Category Archives: Financial Independence

Bitcoin (BTC), the dominant cryptocurrency in terms of market capitalization, has witnessed remarkable growth throughout the years, serving multiple purposes, including its role as an investment vehicle. Currently, advocates are pushing for its widespread adoption due to numerous compelling factors, resulting in its heightened global attention.

In light of this, Finbold sought insights from generative artificial intelligence tool (AI), ChatGPT, with the prompt Give me 10 reasons to buy Bitcoin. Below are the argument fronted by the tool;

The tool pointed out that throughout its existence, Bitcoin has witnessed remarkable price appreciation, captivating the attention of numerous investors enticed by its potential to deliver substantial returns on their investments. It is worth noting that the asset reached an all-time high of almost $69,000 in late 2021. The asset is currently attempting to exit last years bear market, trading above $30,000.

ChatGPT acknowledged that Bitcoins decentralization nature makes it appealing since the nature sets it apart from conventional financial systems governed by central authorities such as governments or banks.

This decentralized nature can appeal to those seeking financial independence and a system free from traditional institutions, the tool said.

The AI tool stated that Bitcoin is widely regarded as a potential hedge against the vulnerabilities of the traditional financial system. Many astute investors perceive it as a means to safeguard their wealth from potential economic downturns, inflationary pressures, or the erosion of currency value.

Therefore, by embracing Bitcoin, ChatGPT stated that these investors aim to fortify their financial positions and shield themselves from the uncertainties and risks associated with traditional monetary systems.

One of the compelling arguments was that Bitcoins limited supply, set at a maximum of 21 million coins, serves as a reason to invest in this digital asset. According to the insights provided by the tool, the scarcity of Bitcoin has the potential to drive its value upward over time, particularly as demand continues to grow while the supply remains fixed.

This inherent ability of Bitcoin is seen as a solution to one of the inherent pitfalls of traditional financial systems, where the excessive printing of money can lead to the devaluation of the currency.

Throughout its evolution, Bitcoin has garnered comparisons to gold, earning the moniker digital gold. This association has prompted ChatGPT to highlight it as a compelling reason to invest in the asset.

The finite supply and decentralized nature of Bitcoin make it highly appealing to individuals seeking an alternative asset class that possesses the potential to preserve its value over the long haul. By resembling gold in these aspects, Bitcoin offers investors the prospect of diversifying their portfolios with a digital asset that exhibits resilience and store-of-value characteristics.

According to ChatGPT, one reason to invest in Bitcoin is its global accessibility without the limitations imposed by geographical boundaries. This distinctive attribute facilitates seamless fund transfers and has the potential to unlock investment opportunities that extend beyond traditional markets.

By transcending the confines of geographical restrictions, Bitcoin offers investors the flexibility to participate in the digital economy and explore investment avenues previously inaccessible or constrained by conventional financial systems.

The tool pointed out that investors can put money in Bitcoin based on its growing adoption. The tool highlighted that Bitcoin had received recognition from various individuals, businesses, and institutions worldwide. In this case, ChatGPT pointed out that the growing acceptance and integration into mainstream finance may lead to increased liquidity and stability in the market.

According to the tools insights, Bitcoin can potentially extend financial services to unbanked or underbanked individuals. By leveraging Bitcoin, these individuals can actively participate in the global economy, gain access to essential financial tools, and facilitate fund transfers more inclusively and efficiently. The efficiency offered by Bitcoin in this regard emerges as a compelling reason to consider investing in this digital asset.

The underlying blockchain technology goes beyond cryptocurrency and holds transformative potential across diverse industries such as finance, supply chain management, and healthcare. The insights from ChatGPT emphasize that investing in Bitcoin can be driven by a desire to gain exposure to the revolutionary capabilities of blockchain technology.

Throughout its existence, Bitcoin has emerged as an investment product that has found its place in diverse portfolios. ChatGPT suggests including Bitcoin in an investment portfolio can offer valuable diversification benefits. Cryptocurrencies, including Bitcoin, have demonstrated a relatively low correlation with traditional asset classes such as stocks and bonds.

This implies that they may exhibit different behaviors in various market conditions. By incorporating Bitcoin into a well-diversified portfolio, there is a potential to reduce overall risk and enhance risk-adjusted returns by tapping into the unique characteristics and potential growth opportunities the cryptocurrency market presents.

