Independence Day 2024: Can FIRE Give You Freedom From a Regular 9-to-5 Job?

Tired of your 9 to 5 job and prefer to lie cross-legged near a beach while listening to the roar of the ocean waves crashing on the shore? This may sound too tempting, albeit unrealistic, however, a number of young people are working tirelessly to make this goal a reality in pursuit of what is known as Financial Independence Early Retirement (FIRE).

So what is FIRE? It’s an acronym whose origins are unknown, but it was popularized by the best-selling book: Your money or your life By Vicki Robin and Joe Dominguez One of the key concepts in the book is that investors should evaluate each expense based on the number of hours of work it took to pay for it.

The idea behind this is that investors should save enough money to be able to retire comfortably. The ideal figure for FIRE is supposed to be 25 times annual spending. This means that when you save an amount that is 25 times your annual spending, you can stop working and therefore use a small portion of the capital each year for the rest of your life.

“Financial independence is increasingly being talked about in India thanks to social media, where some people share their success stories and readers aspire to be like them. As for me, I am a proponent of financial independence, but retiring early just because you have achieved financial freedom may not work for everyone,” says Preeti Zende, Sebi-registered investment advisor and founder of Apna Dhan Financial Services.

“However, Financial freedom “Financial freedom improves self-confidence, gives wings to aspirations and dreams and reduces stress and tension when assuming family responsibilities. Therefore, it is vital to work towards financial freedom in a planned way,” he adds.

Chartered Accountant Deepak Gupta says, “Financial independence and early retirement are what the current generation needs. We are often trapped in home loan, car loan, credit card bills, etc. and hence the dream of retiring early remains unfulfilled. Youngsters should be encouraged to save and invest in mutual funds to promote financial freedom.”

How to do it?

You may wonder how it is possible to save so much money. Well, it is not like a sprint, but rather like a marathon. You have to save for years before you reach your goal. You can retireSimply put, it takes consistent saving and disciplined investing to be able to build such a large corpus.

“Some people believe that achieving financial independence may not be feasible for many. That may be true, but with focus and disciplined investments, aiming to double your primary income every 6 to 8 years and controlling unnecessary lifestyle expenses with increased income can surely help you achieve financial independence much sooner,” Zende adds.

Some collateral damage

In the meantime, it is crucial to realise that saving enough money may not always be the only motivation to retire. Sometimes, work itself keeps us busy and therefore happy and content. Therefore, merely having enough bank balance should not incentivise us to retire, early retirement sceptics argue.

“Retiring early has its own disadvantages: suddenly you lack identity if you only identify yourself with your work, if you don’t have any Hobby or passion “You may not know how to use your time productively, you may be under social pressure to do nothing because others are busy with their routine, and unfortunately, you may soon run out of money if the FIRE calculations were not done correctly,” Ms. Zende says.