Hello friends in today’s article, we talk about the FIRE Movements. FIRE means Financial Independent and Retire Early). Everyone wants to retire early, so for that, we writing this blog. so let’s understand how to get retire early.
so let’s start
Fire movements:- Financially Independent, Retire Early)
The FIRE movement, the concept was given in the book, Your money or your life by Vicki Robin. so let’s understand how we can use this concept to get financially independent and retire early in life. before starting you have to make the financial Target that defines your financial independence.
So let’s start with our income source
so if you want to be financially independent, you have to first step is income source. In Financial Freedom, you have saved money, and multiply your saving by investing this money.
Money people think, how much I can save, in this you can save up to 70% of your income. but, most people can’t save that much, so you can save, how much you can save, that’ may be more than 10% of your income.
when start saving first from your income and then you have to manage your spending within your remaining income.
In this, you have to be very frugal living, cut out the big expenses, and save money.
then you have to multiply your savings money.
Multiply Your Saving:-
Just saving money, is not enough, if you only save money, and put it in the Bank, then inflation eats your all money, and the negative compounding effect works against you.
so for that, you can invest this money in the stock market, because, the stock market gives more return than, any financial instrument.
when you invest in Stocks, its means, you are buying the pieces of the company’s business.
So when you invest in a wonderful business, that means, your saving money multiply not only 10, or 100 times, they can be multiplied by 1000 times, after two decades. (FIRE Movements in Life)
Before investing, you have to confirm, that, you have 3 years of money, to maintain your lifestyle and family expenses, can handle for three years, and only remaining surplus money you can invest.
Because the stock market is very volatile, when you need money in the next year, then you get some losses, so be confirmed, you have an emergency fund, and 3 years of lifestyle maintaining money.
Example to Achieve FIRE Movements:-
let’s take, a normal example of a Teacher ( Ramesh), that has only Rs. 30,000 per month income,
so according to the FIRE Movements, you should invest 50 % ( more than 10 % of income)
Rs. 15,000 per month you can invest in the stock market or you can do the SIP.
so Ramesh has decided that 1 crore rupees are their retirement amount.
so Ramesh is 40 years old.
let’s do a calculation of how much time to make 1 crore rupees by just saving money
Rs. 15000 ( saved money/per month) * months ( 10,000) 833 years = Rs. 1,50,000,00
so it’s impossible for the teacher ( Ramesh ) to get their FIRE Movement in a single life, so for this, you have to get the help of the Stock Market.
so let’s understand, if they invest, how much they get after 2 decad
see the following screenshot, you may surprise.
if you invest like this, only 20% of return for 20 years, can bring the 3 crore rupees for your retirement.