FIRE Financial Freedom and Early Retirement Perhaps just a reliance on work. Just a shift towards reliance on the stock market Not free at all, not independent at all. Today's video I will reveal the risks and difficulties of the FIRE movement to everyone. Of course, this is purely my personal opinion. I also know that making this video may be attacked by many people. Because if you search online Almost all of them will tell you that fire is good, But they don't mention the difficulties and risks involved. So I hope that through this video, it will provide different perspectives for everyone to consider the topic, Don't just follow the crowd blindly and go with the flow. At the same time, I also share with you I think several steps are needed to truly achieve financial freedom, and it's definitely not just saving money and investing it in the stock market. It's definitely not about saving money and investing it in the stock market, and waiting for Wall Street to help you get rich. Waiting for Wall Street to help you get rich is not a viable approach. Hi everyone, welcome back to my channel. My name is Haoye, and I'm an internet entrepreneur. Today, we'll be discussing topics related to personal growth and entrepreneurial mindset. This will help you learn how to live a more effective life through personal growth and entrepreneurial thinking. Teaching you how to live a more effective life according to the explanation on Wikipedia. According to the explanation on Wikipedia. FIRE (Financial Independence Retire Early) is, as the name suggests, a method for achieving financial independence and early retirement. It is a lifestyle that emphasizes happiness over material satisfaction, with the goal of achieving financial independence and early retirement. The FIRE philosophy was born from Vicki Robin's idea that prioritizes happiness over materialism as a way of life. The FIRE philosophy originated from Vicki Robin in the bestselling book Your Money or Your Life, published in 1992. The bestselling book Your Money or Your Life, published in 1992, has a core message that The core message of the book is that Money is a representation of our life energy, Most people spend their time to earn money, While using money to obtain better life experiences, FIRE advocates for maximizing the saving rate in order to accumulate wealth. This is done to generate passive income, which can then be used to cover daily expenses in retirement, Many followers of the FIRE movement use the 4% rule as a reference In other words, the goal is to save 25 times the annual expenses And then use that saved money to invest in funds or stocks So that there is a 4% annual return, which can be used for daily expenses This way, the 4% return can be used for daily expenses, and it will become optional to work for pay This way, paid work becomes optional For example, if your annual expenses are $10,000 So 25 times that is equivalent to $250,000 After you saved up $250,000 that year, Assuming a 4% annual rate of return, That would generate $10,000 of income, Which could fully offset your expenses, So you don't have to worry about money anymore, And if we calculate it based on the savings rate, If your savings rate is 10%, It would take you 9 years of work to save up for one year of living expenses. What if it's 25%? It would take 3 years to save up for one year of living expenses. If the savings rate is 50%, Then it would take only one year to save up for one year of living expenses, If it were as high as 75%, It would only take 0.33 years to save up for one year of living expenses, If we do it this way, When your savings rate reaches as high as 75%, You only need to work for less than 10 years You can save up to 25 times your average annual spending You can retire early and do whatever you want This is the philosophy of financial independence and retiring early (FIRE) It seems like the logic is sound But in reality, there are difficulties and risks that no one has discussed First and foremost, there is the issue of salary threshold Let's take my country, Malaysia, as an example Currently, the average monthly expenditure for regular salaried workers is 1000-2000 ringgit If we include fixed expenses such as rent, utilities, then the amount easily reaches around 3000 ringgit It's almost around 3000 ringgit If you calculate with a savings rate of 75%, you have to save at least 12000 yuan per month In other words, you need to earn up to 16000 yuan per month It's only enough if you have 200,000 yuan per year Although it's not unreachable, it's still not that easy Because most people can't earn this salary And if we follow the customs of Asian Chinese We save up our money, and 80% of it goes towards buying a house and paying for the down payment It is almost unrealistic to use 75% of the money as the down payment Therefore, there is a threshold for implementing FIRE (Financial Independence, Retire Early) Otherwise, even given 20 years, you won't be able to achieve your financial freedom goal Otherwise, even given 20 years, you won't be able to achieve your financial freedom goal Secondly, the impact of inflation on calls As time goes by, you will find that your expenses seem to have increased Originally, my annual expenditure was 25,000 Financial goal is $250,000 Due to inflation After a few years, you realize that your annual expenses seem to have become 30,000 dollars At this point, the goal of financial freedom will become 300,000 dollars Will a 4% investment return be unable to keep up with the pace of inflation? Will it take more time to achieve this goal? Some people might say, I'll find a financial channel to get higher returns. This should be enough, right? But except for some low-interest rates, Bond and bank wealth management products are difficult to outperform inflation, Whether it's funds, stocks, or certain large enterprises' wealth management products, They are all unstable, Because many large enterprises and banks' wealth management products may also fail, It's like a few days ago I saw a wealth management product, Its expected annualized rate of return was 4%, but the actual performance lost 40%, In mainland China, there are many cases of real estate financial products that went bankrupt, Who knows how many families have been ruined and burdened with debt, Even if you invest in the strongest US stock index in the world, And it fell 15% in the first half of this year, Which brings me to my third point, reliance on the stock market. If you've invested the majority of your savings into ETF funds, This means all our hopes are pinned on Wall Street, Going from relying on your job, to relying on the stock market, Your wealth is completely dependent on the performance of the stock market, In other words, if the stock market is not doing well, you eat bread Only when the stock market is doing well can you have a proper meal. So there is still a certain amount of risk associated with this approach. Not free at all, not independent at all. But my own investment strategy is considered to be relatively aggressive. I pursue returns that exceed 10-30%. That's why I invest in individual stocks. The investments are all therefore individual stocks, which carry relatively higher risks. The risks are relatively higher because the stock market, for me, is a means to grow my wealth. For me, the stock market is a means to grow my wealth, rather than to hold onto until retirement. And not to hold onto until retirement. Fourth, there is no choice. You must carefully consider every expense in your life. Everything has a budget. Travel frugally, and choose the cheapest meals to eat. And then you can't have children either. You have absolutely no choice. Just a few days ago, my girlfriend and I did one together. 10 years' goal, 10 years' plan. I realized that my ideal life needs at least $30,000 in income to sustain. If I follow this plan, You may often find yourself saying to yourself: You may often find yourself telling yourself that you cannot have desires, and that you should just maintain this standard of living. You should not have any desires and just maintain this standard of living. You don't need to buy your Dream Car. All you need to do is to drive your Toyota. Is this lifestyle still considered financial freedom if all you need to do is drive your Toyota? Is this way of life still considered as financial freedom?
