Financially Invest Retire Early (FIRE)

FIRE (Financial Independence, Retire Early) is about saving and investing aggressively so you can retire much earlier than usual – think 40s or even 30s. The core idea is to live below your means and invest a large portion of your income (often 20% or more), allowing your money to grow and eventually support you.

To achieve FIRE, you need to save diligently, spend less, and invest wisely. Many in the FIRE community embrace a minimalist lifestyle. If you're in Australia, the reddit.com/r/fiaustralia subreddit is a great resource, full of Aussies sharing their FIRE journeys. ASIC's MoneySmart website also offers helpful information on saving and investing: https://moneysmart.gov.au/saving and https://moneysmart.gov.au/how-to-invest

Exchange-Traded Funds (ETFs) are popular investments for those pursuing FIRE. ETFs are like baskets of different investments, offering diversification and ease of trading. Major ETF providers in Australia include Vanguard, BetaShares, and BlackRock iShares. Popular ETFs include Vanguard's VAS, BetaShares' A200, and iShares' IOZ. For more information about ETFs, visit: https://moneysmart.gov.au/managed-funds-and-etfs/exchange-traded-funds-etfs

To buy ETFs, you need a brokerage account. Online brokers like Pearler, Stake, SelfWealth, and CMC Markets are popular due to their low fees and ease of use. Compare them to find one that suits you, and ideally, choose a CHESS-sponsored broker so you directly own your shares. MoneySmart has a guide on buying and selling shares: https://moneysmart.gov.au/shares/how-to-buy-and-sell-shares

Before starting, figure out your "FIRE number" – the amount needed to live off your investments. While aiming to invest 50% or more of your income is common, always only invest what you can afford. Use my simple compound interest calculator to project your investment growth and determine your target FIRE number! Establish an emergency fund and create a budget before investing. Once you know your FIRE number, set up automatic savings to regularly invest. Remember, FIRE is a long-term strategy, so choose investments aligned with your risk tolerance.

Disclaimer: This article provides general information about the FIRE movement and investing in Australia. It is not financial advice. Consult with a qualified financial advisor to create a personalized plan that meets your individual needs and circumstances.

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