The FIRE movement has become incredibly popular - FIRE stands for Financial Independence, Retire Early.
The idea is that you can follow a method that will let you save up enough money to be able to retire in your 40s or even 30s and never have to work again.
Sounds great, right?
In this video I will give you 5 very specific reasons why I don't like the FIRE movement and why I don't follow it.
For me each one of these reasons is a deal breaker and shows how the whole Financial Independence, Retire Early concept is pretty weak.
I am actually a huge proponent of Financial Independence.
I have followed my own route to Financial Independence and this whole channel is really all about gaining financial freedom.
But I don't subscribe to a fixed dogma that says there is one way to do it and the only alternative is to slave in a job you hate for 50 years.
I think people often oversimplify the concept of financial independence and ignore the issues I am talking about in this video.
CHAPTERS
Introduction - 00:00
FIRE only works for rich people - 01:32
Trading youth for old age - 03:55
Focus on savings and costs - 05:04
The 4% Rule - 06:19
Cap on upside, unlimited downside - 08:41
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The idea is that you can follow a method that will let you save up enough money to be able to retire in your 40s or even 30s and never have to work again.
Sounds great, right?
In this video I will give you 5 very specific reasons why I don't like the FIRE movement and why I don't follow it.
For me each one of these reasons is a deal breaker and shows how the whole Financial Independence, Retire Early concept is pretty weak.
I am actually a huge proponent of Financial Independence.
I have followed my own route to Financial Independence and this whole channel is really all about gaining financial freedom.
But I don't subscribe to a fixed dogma that says there is one way to do it and the only alternative is to slave in a job you hate for 50 years.
I think people often oversimplify the concept of financial independence and ignore the issues I am talking about in this video.
CHAPTERS
Introduction - 00:00
FIRE only works for rich people - 01:32
Trading youth for old age - 03:55
Focus on savings and costs - 05:04
The 4% Rule - 06:19
Cap on upside, unlimited downside - 08:41
💵 GREAT INVESTING APPS I USE
GET A FREE SHARE WORTH UP TO $150 WITH STAKE (UK, Australia, NZ)
https://hellostake.pxf.io/qnA3xq
You will get a free share if you sign up using this link and deposit a minimum of £50.
GET A FREE SHARE WORTH UP TO £200 WITH FREETRADE (UK ONLY)
https://magic.freetrade.io/join/sasha-yanshin
You need to sign up and make any deposit to get the free share.
SIGN UP FOR ETORO (Global)
https://med.etoro.com/B15358_A95689_TClick_SSasha.aspx
67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk. Other fees may apply.
👍 SUBSCRIBE TO MY CHANNEL
https://www.youtube.com/c/SashaYanshin?sub_confirmation=1
DISCLAIMER: Some of these links may be affiliate links. If you purchase a product or service using one of these links, I will receive a small commission from the seller. There will be no additional charge for you.
DISCLAIMER: I am not a financial advisor and this is not a financial advice channel. All information is provided strictly for educational purposes. It does not take into account anybody's specific circumstances or situation. If you are making investment or other financial management decisions and require advice, please consult a suitably qualified licensed professional.
Hey guys, it's sasha, the fire movement has become incredibly popular. Fire stands for financial independence retire early. The idea is that you can follow a method that will let you save up enough money to be able to retire in your 40s or maybe even your 30s, and never have to work. A single day of your life again sounds great right.
Well, everyone on youtube seems to be preaching the fire movement principles and it's becoming a really popular goal for younger people and in this video i will give you five very specific and very important reasons why i personally do not like the fire movement and why? I don't follow it for me. Each one of these reasons is a deal breaker and it shows how the whole financial independence retire. Early concept is pretty weak. Now, don't get me wrong.
I am a huge proponent of financial dependence. I have had my own business since the age of 28 and i'm now a content creator with full control of my time and schedule, and i am financially independent myself. In fact, i advocate financial independence. That is what this channel is pretty much really all about, but i don't subscribe to a fixed dogma.
I don't think it makes sense to join a club with prescribed fixed rules. It is perfectly possible to strive for financial independence without following the fire movement mantra. I also know that the comments i'm going to get on this video are not going to be so positive, but it is not a black and white choice. It is not either you do fire or you be a corporate slave for 50 years.
There is a lot of stuff in between the world is far more nuanced than that. So, let's start with the first issue, and this might be the biggest one. The fire movement only works for people who are already well off. It is easy to sit in an ivory tower and pat yourself in the back for saving 25 of your income, or maybe even 50, of your income into investments.
