and pateint, you will slowly chip away at the large figure.

The accepted figure in the FIRE community is that it should be roughly 25 times your annual expenditure.

What To Invest In?

Ideally anything that generates a passive income that you can live off once you have hit your FI goal.

Whilst property is a very common choice, more and more in the FIRE community are turning to ETF’s and LIC’s for no other reason than they’re a lot less of a headache. 

 

 

What About Super?

Another ‘it depends’ question and very circumstantial. Ask yourself the below questions and try figure out if it’s better to make extra contributions;

  1. How close am I to FIRE?
  2. How long until I can access Super?

Generally, the younger you are, adding to your Super does not allow you to retire early. Even if you’re in your 40’s you can still achieve FI without extra contributions.