Disclaimer:The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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ChatGPT gives 10 reasons why you should buy Bitcoin - Finbold - Finance in Bold

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Scottish independence reset undermined by confusion over SNP ... - Financial Times

Welcome to the journey towards attaining financial success, where time is no barrier and every stage of life offers unique opportunities. Its a journey where perseverance, knowledge, and strategy can translate into substantial wealth accumulation. This blog post is written to debunk common myths about wealth creation and guide you through practical, effective steps to secure your financial future.

Many successful entrepreneurs became successful later in life. Several achieved millionaire status after middle age, including the likes of Ray Kroc, who franchised McDonalds at 52, Harland Sanders, who franchised Kentucky Fried Chicken in his 60s, and Charles Flint, who founded IBM at 61.

Regardless of your age or current financial situation, if you have the right mindset and work ethic you possess the potential to achieve financial success. Read on to discover how to unlock this potential and change your financial trajectory.

Everyone has the potential to build wealth, regardless of their starting point. It begins with assessing your current financial situationyour income, ideas, passions, drive, and investments. Understand that money is a tool that can help you reach your financial goals when used wisely. Educate yourself about financial management, business, accounting, and investment opportunities, which will help you to make informed decisions about your money. A financial advisor can provide tailored advice based on your individual circumstances. A financial educator or mentor can show you the way to wealth.

Many people face hurdles on their journey to financial prosperity, like debt, low income, or lack of financial knowledge. But these obstacles can be overcome. Prioritize paying off high-interest debt to free up more money for investments. If your income is low, seek ways to increase it through career progression, part-time work, or starting a side business. Knowledge is power: educate yourself about financial management and investment to better manage your money. The first step is raising capital for investment or business ventures.

Theres a common misconception that the earlier you start, the better your chances of becoming a millionaire. While starting early provides a longer timeframe for your investments to grow, it doesnt mean that youve missed your chance if youre starting later. The key is to start now. With smart strategies and disciplined financial habits, you can still accumulate substantial wealth over time. All it takes is a decade at most to completely change your financial destiny.

Compound gains, or earning capital gains on previous gains, is a powerful tool in wealth creation. If you invest a certain amount and let the returns compound over time, your wealth can grow exponentially. This principle applies whether youre in your 20s or starting to invest in your 40s or 50s. The key is to remain patient and consistent with your investments, regardless of market fluctuations. The same principle applies to building your own business through scale with leverage. Wealth is created through exponential gains.

Investing is a crucial aspect of wealth building. A diverse portfolio can help balance risk and return. Consider different types of investments, like stocks, bonds, and real estate. Each comes with different levels of risk and potential returns. Diversification can help mitigate risk while allowing your wealth to grow. Consult with a financial advisor to understand which investment strategies best align with your risk tolerance and financial goals.

Financial success isnt just about numbersits also about mindset. Cultivating a growth mindset can help you view challenges as opportunities to learn and grow. Additionally, adopting a millionaire mindsetbeing patient, disciplined, and willing to take calculated riskscan play a pivotal role in your wealth-building journey. Surround yourself with successful people and learn from their experiences and mindset.

Relying on a single income source can slow your path to millionaire status. Consider exploring multiple income streams. This can be real estate investments, dividend stocks, a side business, or part-time work. Multiple income streams not only accelerate your wealth building but also provide financial security if one source is disrupted.

While saving is a crucial part of financial stability, its not the fastest way to accumulate wealth due to low-interest rates on savings accounts. Investing, on the other hand, can offer higher potential returns over time. Therefore, an effective strategy is to save for short-term goals and an emergency fund, while money for long-term goals should be invested for better growth.

Passive income is money you earn with minimal ongoing effort, and its a key to financial independence. Examples include rental income, business income where youre not actively involved, and earnings from investments. The beauty of passive income is that it allows you to earn money even when youre not working. Over time, your passive income streams can grow large enough to cover your expenses, which is a crucial step towards achieving millionaire status.

Real estate has been a proven path to wealth for many millionaires. It offers several ways to build wealth, including appreciation, rental income, and tax benefits. Property value tends to increase over time, and rental income can provide a steady cash flow. Additionally, real estate can be leveraged to buy more properties, thus accelerating your wealth-building journey. However, like all investments, real estate comes with risks, so thorough research and maybe even professional advice should be considered before entering the market.