It is easy to say that you can always downsize your costs. You know own a 10 000 car. Instead of a forty thousand dollar car or downsize from a three bedroom to a two bedroom apartment, but the problem is that the vast majority of people are not in that position. People on low incomes, people who don't live in a developed country, people who don't have those circumstances, people who don't have any hope of saving 25 of their income.
You can demonize the people or say that they only have themselves to blame and that you know you are on low on a low income and you can do it. Therefore everyone can. But the fact is, the vast majority of these people live paycheck to paycheck, and it is not just because they're lazy, many people are born into poor families in poor neighborhoods. They have circumstances that largely dictate how they are going to grow up and the sort of jobs they'll end up doing a lot of people barely earn enough money to pay their bills and they survive paycheck to paycheck.
Some of these people will borrow money to put food on the table for their children. They do not have the luxury of choosing how to spend their money. The electricity bill is non-negotiable and it is easy to say that that person should maybe move to a cheaper city or maybe go live further out so that they don't have to pay as much things like that. But when you don't have any money, any security when you are barely struggling to make ends meet that just isn't a realistic option that people can take. There are many other considerations. These people may need to live close enough to where they work. Maybe they can't commute for two hours because they need to drop off and then pick up their kids from school. And the sad truth is that these are the people who the fire movement appeals.
Most to the person who is struggling to make ends meet dreams of not having financial struggles. These are the people who really want fire. These are the people who fire would theoretically help the most. They will spend money on a credit card to go and buy.
That course or watch endless videos on youtube, but they actually have no chance of ever making it and that's because the basic tenets of how they should get there, starting with saving large chunks of your income, just do not work now. The second point is one that most people in the fire community completely ignore, but i think is hugely important. If you decide you are going to do fire in your 20s and then you're going to go and spend the next 10 to 20 years trying to achieve it. You are essentially trading your best years of life away for old age.
Fire principles will tell you that you need to live further away from the city to save and cast you'll need to go out less when your friends are going out to town, because you know it's an unnecessary expense. You'll not go on that dream holiday that you've always wanted to go on, because the cost will set your retirement date back by a year but sure you can go and enjoy backpacking around australia or maybe camping around europe when you're 65. Instead, you will take on site hustles that will take you away from spending time with your family that otherwise, you would never have taken on. You will waste the best years of your life, not doing things that young people should be doing, or maybe doing things that you really don't want to do just so that you can then enjoy later years of your life more and when you're old.
Looking back at your life, i am not sure that you'll feel as good about that choice, as you think now. The next big problem with the fire movement is this: obsessive focus on saving money and cutting costs instead of growing revenue. The majority of the advice and things that people talk about from everything that i've seen is about how you can save more money. How can you cut out unnecessary costs, reduce your spending, but the truth is the most powerful way by far to become financially independent is not by living in a slightly smaller apartment or going on a cheaper holiday. The best way to become truly financially dependent is, by growing your revenues, a lot, and i know that people talk about side, hustles and things like that in the fire movement you know potentially buying apartments so that they can earn passive income. All of these things i am aware, but investing in your career learning valuable skills, starting a business. These are the things that can make a huge difference, and these things don't really get talked about. Some of these might come at a cost.
Starting up a business costs money money you can't spend because it stops you making those monthly deposits to your savings account which goes against the whole point of fire heck. Sometimes you might need to take on debt in order to upgrade your skills or take on debt to start up that business, so you can earn more money, but i really don't like how little attention this point gets when people talk about fire now, let me talk About the four percent rule, because this is the rule that the fire community absolutely swears by and unfortunately it just doesn't stand up to scrutiny. The four percent rule says that when you retire, you can withdraw four percent of your investments per year to live on. So you need to make sure that four percent of your total investment portfolio is enough for you.
And if you then withdraw that much on average per year, then your investments will grow over time and that growth should ensure that you never run out of money. Even accounting for market fluctuations, but here's the big problem with this when you decide to do the retirement part of fire you're, doing something very different to regular, ongoing investing you're, essentially making a one-off bet at a fixed point in time, with a big load of money. Rather than continuously investing money every single month, which is what a regular investor would do now hear me out here sure in a run up to that point, you might be simply investing regularly like what i just described, but when you decide to go and actually start That four percent rule here is what the big issue is on average, that four percent rule may play out. But if you retire at the wrong part of the economic cycle, you have just ruined your entire 20-year plan.
