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What is FIRE and the different types of it?

What is the FIRE Movement, and what does it mean? It's not the scorching, orange-glowing item that may burn you, no. Many millennials (as well as members of other generations) who want to significantly alter their financial situation and manner of life have adopted the FIRE lifestyle.


Financial Independence, Retire Early (F.I.R.E) means to save and invest aggressively in your 20s and 30s to retire early. The main principle of F.I.R.E. is that you should save and invest up to 50% to 70% of your income in assets that can produce high returns and passive income, rather than viewing it as an investment strategy. The idea behind F.I.R.E is to voluntarily choose not to work a full-time job by having your money work for you rather than retiring early and living the high life.  But is it actually true that you can retire in your 30s or 40s? 


For obvious reasons, Financial Independence, Retire Early (F.I.R.E) has been garnering a lot of popularity. However, early retirement does have its own set of advantages and disadvantages. Hence, as the concept of FIRE movement has evolved, other variations or types of FIRE have sprung up as well. We’ll be going to explore these types, what they mean, and a bit more.

  • Traditional FIRE

Traditional FIRE starts by finding your FIRE number, which is the precise sum of money you must have saved and invested in order to theoretically never run out of money during extended retirement. That's because the majority of your retirement funds remain invested, continuing to compound and increase.


If your estimated annual costs are $50,000, you'll need $1,250,000 in savings and investments. If you wish to leverage The 4% Rule, you will therefore need to live off of 4% of your whole wealth each year. 

  • Lean FIRE

Lean F.I.R.E enthusiasts frequently lead simple lives and make lower incomes than the ordinary individual. To reach financial independence earlier than usual, they adhere to a rigid budget and save up to 25x their annual expenses.


The benefit is that it takes substantially less time than other ways to reach financial independence. Save aggressively today so you can live on less later. A minimalist lifestyle is favored by many Lean FIRE aspirants.

  • Fat FIRE

A person who aspires to live the Fat F.I.R.E lifestyle will have a sizable post-retirement budget with investments that can generate high rates of return and passive income. When they retire, Fat FIRE enables them to maintain a middle-class lifestyle. People who use this strategy won't have to make as many financial sacrifices now or in retirement, so they'll need to put away more money to support their lifestyle than if they used the Lean FIRE strategy.

  • Obese FIRE

With $5 to $10 million in the bank, or rather invested, Obese FIRE intends to retire with this amount. You most likely need to earn a lot of money or you won't be beginning from scratch. You may have inherited some of your fortune and lead a privileged life. Definitely living up to the YOLO anthem. 


Besides that, someone aiming for Obese FIRE could prefer to accumulate and pass down generational riches, hoping to leave a legacy behind. They wish to support future generations and inspire them to do the same.

  • Slow FIRE

The goal of slow financial independence is to balance loving the journey as much as the final destination. You're not in a rush if you're following the Slow FIRE course. Being content while also being financially prudent is what you value most. Happiness and balance are essential. Living in the now while putting together a straightforward plan to automate your path into the future is key.


People that pursue Slow FIRE aren't in a rush to reach retirement. Instead, they set out on the proper route, accomplish one or two key goals, and then take it easy and enjoy life. Although there is no set deadline or timetable, the aim is still to achieve full financial independence.

  • Coast FIRE

With Coast FIRE, you save until you reach a predetermined amount by a specific age, at which point you stop saving and let compound interest "coast" you to your desired retirement fund. You could quit your primary job and instead take on a part-time job or establish passive income streams to live off of after you reach relatively near to your financial independence goal, perhaps at 80%. 


Before stopping, you'll need to do the math to determine how much needs to be saved or invested:


A: Review your costs and any savings you have so far.

B: Your figure should be at least 25x your annual expenses in order to obtain financial independence.

C: Next, determine a cautious investment return of between 5% and 6%.


You may calculate how many years it will take to attain the number from step B without making any additional additions. If you have a longer time horizon, you can invest and save more aggressively in the beginning to shorten the process.


