How to keep the FIRE burning. | Mint

Financial experts came together at the Mint Money Festival 2024 to discuss FIRE (financial independence, retire early), how to execute it, and things to look out for along the way.

FIRE was popularized by the 1992 bestselling book Your Money or Your Life by Vicki Robin and Joe Dominguez. Here, people seek to save extreme amounts of money while working with the ultimate goal of exiting the workforce early.

Naveen Fernandes, who retired at 52, said FIRE stands for “fixed income for retirement” for him. Fernandes is currently financing his entire household expenses through the interest income he gets from his corporate bond holdings. The former mutual fund sales executive, who is now 62, is battling Stage 4 cancer.

“I’ve been a portfolio manager, and I’ve been into equities since 1992 but now (in retirement) 80% of my portfolio is in fixed income earnings of around 12% (9% after tax),” said Fernandes, currently chairman of BSE Administration and Supervision Ltd, a subsidiary of BSE.

He also mentioned that the interest income he receives finances the education of two girls they fostered after a crisis that broke out in Manipur in 2023. They have a portfolio of around ₹2.5 crore, of which nearly 80% is deployed in corporate bonds and the rest in equities.

Samit Singh, founder of Happy Retirement, started planning his retirement around the age of 40 and took the plunge at the age of 50 in 2023. At that time, he said he owned four apartments but has now sold most of them to invest in equities. Spread across mutual funds, direct stocks, and portfolio management services, he now invests 99% of his money in financial assets. He said now he only owns one house and has recently built a farmhouse.

“I decide at the start of every quarter where I should fund for the next quarter,” said Singh, who retired 15 years before the retirement age set by his last employer. He said his corpus is 60 times the money he spends annually.

Don’t overdo equities

When it comes to accumulating a meaningful corpus for retirement, Manish Gunwani, head of equities at Bandhan Mutual Fund, warned people to be careful of equity volatility. “What has happened with Indian equities in the last 20 years might not translate going forward.” 

He gave the example of Japan, which gave nil returns over an extended period.

“The risk today is that people who’ve seen equities for the last 10-15 years have not seen an extended low-return period… I think many people have not seen dreary and boring markets,” said Gunwani.

Vishal Dhawan, a registered investment advisor and the founder of Plan Ahead Wealth Advisors, said unexpected circumstances like a long hospitalization or a child’s education can derail one’s FIRE journey. 

He also said some people may not know what to do with their free time and can end up overspending. “The challenge with having extra time is that often you spend extra money with the time you have.”

On the other hand, Vivek Banka, co-founder of personal advisory fintech platform Goalteller, said that in his platform, an overwhelming majority of retirement goals are unachievable. “What happens is that people give a lot of priority to goals like a car, home, kid’s education, and retirement is unfortunately a low priority.” 

He added that this is based on a sample size of 7,000 to 8,000 users that visited their platform.