I wonder if you know you’ve ‘made it’ when your income from personal assets funds your luxurious lifestyle and supports your future investments?
They call it FIRE – Financial Independence / Retiring Early.
Achieving FIRE is about re-investing returns, calculated risks, diversification and delayed gratification.
When your income flows from a range of sources your lifestyle becomes less exposed to the volatility of any single asset. A steady cashflow during hard times also puts you in prime position to snap up opportunities when others are cutting their losses.
FIRE is what I want, now I need to work out how to get it. So as I have creatively indicated with the use of this stock photograph of a chessboard – it is time to think of a strategy.
I mentioned in my last post that I feel like I’m already behind the curve and wish I’d started doing this 5 years ago, but that’s no reason for me to rush things now.
To kick things off I maxed out my company pension contributions and have opened an Investment ISA (Stocks & Shares ISA). I dropped a cheeky £1,000 into a portfolio of three managed funds which are targeted at medium risk growth. The plan is to top up £200/£250 per month for at least 5 years.
Right now I’ve got another £2,000 to work with, I’m thinking of this as my shorter term investment capital. