The question – what happens to your investments in the next recession – has been on my mind a lot lately.
The FIRE Movement
The FIRE Movement
The FIRE Movement is a lifestyle choice with the end goal of financial independence and an optional early retirement. FIRE, an acronym standing for Financially Independent Retired Early, is based on two financial rules of thumb: The Rule of 25 and The 4% Rule.
Often called FI (rhymes with hi), Financial Independence is achieved with your living expenses can be met by income generated from your investments. Basically, one if financially free when working for a paycheck is optional.
Not everyone should pursue an early retirement, but everyone should pursue financial independence. Many in the FIRE movement have no intention of giving up work once they are FI.
People of The FIRE Movement
Check out what others are saying about the FIRE movement:
- What is Financial Independence, from Mr. FI Guy
- Starting a FIRE, from Caught on FIRE
- What FIRE Means to me, from Enchumbao
- Light Yourself on FIRE This Year, from Funding Happy
- What is Financial Freedom and Why You Should Want It, from Smart Money Manners
- FIRE Fundamentals, from Partners in FIRE
- What is FIRE, from Your Money Blueprint
- FIRE By Any Other Name, from She Picks Up Pennies
- What Do You Mean, "On FIRE"?, from Physician on FIRE
- The Financial Community is on FIRE, from Little Brother Life Coach
- The Five Personas of FIRE, by Prairie FIRE Canada
Keep scrolling to check out some of the following articles related to Financial Independence and Early Retirement.
We’ve all heard the conventional wisdom on investing: Invest only using index mutual funds. 90% of professional mutual fund managers fail to beat their benchmark. What chance does an individual investor have?
Surprisingly, when it comes to stock picking, small investors do have a huge advantage over professional money managers. The main reason is size. Mutual fund managers, if they are successful, end up with a lot of money to invest – billions of dollars, in fact. If they are good stock pickers, they might very well be able to pick more winners than losers. If they were provided with a million dollars, they could come out ahead of their benchmarks.
Personal Finance is Personal
You’re ready to up your money game, so you start searching for financial advice. You begin looking online and find thousands of articles to choose from. Or you turn to Amazon and your local library for books to improve your financial knowledge. But you quickly notice some articles and books tell you to do precisely the opposite of others.
The more you read, the more confused you get.
Because even if the financial advice conflicts, you can see how each argument makes sense. They’re backed up with numbers, and some include real-life examples. Analysis paralysis sets in. So instead of taking action on what you are trying to do – fix your finances – you sit back perplexed and don’t make any noticeable progress on your money matters.
Budgets get a bad rap. Many people feel held down and restricted by a budget, but the reality is that a budget doesn’t hold you down – it gives you freedom! I’ll explain using a short object lesson.
What is The Rule of 25?
The Rule of 25, also know as the Multiply by 25 Rule, attempts to define how much money you’ll need to save for your retirement. Not surprisingly, based on the name of the rule, that amount is 25 times your annual expenses (not income).