Self-made millionaires provide valuable lessons on wealth accumulation. Most didnt get rich overnight; they worked hard, made wise financial decisions, and stayed patient. They understand the importance of spending less than they earn, investing wisely, and continually educating themselves. Study their journeys, learn from their experiences, and apply their strategies to your own wealth-building journey.

Financial habits play a pivotal role in wealth accumulation. Regularly save a portion of your income, no matter how small. Avoid unnecessary debt and pay off existing debts as soon as possible. Invest regularly and wisely, diversifying your portfolio to manage risk. Always have a budget and stick to it. These habits, although simple, can significantly impact your financial growth when consistently applied.

Also, being a serial entrepreneur by making your ideas a reality whether a business, website, YouTube Channel, or book can eventually make you a millionaire when your idea works out.

Financial literacy is the cornerstone of wealth accumulation. Understanding financial concepts such as accounting, balance sheets, profit and loss statements, interest rates, investment vehicles, risk management, and tax planning can empower you to make informed decisions that accelerate your wealth accumulation. Plenty of resources, both online and offline, can help improve your financial knowledge.

Investing in the stock market can be an effective wealth-building strategy. Start by understanding basic stock market concepts, including stocks, bonds, ETFs, mutual funds, position sizing, and risk diversification. Research companies before investing and avoid jumping into trends without proper analysis. Remember, long-term investment can yield huge returns in the right stocks and indexes.

Theres a significant advantage to starting late on your journey to becoming a millionaire you can leverage the wisdom and experiences youve gained over the years. Late starters often have more income and stability, which can be directed toward investments. The key is to start as soon as possible and stay consistent.

Technology provides powerful tools to help you build wealth. Use budgeting apps to track your spending and savings, investment apps to invest directly in the stock market or mutual funds, and financial planning tools to map out your financial future. Online platforms also offer vast educational resources to improve your financial knowledge.

Risk management is an integral part of wealth building. Diversifying your investments can spread the risk across different asset classes and markets. Its also essential to have an emergency fund as a financial cushion against unforeseen circumstances. Regularly review your financial plan and adjust as necessary to manage risk.

A millionaires budget focuses on growing assets and reducing liabilities. It prioritizes investments and savings over unnecessary expenses. Allocate your income towards necessities, savings, investments, and recreation in a way that aligns with your financial goals. Regularly review and adjust your budget as your income, expenses, and goals change over time.

Even as a millionaire, planning for retirement is crucial. Consider your desired retirement lifestyle and calculate the necessary nest egg. Invest in retirement accounts that offer tax advantages, like 401(k)s and IRAs. A well-planned retirement strategy ensures that youll enjoy the fruits of your labor in your golden years.

Becoming a millionaire isnt just about the moneyits about achieving financial independence. Financial independence means having enough wealth to live without depending on employment or other active income sources. It provides the freedom to make money on your own terms, pursue passions, travel, volunteer, or simply enjoy life on your terms. Keep this ultimate goal in mind as you build your wealth.

Building wealth and aiming for millionaire status is a journey accessible to all, irrespective of age or current financial standing. Its pivotal to comprehend and optimize your financial capacity, face and conquer wealth-building barriers, and harness various tools like compounding, investment strategies, and a growth-oriented mindset. The value of diversifying income, prioritizing investment over savings, unlocking the potential of passive income, and capitalizing on real estate and stock market opportunities is immeasurable. Learning from successful individuals, adopting vital financial habits, continuously educating oneself about finances, and exploiting technology to boost wealth are also key components of this journey.

Starting today, even later in life, effectively managing risk, budgeting with a millionaires perspective, planning for a secure retirement and ultimately achieving financial independence are all milestones on this rewarding path. With patience, discipline, and informed strategies, becoming a millionaire is an attainable goal for anyone ready to embark on this journey. The best day to get started is today no matter what your age.

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It's Never Too Late to Become a Millionaire - New Trader U

Monday, 26 June 2023, 10:52 am Press Release: Milford Foundation

The Milford Foundation has today announced a new partnership with MoneyTime NZ Foundation; a charitable organisation that uses the MoneyTime financial literacy programme to teach Kiwi kids how to be smart with money. The Milford Foundation has committed $1.175 million to MoneyTime over the next five years, with the ambition that the partnership will support Kiwi kids financial independence from a young age and allow them to make smart money choices for their futures.

