What is FIRE?

FIRE stands for Financial Independence, Retire Early. It's a movement focused on aggressive saving and smart investing to achieve financial freedom decades earlier than traditional retirement.

FIRE isn't about never working again — it's about having the freedom to choose how you spend your time.

Core Principles

Save aggressively. FIRE followers typically save 50–70% of their income, far above the traditional 10–15%.

Invest wisely. Money goes into low-cost index funds, real estate, and other assets that grow over time.

Reach your number. Your "FIRE number" is typically 25× your annual expenses, based on the 4% rule.

Live on your terms. Once you reach your number, work becomes optional.

Your FIRE Number

Your FIRE number is the amount you need invested to sustain your lifestyle indefinitely without working.

Example

With £900,000 invested, you can safely withdraw £36,000/year (4%) to cover expenses indefinitely.

The 4% Rule

The Trinity Study found that withdrawing 4% of your portfolio annually gives you a 95% chance of your money lasting 30+ years.

Since 4% × 25 = 100%, you need 25 times your annual expenses.

Considerations

• For earlier retirement, consider 3.5% or 3% withdrawal rate
• Diversify across stocks and bonds
• Adjust withdrawals based on market conditions
• Factor in other income like part-time work or rental income

Lean FIRE

Financial independence with minimal expenses. The fastest path to FIRE for those comfortable with frugal living.

Best for minimalists, people in low cost-of-living areas, and those who want to retire as quickly as possible. Leaves little room for unexpected expenses — build an emergency fund.

Barista FIRE

Semi-retirement with part-time work. Your investments cover most expenses while you work for benefits and extra income.

Great transition strategy before full FIRE. Provides social interaction, employer benefits, and reduced portfolio stress.

Coast FIRE

You've saved enough that compound growth alone will fund your traditional retirement. You only need to cover current expenses.

Once you hit your Coast number, you can switch to a job you love, work fewer hours, or take more career risks.

Fat FIRE

Retire with a luxurious lifestyle. No compromises, no budgeting stress.

Travel extensively, pursue expensive hobbies, support family, and maintain a large buffer for the unexpected.

Index Funds

Low-cost funds that track market indices like S&P 500 or FTSE 100. The backbone of most FIRE portfolios.

• Low fees — expense ratios as low as 0.03%
• Diversification — own hundreds of companies in one fund
• Simplicity — no stock picking or market timing
• Average return — 7–10% annually over the long term

Popular choices: Vanguard FTSE Global All Cap, Vanguard S&P 500 ETF, iShares Core MSCI World ETF.

ISAs & Pensions

Tax-advantaged accounts are crucial for maximising wealth. Every pound saved in tax is a pound invested.

Stocks & Shares ISA

£20,000 annual limit. All growth and withdrawals are completely tax-free. Access anytime.

Pensions (SIPP)

• Tax relief on contributions (20–45%)
• Employer matching — free money
• Accessible from age 55 (rising to 57)
• 25% tax-free lump sum at retirement

Strategy: Max out ISA first for flexibility, then pension for tax benefits. Use ISA to bridge the gap until pension access age.

Real Estate

Property can accelerate FIRE through rental income and leveraged appreciation. Target returns: 8–12% cash-on-cash.

• Buy-to-let — direct ownership with rental income
• REITs — property exposure through stocks
• Crowdfunding — invest with smaller amounts

Bonds

Lower risk, steady income. Important for portfolio stability as you approach FIRE. Typical return: 3–5% annually.

• Reduce portfolio volatility
• Stable income in retirement
• Rebalancing buffer during market crashes
• Common rule: your age = your bond allocation %

Saving Tips

1. Pay yourself first

Automate savings to investment accounts on payday. Treat it like a non-negotiable bill.

2. Track your net worth

Monthly tracking keeps you motivated and helps identify spending leaks.

3. Optimise the Big 3

Housing, transport, and food are 60–70% of most budgets. Small wins here have massive long-term impact.

4. Increase income

Cutting expenses has limits — income growth doesn't. Negotiate raises, switch jobs, build side income.

5. Tax efficiency

Use ISAs and pensions to shelter investments from tax. Tax saved is money earned.

6. Stay the course

Market dips are normal. Don't panic sell. Time in the market beats timing the market.

Common Mistakes

Lifestyle inflation

As income grows, expenses often grow too. Keep costs flat while income increases. Save your raises.

Timing the market

Time IN the market beats timing the market. Stick to your plan regardless of conditions.

Ignoring healthcare

Early retirees face costs before state pension age. Budget for private health insurance.

No emergency fund

Keep 3–6 months of expenses in liquid savings. This prevents selling investments at a loss.

Neglecting the present

FIRE is a marathon. Find balance between saving for tomorrow and living today.

No plan for retirement

Know what you'll do when you FIRE. Have hobbies, projects, or part-time work planned.