Recent years, debt to the bank a huge amount of money is a dreadful thing. Some people tend to save salary and trying to spend as little as possible to early retirement rather than take a risk to loan from the bank.They save at least half of their salary each month, and any bonuses are quickly transfer into savings.
Using motorbikes, bicycles, and buses go to the office instead of technology taxi or cars, and also cut down on parties. By this way, they can accumulate enough money to be able to retire at the age of 45-48.The aforementioned trend is increasingly popular among young workers around the world: it is the FIRE (short for financial independence, retire early).
How to retire early? Is it possible?
The basic approach is that: live as frugally as you can, save half your income or more during your 20-30 years old. The goal is to retire in your 30s or 40s latest.
The 'early retirement' part of this trend is misunderstood by many people. Many FIRE followers intend to spend 50 years for enjoy the life or wasteful spending.
By contrast, the right goal should be focusing on financial independence: for the purpose of saving enough money and living frugally, so that decades later they can invest in something but not salary and promotions in a company, or worry about a large bank mortgage.
And although this idea has been around for many years, the online community has allowed the FIRE movement to take hold over the past decade.
In the US, a report from the National Institute on Retirement Security found that two-thirds of millennials saved nothing for retirement. US Federal Reserve data shows 58% of under-35s don’t have retirement accounts. Other save about 4.6% of their income for retirement meanwhile contributions of 12-15% of income are needed.
Many (though not all) in the movement follow the 4% rule: by withdrawing just 4% of an investment, your income will consist mostly of interest and dividends, and you won’t eat in to the principal amount. The rule of thumb here is to save 25 times your required spending: for example, for those who need to withdraw 100 million VND per year, they will need to save 2.5 billion. However, this calculation is not correct in many aspects.
What are the critics of the FIRE movement think? - It is a trade-off for all those short-term problems for the unpredicted thing, or for long-term accumulation?
On the one hand, if you reject yourself too much, you will not be happy, and you also will not be able to keep it going, so try cutting down on unnecessary expenses to the point that you feel uncomfortable, then make a limited line above that level. On another hand, you should live your best life, but that does not mean that you will consume too much. You can get your lover drinking a few bottles together rather than going to an expensive bar. This applies to your whole family. Build an annual family spending figure. And keep in mind that do not indulge in instant consumerism by purchase for your kids the newest version of iPhone.
Early retirement for self-reliance
Although RE (Retire early) is a part of FIRE movement, the trend for the followers is not to quit work when they are 30 or 45 years old and do nothing until death. Early retirement is not a free time to go out, excursions all day. Human has a basic need is work. Everyone wants to be a value chain in society, and that will not stop just no matter you have the right amount of money. Moreover, the money gives them the flexibility to choose to do what they want. Some people choose to travel on a budget, of course - while others simply choose what they do, rather than feel trapped in the cycle of work.
There are many people who once feel stuck in the reel of money and find themselves working hard to maintain a life that they do not really want. After retirement, they found freedom in both emotion and psychology. You have to suffer this to know how strong the motivation is.
Investment in rental properties. A wise early retirement
The default way of thinking is that a person retiring at the age of 35 - 40 will no longer work completely once they 'retire'. That is not the case with most people joining the FIRE movement. For instance, a follower of FIRE – Tran Thi My Duyen, 30 now. She is owning an asset worth 3 billion VND (the majority of this asset is rental apartments, studios). The girl quit her job in information technology at 27s and now works as a freelancer. She did not retire, still has to work, but now she is free to choose a job she really enjoys even though it may not earn much. She hopes her investments will provide a living income whether she decides to quit or not. To her, FIRE is not just about finance - it provides social ties and friendship.
In conclusion, early retirement is when you spend many years of your life accumulating capital for retirement later, and also this money can be invested to earn profit in order to maintain the stability of your retirement. And the rental property is a wise choice. Real estate for rent can generate monthly profits to help investors stabilize and long-term finance. With a stable interest generated from the rental, they can ensure for their family cost. Other than that, their children would be approached with a better educational environment. They have chance to access better medical and entertainment services will make life much more rewarding. Also, planning to travel is easier than just saving up without investing in anything.