MoneyTime is a self-directed programme founded in Aotearoa, which takes an interactive approach to teaching kids an array of financial literacy skills. These include preparing a simple budget, the importance of paying off debt quickly, and how to invest money wisely, which MoneyTime believes are essential skills for all children.

With our roots in financial services and specialist investment, MoneyTime is a natural partner for the Foundation, says Milford Foundation Chief Executive Bryce Marsden. The Milford Foundations purpose is to invest in our future generations, and at a base level, this means facilitating financial literacy education in schools.

According to Financial Services Council New Zealands latest research report[1], financial literacy is on the decline in our country, with only 44% of survey recipients being financially literate, a decline of 6% since March 2020.

Financial literacy is the ability to understand the benefits and risks associated with financial decisions, including spending, borrowing, leverage and investing[2].

Thousands of young students across New Zealand have already benefited from MoneyTimes programme, evidenced by a consistent year by year average of 44% improvement in financial knowledge in children who have completed the programme, continues Marsden.

Both the Milford Foundation and MoneyTime are aligned and motivated in their desire to support a future where confusion and uncertainty around money is replaced by understanding and confidence.

Founder and author of MoneyTime, Neil Edmond, says teaching financial literacy to children can make a real difference to their lifelong financial outcomes.

Learning early means they develop positive attitudes and behaviour towards money at the outset of their financial journey, reducing the need to remedy poor decision making later on, continues Edmond. Financially healthy people create financially successful communities and the whole world benefits.

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Home Journal Bitcoin ETFs: What Are the Potential Implications for Crypto?

The recent buzz in the cryptocurrency sphere has been largely dominated by discussions around Bitcoin Exchange-Traded Funds (ETFs). The concept of controlling Bitcoin through an ETF has sparked a debate, with critics likening it to confining the boundless potential of the internet within a closed system like AOL.

Bitcoins fundamental design revolves around decentralization, enabling peer-to-peer transactions without the need for intermediaries. This decentralization is a cornerstone of Bitcoins appeal, fostering a sense of financial independence among its users. However, the introduction of an ETF brings a centralized authority into the equation, challenging the very ethos of Bitcoin.

Crypto Market Surges: Discover Opportunities Creating Overnight Millionaires!

One of the most compelling aspects of Bitcoin is its capacity to adapt and evolve in response to the changing needs of its users. This flexibility fuels innovation and propels the technologys potential. However, an ETF could potentially restrict this adaptability, creating a bottleneck for innovation and limiting the technologys growth trajectory.

Bitcoin empowers individuals with financial sovereignty, allowing them to control their own funds. This sense of ownership is a key selling point for the cryptocurrency. However, the introduction of an ETF transfers this ownership to a third party, undermining the principle of self-custody that Bitcoin champions.

Bitcoins resilience against systemic risks and market manipulations is one of its key advantages. It offers a buffer against the vulnerabilities of traditional financial systems. However, the introduction of an ETF could expose Bitcoin to similar risks, creating a concentration of power and introducing potential vulnerabilities.

Bitcoins strength lies in its open and accessible nature. It transcends borders and provides financial opportunities to the unbanked. However, an ETF could potentially limit this accessibility, creating barriers for those who dont meet certain criteria and compromising the inclusivity that Bitcoin promotes.

The rise of the internet saw the emergence of centralized platforms like AOL. However, the world eventually recognized the power of an open internet and moved away from these centralized platforms. This historical lesson serves as a reminder of the importance of preserving the decentralized nature of Bitcoin.

Despite the potential drawbacks, the approval of a Bitcoin ETF could have positive implications for the industry. It could attract institutional capital into the crypto space, serving as a temporary solution until proper regulation is established.

Bitcoin represents a new paradigm in finance. As the debate around ETFs continues, its crucial to consider the long-term implications for decentralization and individual empowerment. The challenge lies in fostering innovation while staying true to Bitcoins core values.

CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com

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Bitcoin ETFs: What Are the Potential Implications for Crypto? - Captain Altcoin

Description

As the world watches the shifting landscape of international finance, a crucial conversation is looming on the horizon. At the forefront of this dialogue is the forthcoming BRICS summit scheduled to take place in Johannesburg, South Africa, from August 22-24. This coalition, composed of Brazil, Russia, India, China, and South Africa, is predicted to place Read more

As the world watches the shifting landscape of international finance, a crucial conversation is looming on the horizon. At the forefront of this dialogue is the forthcoming BRICS summit scheduled to take place in Johannesburg, South Africa, from August 22-24.

