FIRE (Financial Independence, Retire Early) represents a movement whose followers want to achieve financial freedom and possibly retirement long before they reach the official retirement age.

The foundation of financial freedom is accumulating investment assets in such amount that they are able to generate a passive income covering all your expenses over a long period of time. The steps toward reaching this goal are quite simple – spend (much) less than you earn and invest the surplus.

Work to earn money first (typically for 10 to 20 years) and let the money work for you afterwards. If you have a monthly salary of €1,000 and your investments automatically generate the same amount, then you do not have to go to work anymore. You become free.

Buy Time Instead of New Clothes

Today’s society is addicted to consumption, and swimming against this current is no simple feat. Marketing is omnipresent, enticing purchases of new outfits (do we really need 52 seasons in a year?), phones, computers, advocating for at least four vacations a year, and prompting thoughts about upgrading your car or renovating your apartment. 

On the contrary, the fans of FIRE reject needless consumption that often leads to debt accumulation. Each useless installment can prolong the time needed to gain financial freedom by years. 

They put stress on experience and time spent according to one’s preference. Even if you abstain from many modern conveniences, you will still live a better life than the aristocrats did a century ago. Therefore, the FIRE movement has a lot in common with minimalism and environmental protection.

Nowadays, a large portion of the developed world's consumption does not serve to satisfy the basic needs, but to fight boredom and exhaustion from the everyday routine or to help people escape from reality.

" The three most harmful addictions are heroin, carbohydrates, and a monthly salary.”

Nassim Nicholas Taleb

If you can escape from the vicious circle of spending, accumulating debt, and increasing your expenses, you have almost succeeded. Once you are happy with your life, you won't need to seek distractions and entertain yourself with buying new stuff. The less money you need every month, the less dependent you are on others.

How Much Does Freedom Cost?

In order to achieve financial freedom, the passive income from your investments needs to cover all your expenses. The 4% rule is used to calculate the amount of invested money you'll need for that. It says that you can safely withdraw 4% from your investments each year without depleting (outliving) them for several decades.

Thus, if you need €1,000 every month, you will have to save up €300,000 (4% from €300,000 is €12,000 every year, or €1,000 every month). You get to the same number if you multiply your expected yearly expenses by 25 (€12,000 * 25 = €300,000). Can you comfortably live off €800 a month? In that case, you will only need €240,000 in your investment portfolio (25 * €800 * 12 months). 

Our algorithms can also help you plan your path towards financial independence. If you insert a target amount of €240,000 into our investment planner and state that you would like to reach it in 15 years, the system will recommend how much you should to invest on a monthly basis or via a one-time deposit to achieve that goal.

Do you pay €20 a month for Netflix or HBO? It is alright, but your portfolio will have to increase by an extra €6,000 to cover that expense. A second car with a monthly installment of €400 (gas, insurance, lease plan) actually costs you €120,000. And so on.

Where to Find the Money?

Everything is possible on a sufficiently long horizon. Do you want to appreciate €100 to one billion? No problem. All you need is to invest it in stocks… and wait for 187 years. Compound interest will deal with the rest. Everything is possible. Theoretically, you can make a billion from one cent. However, if you want to achieve your goals before the sun stops shining, you will need to cut your expenses and speed the process up.

There are no limits to cutting your expenses and increasing your income. If financial freedom is your goal, you can move to a smaller apartment, use public transport or bicycle instead of a car, negotiate for a raise, or work extra hours. There are many options.

New Definition of Retirement

Retirement can mean so much more than a mandated exit from work at an age set by politicians. 

If you want a Swiss pension, you will have to create it yourself. Relying solely on state pension will eventually make you independent from work, but it will certainly fail to grant you financial freedom.

Families could once live off one income. If they could do the same now and invest the second income, they could reach financial freedom in 16 years. Life would then be about much more than desperately trying to save up for one vacation a year. Your whole life would become a big vacation.