FIRE (Financial Independence, Retire Early)
A financial movement focused on aggressive saving and investing (often 50–70% of income) to achieve financial independence and the option to retire decades earlier than traditional retirement age.
FIRE combines extreme savings rates with strategic investing to build a portfolio large enough to cover living expenses indefinitely. The core principle is the 4% rule: once your investments reach 25 times your annual expenses, you can safely withdraw 4% per year without depleting your portfolio. There are several FIRE variants — Lean FIRE (minimal expenses, ~$30–40K/year), Fat FIRE (comfortable lifestyle, $80–100K+/year), and Barista FIRE (part-time work covering some expenses). Reaching FIRE requires tracking your savings rate meticulously, minimizing lifestyle inflation, and consistently investing in low-cost index funds. Assetli's FIRE calculator helps you model your timeline based on your actual spending and savings data.
Example
Annual expenses of $40,000 require a portfolio of $1,000,000 (25x). Saving $3,000/month at 7% return, you'd reach FIRE in approximately 16 years.
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Related terms
Savings Rate
The percentage of income saved or invested rather than spent, widely considered the most important factor in building wealth.
Compound Interest
Interest earned on both the initial principal and the accumulated interest from previous periods, creating exponential growth over time.
Net Worth
The total value of all your assets (cash, investments, property) minus all liabilities (loans, mortgages, credit card debt).
Lifestyle Inflation
The tendency to increase spending as income rises, preventing growth in savings and wealth despite higher earnings.
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Inflation
The rate at which the general price level of goods and services rises over time, reducing the purchasing power of money.
Passive Income
Earnings that require little ongoing effort to maintain, such as dividends, interest, or rental income.
4% Rule
A retirement guideline suggesting you can withdraw 4% of your portfolio in the first year, adjusted for inflation thereafter, with low risk of running out.
Supplementary Pension
A voluntary, often state-supported retirement savings product that tops up your future state pension.
ETF (Exchange-Traded Fund)
A fund that holds a basket of assets (stocks, bonds, or commodities) and trades on a stock exchange like an individual stock.
Dollar-Cost Averaging (DCA)
An investment strategy of regularly investing a fixed amount regardless of market price, reducing the impact of volatility over time.