If you have worked hard to save 750 000 and you plan to live off 30 000 per year with that 4 percent rule what happens if there is then a market crash immediately after you do it in the next year, you don't have a job or any Income anymore and a typical market crash will wipe out 40 to 50 of your investment, pile and all of your money is going to be in those investments because you're expecting that high yield. So you're left with just let's say, four hundred thousand dollars worth of investments. But you have to draw money out of that. You can't just let it sit there and wait for it to go back up. You still have bills to pay. You still have to fund your life. So what's the plan? Do you still take thirty thousand dollars out and if the market crash lasts a few years, then your investments are going to go and get depleted very very quickly, or do you need to figure out how your family can live on just fifteen thousand dollars instead? Remember that if a market crashes by fifty percent, it then has to go up not by 50, but by a hundred percent from that lower point to get back to the same level. It was before the crash and, if you're drawing down what is effectively now, eight percent of your portfolio just to live on your investments will never actually grow back, and here is the last point.
The fire movement strategy sets a maximum cap on what you will ever be able to earn and how much money you will ever be able to have now. That's not necessarily a bad thing. I'm not saying everyone should strive to be insanely, rich or anything like that. But the approach says that the maximum you will ever realistically have is that four percent number there is zero potential upside here realistically, but there is a huge amount of potential downside, and so you have this absolute cap and this kind of massive load of stuff underneath Which is where you are likely to end up if the markets work against you, if you have an unexpected emergency cast or anything else that knocks you off the plan, that's it! Your whole strategy can be ruined and you've been spending years working for it.
Building real sustainable, long-term, robust and growing revenue streams can achieve the same goals of financial independence and that approach doesn't come with any limits. So that's my take. I actually find fire a really interesting concept. I just think the specifics of the commonly accepted approaches that i see a lot of people talk about are just not that good.
Also, what happens if everyone in the world decides to do fire that will make for one super, bland and super boring society? If you found this video useful, i would really appreciate you smashing the like button so that i can get a bit of help to counter the die hard fire fans that i am sure are gon na, come in their masses. To do the exact opposite. Thank you. So much for watching, i really really appreciate it and, as always i'll see you guys later, you.
I was saying this all the time from the beginning, you can only save so much but only sky is the limit to how much more you can make. Therefore you should focus on making more money rather than saving. Ideally you do both but never save money against your ability to make more money.
Good points. I really like the overall concept of financial independence. But I generally think it is more about freedom to do something that you love rather than retire. I know a lot of retired people who are so lost without their jobs. And also enjoy the present. Today is the youngest you will ever be 😉
Good points. I think in #1 it should be noted that there a lot of people that make crippling financial decisions. For example you mentioned their kids… having kids early/before financial stability is stupid and within everyone’s control
100% Retire at 30, 40 or 50 probably isn't what makes you happy. But working less and only with what interests you is nice.
If you are good with your hands and DIY car- and houserepairs, grow (some of) your own food, live ½ frugal and overall keep cost low I think it's possible to get to a good position.
I love doing things and instead of paying for car repair I DIY and work less. I live in Denmark with ca 40-45% income tax and 25%VAT/sales Tax on EVERYTHING, so why pay a lot of income tax for the money to pay the mechanic at the garage and even with 25% sales tax.
For me some sort of "½ FIRE" combined with diy, "½frugal" and ¼-½work would be a good balance. Walking around scratching my ass isn't the dream😉
Great points. Very few can save enough to achieve this based on average incomes around the world. Easier to create a sustainable lifestyle than invest enough to live off your capital.
Next argument………..because a percentage of the population can't achieve FIRE doesn't mean people who are low income can't pursue FIRE. Even if someone can't retire early because of their low income, they can at least give them selves some breathing room. To discourage others from aquiring better money management skills because they are low income is kind of messed up. There are tons of videos of people who are low income and are pursuing FIRE. Why don't you offer that as a suggestion instead of discouraging low income people. In addition, FIRE isn't meant for everyone just as everyone isn't meant to be rich but we still may practice some of the principles that rich people practice to improve our own financial status
So much misinformation. Most people who pursue FIRE typically understand they have to get out of debt first. No one started off saving 50% of their income. The vast majority did live paycheck to paycheck…..FIRE is just a way to give you more options so that you don't have to live paycheck to paycheck,……..next bullshit argument
FIRE is about options not retiring early. It just puts you in a position a better postion that gives you more options……I don't know what this dude is talking about. Low income people are doing this because FIRE is based on your expenses, not your income. A low income person will less expenses so they will need less money.