Example for following the above:

  • $30,000 year expenses with $100,000 already saved

  • $30,000 x 25 = $750,000 to be FI

  • 6% interest return

It would take roughly 36 years to reach your FI number based on those figures. However, if you already have $200,000 in savings or investments, it would only take you 25 years to reach financial independence, which is an 11-year reduction! It's not simple, but if you can invest a sizable sum of money in your late 20s or early 30s, you can coast to financial independence. Since investing and saving are no longer a concern, you now simply need to make enough money to cover your post-retirement expenses.

  • Barista FIRE 

Barista FIRE refers to the decision to work part-time in order to maintain health insurance and other benefits despite having adequate savings to retire early. Strabucks is an example of a company where you can work and receive outstanding benefits. The Barista FIRE lifestyle involves having a part-time employment after retiring early to pay for post-retirement expenses. It is a hybrid of Lean and Fat F.I.R.E. However, those that are passionate about Barista F.I.R.E will have enough savings and investments to produce strong returns and passive income. As a result, you won't need to put in 40+ hour work weeks in order to maintain your preferred way of life. 


The benefits include not working yourself to death in the hopes of achieving FIRE, being able to achieve some degree of financial independence more quickly, and possibly receiving some health coverage that you won't have to pay for entirely out of pocket. This is an alternative choice for people who might be unsure about early retirement and wish to try it out for themselves. Additionally, it enables you to explore more of your interests, develop side businesses, or discover a job that you might enjoy doing on a full-time basis.

  • Flamingo FIRE

The term "flamingo FIRE" refers to a combination of semi-retirement, early retirement, and regular retirement. The 1st stage is accumulation, during which you work full-time to accumulate a nest egg while making as many investments and savings as you can. You enter phase two, semi-retirement, when you have accrued half of your FIRE number.

Even while you work to pay for your living expenses, your savings account will continue to grow during that time. Let's say you don't need to increase your nest egg at all throughout those 10 years. You can retire as soon as it doubles in 10 years. Until then, you can work a job that makes you happy, even if it doesn't pay as well, or you can work part-time. Stage 3 of FIRE is complete when you have accrued 25x your anticipated living expenses.

  • Baby FIRE

In that you probably continue to work part-time to help pay some of your costs, this one is similar to Coast & Barista FIRE except that you also add an actual baby. The goal is to accumulate enough savings and investments to meet your costs during a lengthy maternity leave, allowing one or both parents to take a sizable period of time off work while the child or children are still small.


To be able to spend valuable time with their new family, it is ideal for both parents to take more time off or work part-time. As an alternative, couples can invest and save as much as they can for a few years after getting married, up to the birth of a child. 

  • Hybrid FIRE 

There is no one way to become financially independent and retire early. Life may and will interfere, even if you choose a course and fully commit to it. Plans frequently fail. Emergencies arise as a result of life. Be ready to be adaptable. The only thing about life that you can count on is the unexpected. A day without surprises, so the saying goes, is the only surprise of the day. If you stray from your course, try not to lose heart. Don't be afraid to mix two or three of the FIRE pathways discussed for a hybrid strategy.



Now that you are aware of the several forms of FIRE, do you think the movement or any of its types are suited for you? FIRE is not exactly feasible for everyone, so keep that in mind as well. There is a prevalent belief that all it takes to get there is increasing revenue and decreasing expenses. But you can undoubtedly gain the upper hand if you start out with a rather big income. In essence, FIRE might not be all that fulfilling for you if your only motivation is that you hate your job.


The principles of FIRE are beneficial to everyone because they teach important life skills that are applicable to everyone, whether or not they intend to retire early. These skills include saving money wisely, budgeting, and investing. To conclude, it's vital to have realistic expectations, be aware of your personal objectives, grasp the implications of FIRE for your life, do your research on the pros and cons (become familiar with both sides of the FIRE argument), and do a detailed analysis of the numbers. In either case, achieving financial independence is not a race because there are numerous ways to do so, both swiftly and gradually.


Fempire Finance 

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