Wanna retire early? Crunch the numbers and play the long game

Posted: 18 January 2021 8:00 am
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Young brave divers couple jumping off cliff into ocean

It’s all about the details — and the side hustle — for this adventurous saver.

Our series highlights stories from real people who’ve joined the financial independence, retire early (FIRE) movement. Some have successfully reached FIRE, while others are on track to do so over the next few years. Answers are edited for length and clarity.

  • Name: Blake Sutton
  • Current age: 41
  • Profession: Senior electrical and software engineer
  • Investment strategy: Strong career, side hustle and dollar-cost averaging in index funds
  • Time in FIRE movement: 8 years

What inspired you to join the FIRE movement?

Realizing how much I enjoy having full control over my schedule.

While I have no desire to drink piña coladas on the beach until I kick the bucket, I don’t want to be constrained by the typical 9-to-5 hours of a standard job. I want to spend more time with my family, more time outdoors hiking and rock climbing, and do some more sightseeing in all the various corners of the globe.

There is a lot that I want to do that just isn’t possible when working a 40-hour workweek.

What advice would you give those just getting started?

Here are three tips for those looking to get into the FIRE movement.

Start a side hustle.

There’s no better way to accelerate your transition into FIRE than with a side hustle. Earning an extra $1,000 per month is $12,000 per year. Assuming an average 8% year-over-year returns, $12,000 a year is $350,000 after 15 years.

A side hustle can be myriad things, and everyone has something to offer. You can earn money online through starting a blog (I leveraged my expertise to start a website), you can sell services online or you can do it the old-fashioned way and sell services in person. From tutoring to handyman work to driving an Uber, there’s no excuse for “not being able to find work.”

Think about what it costs you 15 years from now.

An 8% return in an index fund is a very achievable level of growth. Over 15 years, that amounts to compounding of around 3.17 times your current investment.

If you think of all your expenses in terms of how much it will cost you 15 years from now, it puts them in a very different light.

This doesn’t mean you can’t have any extras. But if you’re buying, say, three coffees per day, that’s about $15 per day, $75 per workweek or $3,900 per year.

Spending $3,900 this year will cost you $12,363 in 15 years (i.e. 3900 x 3.17). And that’s just for year one.

When you think of your expenses like this, you’re more likely to make the small sacrifices now that will lead to big returns later.

Set it and forget it.

Don’t try to outsmart the market. Not only are you unlikely to succeed — even top hedge fund managers fail to beat the market — but there’s a significant opportunity cost to all that time you spend stock-picking.

If you take the time you would have spent stock-picking and invest in actually earning money, you’ll end up with both better market returns and more money to invest.

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