Introduction:
Financial independence: Retiring early is a strategy that provides financial freedom before the age of 30, 40, and 50, but it requires intense saving, budgeting, and investing to support your retirement corpus.
It is possible when you will able to strict saving budgeting and investing for your retirement and you have to make your investment strategically so you don’t need to work after the age of 30’s, 40’s, or 60’s. However, it is not easy but you can do it if you invest your money in a good financial instrument.
What is Financial independence retire early. (FIRE)?
Financial independence retire early is a practice where investors can retire early before the age of 30’s, 40’s, or 50’s. However, it is not easy but with the help of intense and strict saving and budgeting investing toward effective financial instruments, it will be more possible. If you are getting bored with your 9 to 5 office job so you have to follow some strict budgeting and saving strategy and invest your funds toward high-return financial instruments such as mutual funds, stocks, bonds, gold, etc. Nowadays it become more popular and everyone wants to follow this strategy in the future.
How Does Financial independence retire early works (FIRE)?
FIRE requires more intense saving budgeting as said earlier. if you invest your money in some high-yield investment scheme definitely you can achieve financial freedom.
Around 70% to 75% of your annual income and you should save then you can able be to invest for the future. FIRE makes you more piece full life if you invest wisely. I will explain with the table below.
| Annual income | 20 lakh |
| Saving 50% of annual income | 10 lakh |
| Accumulate corpus | 2 Cr |
| Year | 20 |
Notes: You need to divide your 10 lakh by 2 Cr so you will get a year where you have to make your corpus 2 Cr in 20 years and you need to save 10 lakh for 20 years so it will become 2 Cr However, it is just a rough figure I’m explaining here.
How to implement FIRE?
Before making a corpus there ii some important points to keep in mind so below are the points I m going to explain.
A)- First make a budget: Define your income source and expenses and you should have a solid budget plan and manage it accurately and precisely so budgeting is very important while making FIRE successful.
B)- Aggressively reduce your expenses: Saving an investment plan is not enough to make a great corpus you must focus on your expenses and reduce them aggressively so you will able to manage and grow your corpus.
C)- Make your Financial Plan: Now you have to identify your financial goals such as how much you can take a risk, if you are an aggressive risk taker you should park your savings into equity or any other market-related investment. If you are conservative toward your risk you can invest your fund in fixed deposits, any pension scheme, or govt security.
D)- Be Disciplined: If you want to make a consistent corpus you should be more disciplined toward your investment journey other wise it will not work effectively.
C)- Keep Tracking Your Progress: Monitoring your investment at regular intervals becomes necessary when you are trying to achieve your financial freedom journey.
Types of Financial independence retire early.(FIRE)
1- Fat FIRE: When you retire with high savings and a comfortable lifestyle. Fat FIRE says when you are able to save more and invest it properly in the end you get a more comfortable life.
2- Barista FIRE: When investors have huge savings but want to work part-time and get more after retirement.
3- Lean FIRE: Lean FIRE means your investment covers only basic needs like food, transportation, and rent. It is simple to say that you can retire with minimal lifestyle and expenses.
4- Coast FIRE: It says you have to save enough money for your retirement and you can just earn money for daily life-going expenses. As your parked money grows at an existing rate.
Conclusion:
As I discussed above FIRE we have understood better way Financial Independence Retire Early is a great strategy to retire early in your 30s, 40s, and 50s year of the age, you have to strictly make your financial budget and saving and invest effectively if you follow all the required strategy definitely we can achieve your financial freedom very carefully your budgeting, saving, investment should be in the right way so that you can achieve your goal very effectively and plan your budget and most important expense reduce your expenses and make your more investment effective.