I definitely hear his argument about the FIRE movement but when it comes to the 4% rule withdrawing annually from your stock investments over a period of time til retirement, wouldn't it be wise to save for an emergency fund for a couple of years if the market ever crash. I would think you would be in a lot better shape.
One extra point for me is that I actually find work enjoyable and plan to work for as long as possible for my brain health. I'm worried once I retire I'll start to deteriorate both mentally and physically.
I did my calculation about 2 years ago I would have to go back and live with my parents until at least 45 😅 those YouTube videos are either ceo in finance or the other spectrum who can build their own house 🏠
Respect your view on this but i would say FIRE is not one size fits all, if you cant move house, cant save 25% or more of your income that is okay there are things you can do and be better with finance. People on low income do have a chance of getting better with money eg investing, managing finances and can strive towards something. I agree with you THIS SHOULD NEVER TAKE AWAY FROM YOUR LIFE its not about not enjoying life, never seeing your family or friends, constant sacrifices. You have to decide what works for you like i said not a one size fits all. Perhaps the people you are listening to talk about FIRE are not telling you that the first step should be to reduce debt not take it on and that whatever you do make sure it works for you and you are happy at the end of the day. Ultimately your financial well being and mental well being should not be sacrificed and your life should be better with FIRE not worse.
Some good points – especially around growing your income. However, you're attributing way too many rules to the FIRE movement. Everyone has their own journey there's no cookie cutter approach or hard and fast rules. The "market crash" argument and "cap on upside" arguments apply to retiring at any age, not just FIRE. Point taken though that 4% is probably too much for an early retiree.
My rebuttal – 1) Make a decent income 2) Cut your expenses, not your throat 3) Understand that "retirement" is in quotations and that you can work when and how you want at that point. Maybe that's just managing your own property or investments. Maybe it's working 6 months out of the year or less. My situation – I was born poor, meaning my parents had no savings and no assets. I make average pay. I live in a cheaper than average apartment. I budget my entertainment, my luxuries and my vacations. Yes, you can have nice things and go places on a budget. I have been able to save almost half of my take home pay for several years now. Can everyone do it? No. Not everyone can ring the toilet when they piss either. If you can't retire, then keep working. I must be some rare, thrift wizard unicorn or something right? Nah, bruh. I just want to live without being a slave more than I want to yolo my money away this week.
Funny thing is that people that support Fire on YouTube for example, are youtubers proclaiming that their frugal lifestyle, investing and, different streams of income made them millionaire. All of that is just to make people watch how they can ALSO get rich. The reality is that that this people for example are making good money on YouTube that also allows them to have different streams of income.
There is no secret or recepie on how to be financially independent or retire early, is about making more money! It always been and will always be the way.
Is good to be aware of your spending but being frugal won't make you rich, and putting all your money on stocks could be very dangerous.
On the other hand people can still make good money in corporate jobs and some of us actually like our jobs. Many people in corporate are already FI but they like what they do, they don't feel like retiring.
Be aware of your finances, enjoy life, do something that you like and make money doing it. Salam
Went in with an open mind and hoping to learn something, but every point you make is just asinine. You say the 4% rule MIGHT not work if right after it a market crash wipes out 50% of your investments. How's the job market for the job I just quit? Probably non existent because the greatest market crash ever just happened. Pure clickbait dumbassery.
Trading your youth time for old age REALLY is a biggest deal breaker, you bascially throw away your best time in your life… and also isolate yourself from society(work field) at the age of 40 or younger seem kinda high risk. I think it is important for you to keep your profession/skill on track even you already at FIRE stage
This is exactly why I subscribe to the FIFU movement aka financial independence, fuck you. That last part is about building up a small buffer of money to keep you going to 3-6 months, which allows you to not take jobs you don't like. (assuming you have a high income skill which allows you to have standards/preferences in your work)
I’m in my mid 20s in college and graduating in 2.5-3 years. In CS and will get a job in SE in a low cost of living area. All I do is skateboard, travel, play games and workout. I don’t spend much a month, even when I had a huge ass insurance and car loan. Based off of my calculations alone I should have $3m by 35-40 without even investing. And that’s with a $75,000 job. I don’t want kids or marriage but if I find a girl that’s with the plan. We’d be set for life. Just travel and enjoy ourselves. Not but anything too crazy of course.
