I’m on FIRE

Hi Scott,

I’m 27 and I’m currently aiming to achieve dividend FIRE (Financial Independence Retire Early, i.e. living off income from dividends in the future). I’m fortunate enough to have purchased my own house with help from my family, but my future goals have left me with a few questions. Should I prioritise paying off my house or investing? The ChatGPT number being spit out at me for my desired goal seems absolutely insane ($3m, which might as well be a billion). I’m worried that by the time I reach my goal, I’ll be close to retirement anyway. I wonder if the sacrifices I am making now are worth it, or if I should be taking a more balanced approach and enjoying life along the way instead. What do you think?

Lincoln

Hey Lincoln,

Let’s play this one out.

You spend your twenties and thirties eating baked beans – without the beans – because every cent belongs to Vanguard. You manage to save 75% of your income, and tell yourself you don’t need a social life because your true friends are compound interest and low-cost ETFs.

Then you retire.

What are you going to do with yourself for the next 50 years?

Hang out at your local Men’s Shed and build birdbaths with the local lads?

Farm chestnut trees? (Oh, wait.)

Or more likely you’ll do what many retirees do who’ve turned off the income tap for the final time:

Stress about every move of the share market.

So let’s talk about the $3 million stretch target that ChatGPT suggested for you. The Aussie share market historically has a dividend yield of 4%, which would give you roughly $120,000 in annual income. That will get you an annual holiday at the Ouyen Caravan Park (in a tent).

Look, I admire the FIRE movement for its focus on saving and investing … to a point. 

Yet you also have to ask yourself:

Why are you so hell bent on retiring? 

Dude, I’ve had yoghurt in the breakout room fridge that’s been at work longer than you!

Instead, I’d really encourage you to change your focus. 

Spend your twenties and thirties doing interesting stuff. Maybe start a business. Or do a random job that you really enjoy. Travel. Find a career that you love. 

Whatever you do, don’t make your life all about money.

Scott.