Happy Path FIRE - Financial Independence Retire Early

Introduction

FIRE – is a mash-up of two phrases FI – Stands for Financial Independence, RE – Stands for Retire Early.

FIRE is now a movement and more and more people are embracing it. One of the key driver is the desire to live the best life you can without having to participate in the rat race. The internet is riddled with dozens of blogs and forums that are very insightful. I myself have learnt a great deal from them.

One of the problems is that the material that is available out there is spread out into multiple sources and is difficult to filter the content into what is actually quality and what is simply a sales pitch. Another issue is the fact that many of the Blogs and Forums assume that the reader has above average level of understanding of Finance.

Through this course I have tried to solve these two problems.

I have structured the course in such a way that the essential, distilled, practical contents from a vast amount of sources is presented in an easy to understand way. In addition, the course does not assume any prior knowledge of Finance. In fact we literally start from the foundational idea of ‘What is Money?’.

The Course also has spreadsheets that are provided as a takeaway and can be used/modified according to your needs.

The ultimate goal of the course is to help you achieve Financial Independence the Easy, Fast and Safe way.

Disclaimer  - In this course I do not provide a 'Buy this stock, it will make you rich' kind of information but a way to invest for the long term. Using the analogy of buying a Mobile Phone - I do not say buy the iPhone 11 Pro, its the best, rather, I teach you how to choose the right Phone for your needs.

Course Structure and Organization

The course is structured into 5 Sections with Multiple Modules under each section. Each Module is further divided into Chapters.

Section 1 – Spark of FIRE

In this section we will Define and Clarify the meaning of FIRE through answering the key questions of What and Why FIRE. By answering these questions you will be able to know with clarity as to what FIRE is and what it is not.

Section 2 – Building Blocks of FIRE

In this course I do not assume that you have any level of knowledge about Finance. In case you are confident about the basics of Finance then I would recommend you to skip this section. If you think you need to revisit some of the concepts that you do not feel too confident about, then I would recommend you to quickly skim through this Section with a focus on your weak areas.

In case you have no prior knowledge in Finance then I think this section is a prerequisite to be able to understand the contents of the next upcoming sections. Worry not, the contents of this section are not scary academic, I don’t like those either. The good news is that you don’t have to be a Harvard Economist to be able to FIRE.

Module 1 – Economics

In this Module we start off from the very basics of Money. We will address questions like ‘What is Money?’ , ‘How can a piece of paper have so much value?’ etc. We will also learn about interest rates and more importantly the miraculous powers of compound interest rates. We will learn how to think about money in 2-Dimensions rather than in the 1-Dimensional way in which we usually think. This shift in thinking itself is of immense value to you.

We will also understand the intuition behind Inflation and Credit Cycles and what the implications of these to FIRE.

This module has accompanying spreadsheets that can be used to further strengthen your understanding of the concepts presented here.

Module 2 – Capital Markets

Stocks, Shares, Bonds, Funds, ETFs etc. We will understand the foundational basics of all these types of investment choices. I use easy to understand intuitive examples to demystify these seemingly ‘complex’ things also called Financial Instruments.

By the end of this module, you would have a strong foundation in the concepts behind these Instruments.

Module 3 – Statistics

We all are faced with choices in Life. Making choices is hard but making Financial Choices need not be hard. We will learn about the tools and techniques that are used by Big Companies in their Sales and Procurement Offices and apply them to examples that we all face in our everyday life.

We use the worksheets that accompany this Module to make optimal choices on scenarios like a) Two Job Offers but with slightly different Bonus structures b) An opportunity to invest in a rental property vs Investing in a fixed deposit etc.

Module 4 – Accounting

This is the last module in this section and acts as a connecting link between this section and the next section which is the ‘How to’ of FIRE. If achieving FIRE is a journey then this course is like a Map. A Map is only useful if you know your location on the Map. This Module allows you to find your Financial Location on the Map.

We will go through the concepts of Networth, Net Income and Tax. More importantly we will understand the importance of Net Income over Networth and the way these two are related.

Through the accompanying worksheets we will work out how to calculate Networth and Net Incomes.

Section 3 – Starting the FIRE

Module 1 – Step 0

Debt is the Enemy! Before we start off on the journey of FIRE we should get our Debts under control. Not all debts are bad, some can be good like a Mortgage other can be bad like Credit Card debt due to lifestyle choices.

We will learn about Debt in detail and apply the concepts of Compound Interest which we learnt in the previous section to get a realistic view on how debt can become a burden.

We will learn one of the most popular methods of tackling debt called the ‘Snow-ball Method’ using real-life examples.

Module 2 – Step 1

All the stuff we have gone through so far is the prep work before we take our very first step on the journey of FIRE. In this Module you will be able to set your own personal Vision of FIRE by answering personal questions on what FIRE really means to you? How does a post FIRE life really look like? Etc.

Once you have a clear understanding of your personal Vision of FIRE we will use the Vision you developed as an input to derive some key numbers that ultimately give you an estimate on the Income that you need to sustain your post FIRE life. We will then learn about Passive Income.

We will apply strict criteria to check if any given income source is Passive or not. Finally we will learn the simple yet the most important equation of FIRE.

Module 3 – Step 2

In this Module we will further extend our understanding of Passive Income. We will look at the FIRE journey in its entirety i.e the pre-FIRE life, post-FIRE life and beyond. Considering these stages is important to get the calculation right so as to achieve FIRE ‘Early’.

In this Module you will learn the corner-stone of FIRE which is the Trinity study, also known as the 4% Rule. We will understand the intuition behind this rule and also apply it using our worksheets and ‘fact-check’ with few other reputable external public resources.

Module 4 – Step 3

This Module is by-far the most technical that this course would ever get. It is not required to know all the contents of this module to understand how to FIRE. The main purpose of this module is to give you the evidence behind all the claims and suggestions that I have presented in the course so far so that you feel confident about the concepts that you have invested your time and money to learn.

I have used the life-lessons and advice from Gurus like Warren Buffet, Benjamin Graham and Jack Bogle to build the case for the suggested methodology in this course.

Section 4 – Maintaining FIRE

It is important to FIRE but it is more important to stay FIREd. In this Module we will talk about the three components that are needed to maintain FIRE – Risk Management, Portfolio Management and Lifestyle Design.

We will go into the details behind each of the components and understand how they contribute to help you maintain your FIRE. We will look at the practical solutions available to cover each of the components of FIRE as well.

Section 5 – Accelerating FIRE – The Big 3

The basic needs of human beings of Shelter, Transport and Food have not changed for Hundreds of years. What has changed however is the way in which we fulfill these basic needs.

These three needs are called the BIG 3 within the FIRE movement.

In this module we will dive deep into understanding each one of them. For shelter, we address the question of Buying vs Renting. We use a simple yet powerful heuristic model implemented in the worksheet that accompanies this course to help you make a judgement on this difficult decision.

We look into the various aspects of transportation and how transportation choices are closely linked to housing choices. We will explore the pros and cons of Buying a Car.

When it comes to Food, we discuss the benefit of how simple acts like meal-prep can help you accumulate wealth faster.

This module includes an additional item which is a rapidly growing phenomenon ‘ Subscriptions’. We will use worksheets to reverse engineer the subscription models developed by Marketing people and put them into the real context so that you can make informed choices when it comes to subscriptions.

2022 Jan Update

Crypto in FIRE

In this module update you will learn about Why should you include Crypto in your FIRE portfolio? Which Crypto to choose among the thousands of choices out there? You will also learn about the best practices and the common mistakes when it comes to buying and storing crypto.

This module concludes with the structuring of your FIRE portfolio so that it has exposure to Crypto.