This coalition, composed of Brazil, Russia, India, China, and South Africa, is predicted to place de-dollarization high on its agenda.

This was revealed in a recent meeting between the presidents of Brazil and South Africa, Luiz Inacio Lula da Silva and Cyril Ramaphosa. The pair deliberated on various key issues including the ongoing Russia-Ukraine conflict and potential peace-making efforts.

The core of their conversation, however, revolved around the BRICS summit and their collective vision for its outcome.

President da Silva, in particular, has been an outspoken advocate for transitioning away from the U.S. dollar in global trade, favoring the use of national currencies.

His advocacy extends to the potential creation of a common BRICS currency, similar to Europes Euro. This topic is expected to be heavily debated during the upcoming summit.

Da Silvas argument in favor of a BRICS-based currency stems from his vision of bolstering independence among these emerging economies.

By adopting a unified trading currency, BRICS nations could significantly reduce their reliance on the dollar, creating a more balanced global economic playing field.

Alongside this discussion of a unified currency, the BRICS bank stands as another beacon of financial independence for these countries.

Da Silva views the institution as an alternative to traditional financing mechanisms, helping BRICS nations escape the limitations imposed by Western-based financial institutions.

As part of his vision, he anticipates an increased cooperation with the African Development Bank, highlighting the emerging symbiotic relationship between BRICS and other global south economies.

This vision paves the way for increased self-reliance, leveraging the strength and potential of these emerging economies.

The coming months are expected to be a pivotal period for the BRICS nations. As they grapple with the challenges of the ongoing Russia-Ukraine conflict, they also confront the broader issue of financial independence and global economic restructuring.

The question of de-dollarization is not a mere talking point; it is a critical component of their agenda, aimed at transforming the way these nations engage with the global economy.

The leaders of the BRICS nations are certainly under the global gaze as they prepare for the summit.

As they steer their nations through the complexities of the current geopolitical landscape, the decisions made could have significant repercussions not just for their respective countries but for the global economy at large.

This August summit is more than a meeting; its a potential turning point in the history of global trade and finance.

In the coming weeks, the anticipation is set to build, not only within the BRICS nations but among financial institutions and economies worldwide.

The discussions and decisions made at the upcoming BRICS summit could indeed redefine the worlds economic trajectory, nudging it towards a future less dominated by the dollar and more reflective of a balanced, multi-polar global economy.

Disclaimer:The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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De-dollarization will be a priority talk at BRICS meeting Cryptopolitan - Cryptopolitan

Gen Z viewers are more inclined towards 'Financial Independence Retire Early' concept: Rachana Ranade  Times of India

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Gen Z viewers are more inclined towards 'Financial Independence Retire Early' concept: Rachana Ranade - Times of India

What is the FIRE movement?

Financial Independence Retire Early (FIRE) is a movement that prioritizes saving and investing 50% or more of your income so you can retire before youre in your 60s. You can say youve reached the FIRE finish line once your savings can cover your expenses post-retirement, with inflation factored in.

The goal of FIRE is to achieve financial freedom so investors can choose how to spend their time.

It's basically having the financial flexibility to have the ultimate life flexibility, says Rachael Burns, a certified financial planner at True Worth Financial Planning, based in Folsom, California.

The term FIRE came from a 1992 book called "Your Money or Your Life," written by Joe Dominguez and Vicki Robin. The book discusses changing your relationship with money to achieve financial independence, and live a life that aligns with your goals and values.[0]

Financial independence might look like taking a pay cut to pursue work you love, working part time so you can take more naps during the day, or it might mean not working at all. And its a popular goal: 22% of millennials hope to retire before they clock 60, according to Fuel for the F.I.R.E., a 2021 Vanguard Digital Advisor survey.[0]

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How does FIRE work?

People who use FIRE to retire early do so by drastically reducing their expenses, looking for ways to increase their income, and investing the money they save in a mix of tax-advantaged accounts as well as regular brokerage accounts.

But FIRE retirement does come at a cost that not everyone can afford. It often requires cutting down expenses to the bare minimum so you have more income to invest. As mentioned above, FIRE followers could be saving 50% of their income or more, and thats not possible for everyone, Burns says.

