Have you heard of the new F.I.R.E movement? It stands for financial independence, retire early. Actually it’s not a new concept, it’s just a new way of talking about early retirement. It touts a different–quicker way to leave your 9 to 5. The ultimate goal with F.I.R.E is to be free from debt and live off your investments and savings at an early age. Some, who are part of the movement are trying to retire as early as age 30.
How? Historically, financial advisors have encouraged investors to save and invest 10%-15% of their income. Members of the F.I.R.E community suggest you save more–significantly more. Many in the community have challenged themselves to save as much as 50%-70%. That sounds like a very lofty goal, but they are doing it by any means necessary. Here are a few of their suggestions:
- Live frugally
- Bikes over cars
- Grow your own food and cook at home
- Become a minimalist
- Live in a tiny house
- Low cost investing
- Low taxes
- After retirement, take on seasonal or short-term jobs
Not everyone will latch on to the idea of retiring early. It sounds good, but the execution can be challenging. If the suggestions above don’t make you feel uncomfortable, you may be a good candidate for the movement. F.I.R.E can offer you the opportunity to find your God-given purpose and live the life that you really desire without focusing on money.
I’m here if you need me,
According to experts, the majority of working Americans are not saving enough to retire comfortably. As a matter of fact, they say it’s hard for us to even come up with $1,000 in the event of an emergency. If we can’t fund a short term emergency, then surely we are not going to be able to sustain a long retirement.
Here are THREE ways to grow your portfolio:
SAVE more! You’re probably not saving enough. A good rule of thumb is to save at least 10% of your income and work your way up to 15%. Ten percent may seem like a lot to start with especially if you have not been saving at all. I say start saving as much as you can, even if it’s 5%. When you get a raise, SAVE YOUR RAISE!
Don’t feed the flames of FEAR. In order for your money to grow, you have to INVEST in the Stock Market. The Stock Market by nature will have some volatility, however you have control over how much volatility your portfolio is exposed to. If you make consistent contributions, diversify your portfolio and take on some level of risk, your portfolio will grow over time.
MAX out your retirement account, don’t take AWAY. While you are working and accumulating assets, NEVER take distributions from your account. Trust me, you are doing yourself a disservice. You will pay taxes and most likely a penalty. It is a painful hit to your portfolio and ultimately your retirement. Even if you pay yourself back, the money you took out is not invested so it’s not getting the opportunity to grow.
By implementing any one of these tips, you will put yourself in a better position to retire. Implementing ALL three will significantly increase the probability of reaching your retirement goal.