F.I (Financial Independance) and F.I.R.E (Financial Independance Retire Early)

[PieterVenter7]

Now here is a whole rabbit hole to dive into when it comes to personal finance especially for the appeal of developers and I think it will be a nice section to add

The concept behind it is quite simple there comes a point where your investments net inflation makes more money than what your expenses are in a year.

Now the origins of the FI movement can be tracked back to a book "Your money or your life" Book by Joseph R. Dominguez and Vicki Robin which gives great insight into what your true hourly wage is and the starting concepts around it.

But the movement was really popularized by Peter Adeney an canadian software developer that retired at the age of 30 in 2005. He has a blog MrMoneyMustache. Tough his brand of F.I.R.E is not popular for everyone as he is on the frugal side.

Now there is allot of articles that can come from this topic

• From the math around retirement
• Importance of savings rate
• Rebalancing of asset allocations
• Budgeting
• Frugality
• Benefits of FI other than retirement (For developers like myself that doesn't plan to retire any time soon as this is a passion) knowing that you don't need to work or even you have a few years runway gives you allot of power in the negotiation table.

Let's take the math for example.

Now this gives you a much better target to go for than the conventional wisdom of save 15% of your salary

The first version of the math came from the trinity study where with a 50:50 you have a 30year save withdrawal of 4% meaning that if your net worth is 25 times your yearly expenses a 99% change of not running out of money in a 30 year time span.

No this study has been someone expanded by this one Karsten Jeske

Where if you take early retirement into account the real save withdrawal rate is 3.25% that would be yearly expenses times 31. that will give you a 99% change at success over a 60 year period with 100% Capital Preservation.

Short explainer on how the simple withdrawel method works

On your initiation of retirement your the first year you take your WR (3.25%) so example if you have R10 000 000 networth that means a first year withdrawel of R325 000. Now every year after that you take your withdrawal and increase it with inflation.

There are more complex dynamic withdrawal calculations to dive into later.

[alex-steinberg]

FIRE is actually a huge motivator for many devs I know, it should totes be in this guide! cc @shannagh11

[shannagh11]

Thanks @PieterVenter7 and @alex-steinberg !