FIRE: Financially Independent and Retire Early

FIRE: Financially Independent and Retire Early

Building and managing your wealth is definitely not an easy task, but we can surely make it a simple one. With the right plan of action, you can become financially independent and retire early. Some of you may be wondering if this is an exaggeration when we tell you that you can retire earlier than your conventional retirement age. However, this is absolutely possible if you plan and execute the right strategy.

What is FIRE?

FIRE is an abbreviation for Financial Independence and Retire Early. It is a new financial movement where the goal is to create a solid reservoir of savings and investments so that you can retire earlier than your regular saving and retirement strategy.

How is it beneficial to working individuals?

The FIRE movement essentially targets today’s young and working individuals to help them generate an excellent strategy to be financially independent and retire early. People often spend all the time doing their job or running their businesses but spend very little time when it comes to money management.

In the session of Nivesh Mahakumbh, Upasana Taku, Co-Founder and COO of MobiKwik, says that in order to plan and execute this strategy, it is important to start thinking of investments right from day one; the time when you earn your first cheque. Starting early is extremely crucial irrespective of the amount that you start with. It can even start with 10% or 20% of your income.

Today, many individuals who start their careers with a debt liability already on their shoulders. When speaking about this to Harsh Jain, Co-Founder & COO of Groww, he provided a different perspective towards the individual’s debt. Whether it is a home loan or education loan, it is definitely more of a benefit than a liability if it helps you to either earn, save, or invest in the future. And, if this is the case, the future returns are going to be much higher than the amount of the loan.

What are the best investment instruments for the FIRE technique?

When Harshil Mathur, CEO & Co-Founder of Razorpay, asked about the best instruments for the FIRE technique to Nikhil Kamath, Co-Founder & CIO of Zerodha & True Beacon, he pointed out that a balanced and diversified portfolio is the key to mitigate the risks of the market. In today's market conditions, it is ideal to become a profitable and solvent investor for the long term rather than take risks and burn out in the short term.

So, the key takeaway is that if you are building a new portfolio, plan and prioritise to make it a balanced and a diversified one. i.e. There should be a balance of risk-free instruments and high risk-high return yield instruments. You can also go for a low-risk diversified portfolio to maintain the balance.

Conclusion

FIRE strategy is just another route for you to achieve your goals as early as possible. It is also essential to know that one single strategy cannot work for everyone. You need to give ample time and effort to understand what kind of wealth management suits your personal needs. So, Firstly understand your financial needs, start investing early and keep growing and diversifying your investment portfolio to create wealth and ultimately retire as early as possible!

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

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