"Some people are not able to live as simply, maybe because they have a family.

The rule of 25 and 4% rule

Followers of FIRE often consider two things: the 25x rule and the 4% rule.

Rule of 25

The rule of 25 says you need to save 25 times your annual expenses to retire. To get this number, first multiply your monthly expenses by 12, and then youll have your annual expenses. You then multiply that annual expense by 25 to get your FIRE number, or the amount youll need to retire.

So, for example, if your monthly expenses are $6,000, you multiply that by 12 to get an annual expense of $72,000. Multiply that by 25 and youll have your FIRE number of $1.8 million.

If a FIRE number seems too ambitious, some people explore ways to increase their income and then invest that extra money.

The 4% rule

The 4% rule says that retirees can withdraw 4% of their savings the first year, and then adjust for inflation in future years if necessary, and not run out of money in retirement.

The 4% rule assumes a 30-year retirement goal, so if you plan to retire earlier than that, this may not work for you.

And Burns says investors should be cautious about following advice designed for masses, especially when it comes to determining a FIRE number.

I see a lot of people saying, Oh, you need to have this much money and then you can retire, or You can safely withdraw 4.5%. These rules of thumb are really big generalizations, but really like any of that financial advice, it's never one size fits all, Burns says.

The right savings rate

If youre interested in early retirement, think about how much money you plan to save and invest annually to reach your goal.

Figure out a savings rate that matches the speed at which you want to go, says Paris Woods, New Orleans-based author of The Black Girl's Guide to Financial Freedom and a FIRE supporter.

If your goal is to achieve financial independence in 10 years or less, Woods suggests saving about 70% of your income.

The magic of compound growth

Because of inflation, physical cash saved in a bank account probably wouldnt be enough to sustain you for the next 40 years.

However, saving and investing money in tax-advantaged retirement accounts can help you prepare for retirement, thanks to compound interest.

Both IRAs and 401(k)s are accounts you can use to invest for retirement. Roth IRAs require you pay taxes up front, but your investments grow tax-free and you can withdraw your money tax-free in retirement. Accounts such as traditional IRAs and 401(k)s are subject to taxes when you withdraw money in retirement, but you still enjoy the benefits of tax-free growth and compounding returns.

There are annual contribution limits for both IRAs and 401(k)s. So what happens if youve maxed out all of your retirement accounts? Where do you save and invest next?

Invest as much money as you want in a regular brokerage investing account, Burns says. There's no limit to how much you can add to that.

In terms of what to invest in, be that stocks, bonds, or funds such as ETFs, it just depends on your risk tolerance.

It does need to be invested fairly aggressively, and aggressive means something different to everyone, she says.

Tax-efficient strategies

A question you should ask yourself when devising a strategy is how much money youll need between your goal retirement age and the age you can start withdrawing from your retirement accounts penalty-free, which is usually around 59.

Once you come up with a number, you could consider saving that amount in your regular brokerage account. That way, if you do want to retire early, you don't run out of cash before youre eligible to start taking qualified distributions from your retirement accounts.

While youll still have to give Uncle Sam a piece of your pie when withdrawing from a regular brokerage account, you wont have to pay early withdrawal penalties. You will have to pay taxes when your investments earn dividends and interest, as well as when you sell investments for more than what you bought them, Burns says.

There's no way to get around paying taxes its just part of the game, and if you're paying taxes, it probably means you're making money. So it's kind of a good thing, but we obviously don't want to pay more taxes than we need to.

Types of FIRE

Some people assume FIRE means you have to avoid splurging. But there are various forms of FIRE; some are extreme, while others are milder.

These are popular FIRE approaches:

Lean FIRE

Those who believe in minimalist lifestyles and can live off very little tend to fall into the lean category. They may save more than half of their income to achieve financial independence faster.

For those people who care really deeply about liberating themselves from needing to go to work every day, I think it would be compelling to take this lean FIRE approach, Woods says.

Fat FIRE

If your motto is to live a little, fat FIRE may be for you. The goal of fat FIRE investors is to save a large amount of money so they can live it up in retirement. For instance, if you live on $200,000 annually and would like to continue living on that amount in retirement, youll need to save and invest a larger amount than someone who plans to live on $50,000.

