All about FIRE and bits of Gold, Bitcoins and Nelson Mandela(S1E2)


(Podcast Transcript)

Hi Guys. Welcome to Season 1, Episode 2 of Little Saves podcast on Personal Finance

Analysts say a gram of Gold will be worth Rs.8000+ (cmp Rs.4600/gm) by end of 2021. Their reasoning is that as world goes into recession, governments across the world will start pumping money to get economies to recover which will increase value of gold as it is a safer alternative.

Franklin India Mutual funds decide to close 6 of their funds due to liquidity issues. Those of you who are closely following my portfolio on Littlesaves.com will know that I had one of these funds. But, fortunately for me, I had closed this fund several days back. I put that money into gold!

Bitcoin’s ranging around $7K. Some say it’ll reach $300,000 and other say it’ll be worthless soon. As for me, I want to pick up a small amount of crypto currency as I believe it will be a worthwhile investment.

Let’s talk about the main story of FIRE on today’s episode. Not many in India get FIRE? It is popular among youngsters, but a lot of uncles on social media troll me when I say Passive income or early retirement. The idea of retiring earlier than 65 is just absurd to them! Retirement is not an Age! It is the amount of money you have and earn without working that lets you retire. Let’s say you win Rs.500 crores at a lottery, will you still go to work? No! FIRE is about getting to this stage early in life, where without winning a lottery, but with careful planning and disciplined saving, you get enough savings that generate you a steady stream of passive income which allows you to no longer be dependent on your job for monthly expenses.

Financial Independence and Retire Early has been around for 25 plus years now. Books such as Rich Dad, Poor Dad or Your money or your life talk about concept of FIRE and money. How do you get to FIRE? You need to plan to become financially independent. There are several key principles for FIRE:

Save a lot – Aggressive savings. If you are spending 100% of everything you earn, you can never retire as you don’t have any savings. If you save 50% of your income, for every one year you want to retire, you need to work for a year. FIRE enthusiasts suggest saving 50% at least.

Next principle is to build streams of Passive Income. Make money earn interest or returns. This as you continue saving over a period of time will give you returns that will equal your salary making you financially independent.

Third principle is to start earning Extra income. Don’t waste skills you have. Be it creating music, photography or teaching English. You can monetize this and get some side income that will help you save faster towards your FIRE goal.

There are two main types of FIRE: FAT FIRE and Lean FIRE. FAT FIRE is when people wish to leads a luxurious life in retirement. This means you will need to save a lot more as the monthly expenses for you to lead a luxurious life is a lot! On the opposite end of the spectrum is Lean FIRE where you live a simple frugal life in your retirement. So you need lesser savings and income to retire. It is your choice on what you want, depending on the retirement lifestyle you choose, your goals and time you take to retire will change. You can check out my article detailing FIRE Movement here.

Let’s close with a quote from Nelson Mandela. He says “May your choices reflect your hopes, not on your fears”. He means that decisions should be on what we hope to achieve in future and not on bad experiences from past. Eg: Say I bought some gold and gold price goes down so I sold it at a loss. In future I shouldn’t shy away from gold because the last time I bought gold prices fell. Instead I should plan and research to ensure that there is a potential profit in investing in gold. When investing be confident on your research & information, stay true to the duration you had in mind to stay invested.

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Abhi
Abhihttps://littlesaves.com
Abhi is a 29 yr old Indian, on FIRE to retire by 40. He has been investing and learning Finance for the past 12 years. After completing Mechanical engineering, he started working in a multi-national Bank and grew to become an AVP. Currently with an IT MNC as a VP. He lives in Bangalore with his wife and their 1 year old daughter. In his free time, Abhi loves to game on the Xbox, watch movies, read and blog.

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