FIRE Movement: Dreaming of Early Retirement? Here’s How to Make It a Reality

The talk of the town for young generations these days is the F.I.R.E. movement. According to experts, the young generation’s dream is improbable to be realized in reality, and it is even more challenging to achieve through entrepreneurship. Nevertheless, we have examined why people dream of early retirement and how to build a secure asset.

Financial Independence, Retire Early (FIRE)

The term ‘FIRE movement’ refers to people who aim to retire early by saving money as soon as possible and living the life they want. It is a newly coined word derived from the first letters of ‘Financial Independence,’ which means economic independence, and ‘Retire Early,’ which means early retirement. These people aim to retire in their late 30s or early 40s and save more than half of their income from their early social years.

How much wealth do you need to achieve this goal?

 

There is no exact standard for the retirement fund. It varies depending on the number of individuals, such as single households or dink couples, and the desired goals, as the living standards and costs differ. Even among economic experts, there are various opinions on the minimum seed money to achieve this, such as $750K or $2.25 million.

Setting overall goals and plans

The first thing to do for effective asset management is to set clear economic goals. We set many goals in our lives, but most end up short-lived. However, planning in terms of asset management can be pretty effective. You must set goals such as children’s education expenses, home purchases, and post-retirement funds and develop specific asset management strategies for each goal.

How should you invest?

There are various investment methods, such as stocks, bonds, and real estate. It is essential to choose the appropriate financial product according to your investment preference and goal and analyze the risks and returns of financial products in detail. Also, as important as investment is expenditure. It is wise to save first and then spend. This is an effective saving method, and excessive control of expenses can lower the quality of life, so appropriate choices are necessary.

Regularly reevaluate your assets

It is also important to regularly reevaluate and readjust your assets. It is recommended to check the value and performance of the products you invest in and create a portfolio according to your needs. Depending on how much you increase the investment return rate, the preparation period to reach this goal can be shortened, and high expected returns come with high risks, so it is important to practice investment that suits your investment preference and financial goals.

What about starting a business?

In addition to investment, many people also turn to entrepreneurship. The food service industry has a relatively low entry barrier and does not show significant success for young entrepreneurs. In the case of cafe startups, which are most often considered when starting a business, you can open an independent cafe with an investment of around $75K. As for franchise cafes, the investment amount doubles, so young people tend to be attracted to small independent cafes, and competition can only intensify.

Is extreme frugality really okay?

It is natural to feel repulsed when you see people who live by extreme frugality while dreaming of the FIRE movement. In Korea, there was a trend of creating group chat rooms called ‘poor regions’ to certify zero daily spending. The young people in the poor region incorporate their values into their daily lives without caring about people’s cold gazes and live by practicing their values every day.

Second jobs are on the rise

Asset management for the FIRE movement is a series of processes in which you accumulate savings assets after deducting expenses from income. Therefore, when you are living an economic life at a young age, you need to find ways to increase your income. People usually choose to increase their salary by increasing their self-worth or having a side job besides their primary job. One of the representative second jobs is delivery part-time work, which is advantageous for those who need to maintain their main job during the day. Other options include e-book production, blog marketing writing, overseas purchasing agency, and running a smart store.

Is it better to be single or married?

Does being alone make you spend less money? Does being together make you save more money? From the asset management perspective, marriage is often considered a factor that is highly likely helpful. Many people think of preparing and getting married in advance, but it takes time to deplete assets anyway. Although marriage incurs many costs, such as child rearing, setting life goals step by step with your partner, and working towards them together can positively affect asset management.

To successfully achieve the FIRE movement?

If you want a financially free life not tied to money, it is crucial to secure stable cash flow. You need to establish a system that generates cash even if you don’t work, and a portion of the retirement assets should be prepared to create a steady income through various pension plans, even if the return rate is not high. In addition to financial aspects, don’t forget to take care of your physical health and maintain social relationships with people around you.

By. Jeon Sin Young (press@daily.co.kr)