Barista FIRE

Individuals who do barista FIRE arent necessarily trying to escape work; the focus is on saving up enough to retire, but then work less or part time. To do this, barista FIRE investors save enough so that they dont need to earn huge amounts of money from work to fund their lifestyles. Some people are drawn to barista FIRE because its a way for them to focus on work that matters to them, as Woods says she is doing.

I think I might find myself in the category of folks who are doing work that is meaningful and see working as playing some role in their lives for the foreseeable future, but want the freedom to only do work that is meaningful and accept roles that meet their personal requirements, Woods says.

Limitations of FIRE

Retiring early might sound appealing, but there are risks, and its not for everyone.

For instance, if you stop working, youll have to foot your own medical expenses until Medicare kicks in around age 65, and your investments may not perform as well as you thought. Either one of those scenarios could have consequences such as having to raise your withdrawal rate or needing to re-enter the workforce.

FIRE requires getting pretty strict with your spending, Burns says, as some people save 50% or more of their income, which is not doable for all investors.

If you dont earn enough to cover your basic needs and save aggressively for early retirement at the same time, FIRE may not be for you, Burns says. Lacking an emergency fund or owing high-interest debt may be other reasons that FIRE may not be attainable.

If someone's making minimum wage, this is not going to be doable for them, Burns says. But if their income is high enough to where they're like, OK, I can, I can comfortably live off of half of this and just sock away the rest, then that's, that's how you get started.

Excerpt from:

FIRE Movement: What It Is And How It Works - NerdWallet

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

The FIRE movementfinancial independence, retire earlyhas gained wide exposure in recent years. FIRE adherents are often portrayed as people who take extreme measures to save for early retirement, leading many people to dismiss the movement as a fringe concept. But theres more to FIRE frugality and deprivation, and it hardly a one-size-fits-all journey.

For many practitioners of FIRE, the goal isnt the retire early end of the acronym but rather the financial independence part. They aim to save enough money to given them the freedom they want and avoid depending on a regular job to pay the bills.

In its most extreme versions, of course, FIRE adherents minimize expenses by giving up all the small comforts in life, from turning on the heat or air conditioning to buying a cup of coffee. But there are plenty of folks for whom the journey more moderate sacrifices. In this version of FIRE, its about living within ones means while saving for the future.

Jackie Cummings Koski accomplished her goal of saving 25x her yearly expenses in 2018. With enough savings tucked away, she believed that she had the means necessary to quit her job as a sales manager in Dayton, Ohio but has in fact chosen to keep working. Knowing that she can quit when she wants is liberating, she says.

Koski started working toward financial independence after getting divorced in 2003. During the process of splitting their assets, she realized her ex-husband had $120,000 in his retirement accountsabout six times as much as she had saved. For Koski, it was an eye-opening moment.

I vowed from that day that I was going to pay close attention to my finances and do things to put me on a better financial trajectory, she recalls. I didnt want to be the stereotype of a divorced single mom, especially being African American, so I did everything I could to turn it around.

FIRE practitioners aim to save 25x their annual expenses. This strategy is based on two common retirement strategies: The 25x Rule and the 4% Rule, each of which help people set up safe rates of withdrawal from their retirement savings.

But as noted above, FIRE isnt a one-size-fits-all goal. Some, like Koski, are looking to be financially independent, while others really are focused on beating the standard timeline and retiring very early. Individual interpretations of FIRE are affected by how much people are willing to save each year, and what they plan to do and how they want to live in retirement.

There are three broad approaches to FIRE:

The three factors that go into financial independence include your savings rate, investment returns and withdrawal rate. Heres how that works.

First, determine what percentage of your income you can save. Savings can and should include all retirement contributions, any employer matching contributions and money set aside outside of retirement accounts in a taxable brokerage account.

Second, take the portion of your current income you spend and multiply that number by 25. For example, someone who spends $50,000 a year would need to accumulate 25 times this amount, or $1.25 million to achieve FIRE.

Finally, calculate how long it will take you to accumulate your FIRE number based on the amount you save each year. This will require you to make an assumption about investment returns. The higher the rate of return, the faster you achieve FIRE. You can use this calculator to try this for yourself.

Take somebody who earns $70,000 a year, with zero saved for retirement. If this person wanted to pursue a FIRE strategy, they could save 10% of their income, or $7,000 a year. Applying the 25x rule, they would need to save around $1.58 million (25 x $63,000). Given these assumptions, plus an 8% annual return, it would take this person about 37 years to reach financial freedom.

