FIRE Movement Explained: How To Retire Early Without Financial Worries

What is it?

FIRE stands for Financial Independence, Retire Early. It is often defined by the principles of frugality, extreme savings and generating investment income. The ultimate aim is to be able to use your passive income to cover living expenses and retire earlier. 

The underlying mindset behind the FIRE movement is delayed gratification because you have to work hard now, spend frugally now, save wisely and put some money into investments to compound over time so that you can enjoy next time by retiring earlier. 

Sounds a little tough for you? Don’t worry, there are different variations of FIRE and you can find one which is more suitable for you!

Variations of FIRE


Lean fire is where individuals are seeking to live off a more frugal and simpler lifestyle, or what we call these days, a minimalistic lifestyle.  The advantage is that since they spend less, they can afford to save more or invest more now to build their retirement nest. Furthermore, as the retirement nest amount required will be smaller for a minimalist lifestyle, individuals adopting this approach would be able to retire earlier. 


Under this FIRE variation, individuals prefer to live a more indulgent lifestyle, and hence have to build up a larger pool of retirement sum to continue leading an indulgent lifestyle. 

Coast FIRE 

Coast FIRE entails front-loading your money into investments, then leaving it on “autopilot” to compound the money so you can “coast” through retirement using your investments. Even after you have built up a sufficient investment portfolio size for retirement, you will still continue to work now to support your current living expenses but it is not to save or invest more for retirement. 

Barista FIRE 

Barista FIRE is very similar to Coast FIRE. Instead of relying only on investment portfolio to pay for retirement spending, individuals also take up part-time jobs during retirement to cover a portion of the expenses required. Therefore, this is a lighter version compared to Coast FIRE as one does not need to build an investment portfolio that is as big as what a regular FIRE would need.

Finding the best fit for yourself

The above FIRE variations are basically broad categories to define the different ways to FIRE. In fact, there are more than just these 4 variations of FIRE. Hence, when it comes to actual execution, one can choose to do a hybrid of more than 1 FIRE type, or modify the FIRE types according to his/her own personal preference and lifestyle needs.

Personally, we don’t like the idea of sacrificing our current living standards and live overly frugally just so that we can save more now. We are believers of striking a balance on spending and saving wisely without compromising our basic standard of living. That includes small treats and purchases along the way to celebrate the accomplishment of different milestones in life. After all, life is finite and we don’t want to regret that there was no enjoyment at all!

How do you FIRE?

There are 3 main pillars of FIRE:

1. Increase savings

This is the most fundamental pillar out of the 3 pillars. One may be earning a high income but if he does not know how to save sufficiently, he would still be stagnant in the FIRE journey. In addition, you would not have the funds to pump into your investment portfolio without savings. 

So what is a good amount of savings per month?

It really depends on how much you are earning and spending. First, determine an appropriate amount to spend per month to cover the basic living expenses (e.g. transport costs, food, bills, insurance premiums).

Next, buffer a little for some discretionary expenses to reward yourself along the way.

For the remainder of the monthly salary, you can then save them!

There are some individuals who attempt to set a target percentage to save, say at least 50% of their salary. Whatever percentage, in our opinion, should be adjusted based on personal circumstances.

It really depends on how much your monthly salary is. Take for example, if you are earning $2,500/month, then 50% will be $1,250. This amount may not be sufficient for some people to spend in a month.

Hence, we should work towards a personal target savings amount that is achievable for ourselves and at the same time, we do not sacrifice our basic well-being. As your income progresses, you may adjust accordingly to buffer more for investments.


2. Boost income

There are certainly many ways to boost your income, for example, you could start a business, take up part-time freelancing jobs or to monetise your passion.

Alternatively, you can also work on beefing up your knowledge and expertise in the field that you are currently working in to create opportunities for promotion, secondment or transfer to another department.

Quoting what Warren Buffett says, “Investing in yourself is the best thing you can do. Anything that improves your own talents.”


3. Invest consistently

While we may be able to take up some part-time freelancing work to earn extra income, we are ultimately limited by how much time we have in a day to work. If we could find a way to make money while we sleep, that can further accelerate our FIRE journey, isn’t it?

But investing doesn’t make you rich instantlytime is needed for the compounding effect to work. This is why we should start investing early and consistently so that our capital can snowball over the years. 

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What are we doing to FIRE?

There are many ways in which you can invest your money in the financial markets or some do it through the property markets. We personally prefer to invest our money using 3 main instruments: U.S & China stocks, options and Singapore REITs. 

Here’s the strategy: We invest in the U.S & China stocks and options to accelerate the growth of capital and some of this money accumulated would be pumped into S-REITs at the same time. 

The rationale is that we have limited capital to begin with and we would like to compound our money at a higher rate of return in the initial phase of our FIRE journey so that the capital can snowball.

Comparing U.S stocks and options vs Singapore REITs, the former would generally tend to yield a higher return on investment based on the historical performances over the last 20 years.

This is because S-REITs distribute at least 90% of their taxable income as dividendsthey don’t leave much of their earnings for growth purposes.

On the other hand, the U.S growth stocks usually retain most or all of their earnings for growth development plans. As these growth companies continue to grow their earnings at a double digit rate, the share prices also increase and that is why we can enjoy a higher ROI from the capital appreciation.

Subsequently as the capital accumulates and as we age towards retirement, we would then increase the allocation to allocate a higher proportion of the capital into S-REITs compared to the U.S stocks and options.

The top priority by then would more be about capital preservation and ensuring that we can withdraw a sufficient amount for daily expenses and not so much about growing the capital faster.

S-REITs though the dividends are not guaranteed, the good ones generally still are able to maintain a consistent distribution which gives me a regular stream of cash flow. 

How do we execute it?

This is the regular routine (be it for U.S stocks, China stocks or Singapore REITs):

1. Pick quality businesses to invest in by analysing the businesses

There are more than 7,000 companies listed in the U.S stock markets but only about 30% of them are profitable.

And if we look at just the S&P 500 companies, only about 20% (which is approximately 100 companies) have a double digit revenue growth and earnings growth in the last 5 years.

If we apply more extensive criteria to further narrow down to the strongest companies, we would be left with just less than 10% of the S&P 500 companies which are worthwhile to invest in. 

The selected companies are then curated into a stock watchlist that we set up in the brokerage platform. 


2. Make minimal risk entries and exits by studying the charts

The next step is to go through the stock watchlist to identify if there are any opportunities to buy at high probability entry points.

High probability entry points are price levels where the odds for upside returns is generally greater than the downside risks. They are the levels where prices tend to rebound up, so we score a good deal by buying at a lower price and eventually enjoy the capital gain when prices rebound up. 

How we do so is through analysing the stock price movements for the trend, momentum and candlestick patterns, some of which we shared in our live Zoom webinars. 

The same goes for finding exit points. At times, we may offload some positions in certain stock counters when we identify a good exit price level at which prices are hitting a strong resistance.


3. Rotate capital based on the market conditions

This brings us to the 3rd step. The money that we get from offloading some stock positions will then be rotated into another stock on our watchlist that is offering a good buying opportunity.

Why we rotate our funds around is because of the concept of sector rotation where various sectors perform differently at different parts of the market cycle.

Furthermore, there are occasions where even quality businesses may face temporary headwinds which depresses their stock prices. For example, Adobe stock prices recently plunged by over 16% on acquisition of Figma. These then create opportunities for us to buy into the great businesses. 

Through this routine, we slowly build up an investment portfolio and compound the returns over time for our FIRE journey.

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