Way to retire early!
Do you also think that working for 60 years is too long? If yes, then FIRE model i.e. Financial Independence, Retire Early can prove to be a great path for you. This is a financial planning strategy that gives you the opportunity to become financially independent at an early age and retire early. Let us know what this model is and how adopting it can change your life.
What is FIRE model?
FIRE means Financial Independence, Retire Early, i.e. become financially independent and retire early. Its main idea is that you invest a large part of your earnings in savings and investments, so that in a few years you accumulate so much money that you do not need to do any job in the future.
Under this model, people usually invest 50% to 70% of their income in savings and investments. The remaining expenses are done very thoughtfully so that the money grows faster and you can achieve financial freedom soon.
How does the FIRE model work?
Save more, spend less: Generally people are able to save only 20-30% of their salary. But in the FIRE model this percentage is much higher. According to this formula, you have to save half or more of your income. This means adopting a simple lifestyle, staying away from unnecessary expenses and using money properly.
Smart Investing: You cannot achieve financial freedom just by saving money. The most important part of FIRE is to invest wisely. The money saved is invested in options like mutual funds, SIP, stocks, real estate, so that over time one gets the benefit of compound interest and the money grows faster.
set financial goals
You have to decide how much money you will need every year after retirement. For this, a simple rule of 25x rule is adopted in the FIRE model. That means, if you want ₹6 lakh every year, then you will have to prepare a corpus of ₹6 lakh × 25 = ₹1.5 crore. When this amount is deposited, you can retire comfortably.
create side income
If you want to achieve FIRE quickly then do not depend only on salary. Adopt options like freelancing, blogging, YouTube, rental income or stock dividends. This will increase your income and you will be able to reach your financial target quickly.
Who can adopt FIRE model?
The FIRE model is for every person who can manage his money in a disciplined manner and make long-term plans. This formula is becoming very popular especially for young professionals, people working in IT sector or those employees who want financial freedom soon.