Heres another scenario: A person who earns an annual income of $70,000, with zero saved. But in this case, the person is pursuing FIRE by saving 30% of their income. Assuming the same 8% return, it would take them about 22 years to save the same 25x amount to reach financial independence.

The more you save, the sooner youll reach financial independence. If you budget wisely and choose to save 50% of your income under the same scenario, youd hit financial independence in about 14 years.

People pursue FIRE for a variety of reasonsnot everyone wants to be financially independent just so they can stop working. Koskis decision stems from experiences she had as a child growing up poor.

Koski and her five brothers were raised by their father, a single parent who worked at a factory in Augusta, Georgia. Koski says they never went withouttheir father worked multiple jobs to make ends meet, and they got free lunch at schoolbut they were living below the poverty line. She recalls how she and her brothers always knew it was almost payday: the fridge was empty.

At the time, I didnt realize it, but we were very much living paycheck to paycheck, Koski recalls. The experience made her want to cultivate a very different life..

Some say FIRE is only possible for individuals who are ready to forgo comfortable lives now to retire early in the future. But Koski doesnt believe shes sacrificing her current lifestyle to achieve financial independence. Im not a minimalist. I buy the things that I value and that I like. And my daughter, she had a good life, too, says Koski.

She builds her budget around the money that is left after maxing out contributions to her 401(k), Roth IRA and health savings account (HSA), a practice she started in 2008. Koski has enough money for everything she wants to do, because she is strategic about spending. She uses an app called GasBuddy to find the cheapest gas near her, for example.

I dont mind spending money, but I want to know if Im getting the best deal and making sure that Im careful with the way that I spend my money, says Koski

Part of what has fueled interest in the FIRE movement is a growing discontentment with life in corporate America. Some FIRE followers say instead of being miserable sitting at a desk for most of their lives, theyd rather travel the world or do work they actually find fulfilling. But not everyone pursuing FIRE hates their job.

Koski may already have 25x her yearly expenses saved, but she still heads to the office Monday through Friday. Theres other things that I would like to do, but I like my job, Koski says. I like my boss. I work at a great company. I feel good about what Im doing at work, so Im not running from my job.

Theres little reliable information on who identifies with the FIRE movement. But its clear that the dream of achieving financial independence isnt only for high earners.

In 2018, TD Ameritrade conducted a survey of 1,503 U.S. adults aged 45 and older with more than $250,000 in investable assets, including 753 individuals who said they are financially independent or plan to be. Around a third of respondents who were already financially independent had incomes between $50,000 and $99,900a stark contrast from the idea that FIRE is only attainable for people making six figures.

Still, there are obvious barriers to the most ambitious FIRE goals, like retiring at 35 or 40. A big one is student debt. Over half of young adults who attended college have student debt, with the typical monthly payment reaching between $200 and $299 per month, according to the Federal Reserve.

Student loans may slow down the process of becoming financially free, but paying off student loans doesnt have to be seen as a permanent barrier, says Tanja Hester, author of Work Optional and a leading figure in the FIRE community.

Its just another savings goal, Hester says. In order to do something like retire early, youre going to have to go through several financial milestones. Its understandable why you might see it as a hurdle, but its just another thing to figure out, just like figuring out how youre going to fund your early retirement years, how youll fund your traditional retirement years or how youre going to get health care.

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Some critics argue that the FIRE concept carries big risks. Saving 25x yearly expenses is based on the traditional 4% rule, which is considered as a safe withdrawal rate for a 30-year retirement. An individual retiring at age 40, rather than the expected retirement age of 65, could easily outlive their savings.

Some individuals pursuing FIRE try to mitigate this risk by investing in passive income streams, like rental properties, to help boost their annual cash flow. Others choose income producing activities that are meaningful to them, such as running profitable blogs or starting businesses built on their passions.

David Blanchett, head of retirement research at Morningstar, says that while wanting to retire at 30 is unrealistic for most Americans, the general principle of financial independence is something everyone should be striving for.

My concern with what Ive heard about FIRE is mostly about outliers in an impossible situation, so it doesnt really connect well and isnt realistic, Blanchett says. But the concept of saving more is one thing as a society that we need to do. People really need to ask themselves, what is really important to me? And then build financial goals around it.

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