OOOOhhhh loving the controversy!!! 🙂 Agree that FIRE "principles" are flawed at face value / black & white view, but the reality of the FIRE "movement" is much more inspirational and Nuanced. Would love to hear your thoughts.
1) FIRE "Movement" = people, are you saying we are flawed? lol
2) Only works for the rich.. This is kinda negative / limiting belief right? Im not from wealth, son of a postman / part time cleaner, mediocre at school, got a bachelor by 24, was broke. Worked hard 14 years in corporate life and real estate investing, now theoretically FI in my late 30s.
3) Irony of FIRE, is that most people that hit FIRE will never retire, so its just a motivational tool / community to inspire, support etc…..so its really FI the aim as I think you relate to.
4) Focus on savings / costs, absolute, don't live in London, Paris, Amsterdam NYC and complain you are broke!!! There are lots of really nice places with great quality of living, reasonable wages, but lower costs.
5) Increase revenue, fully agree with you here, this should get more focus definitely.
6) Missing your best years???? There loads of great stuff to come, look after yourself, try stay healthy!! Dont take it for granted, but look forward to the future..
7) For those that do retire say 35 whatever, "what if the market crashes??" just go back to work a few years, like everyone else, might suck for a while but isnt a catasthrophy! 😉
Sorry for essay, enjoyed your video all the same though! 🙂
Another critique that I forgot to mention is that FIRE requires at least a decade of completely uninterrupted high income, just hard to find. Most people switch jobs or go through at least brief periods of unemployment over the course of 10 plus years.
Also, FIRE doesn't account for basic life events. What if you lose a job? What if you have twins instead of one kid? God forbid, what if you or a loved one gets sick? What about if your house needs a new roof?
This leaves you no room to flex
Great video. I just did a video about some problems with the FIRE movement and our thoughts didn't really overlap. This is why it's fun to see other peoples thoughts on all things finance. New sub.
No, people aren't giving up their younger years to devote to F.I.R.E and then "having to wait until age 65 to go backpacking round Europe". That would be "F.I.R.A.T.E.S.T" – Financial Independence, Retire At The Exact Same Time. What would be the point in that? It's sacrificing your younger years just so that you're in exactly the same position as everyone else who didn't do that.
The whole idea is about sacrificing your 20s and 30s so you can spend your 40s and 50s doing all these things while you're still in good health and have the energy. Then after that you can still have the same sort of retirement as everyone else who had to work during those 2 entire decades.
There are a lot of very disingenuous ways these arguments are being put across. Another example is the claim that some people just don't have the choice to participate because they have to borrow money to feed their kids. These people had the same choices as everyone else and they chose to have kids they could barely afford. They had the choice to stay childless and achieve financial independence and they chose to raise kids instead. Sure, they might not be able to afford both, but that doesn't mean they never had the choice of each option individually.
Money can only be spent once and it's up to the individual to make choices and compromises about how they want to spend it. If I earn £40k per year and spend literally every penny I make on gambling down the casino until I have nothing left, does that mean that people earning £40k per year in our society can't afford to pay rent and feed themselves? Hell no. It means I chose to spend my rent and food budget on other things. It's the same with kids. These parents could have done all sorts of things with their disposable income but they chose to raise kids with it instead. That's up to them.
People don’t like sacrifice and of those that are willing most only superficially so. Hence fad dieting vs adopting an active lifestyle. FIRE is a cognitively simpler endeavour that starting a business let alone creating multiple income streams. Uncritically following FIRE is an example of taking the path of least resistance, much to the chagrin of those who assume it to be a valid form of delayed gratification.
PS, the only types of people who come at you aggressively for challenging an idea are those who lack self-confidence, the ability to integrate new information and who’s identity is wrapped up in that world view.
Hey Sasha wanted your opinion. I am in my early 30's and have about 200k invested in stocks and shares ISA. Given all the doom and gloom prophecies regarding the stock market would you continue investing or cash out and invest in property with leverage?
The last point about the 4% rule applies to everyone who retires, not just FIRE enthusiasts. You could retire just before a big jump in the market or right at the point where the market corrects 30 or 40 % or worse. Retiring when you have just enough to make it on the 4% is risky. No one knows for sure what is coming next. His first point about only the rich can do FIRE was spot on. I was never able to save more than about 13% of my income.
If I retire at 47 that's 20 years earlier than retirement age.
20 years of time to enjoy when others are at work. For what? Not buying expensive cars, not going out to drink every night, going on a cheaper holiday?
Sounds worth it to me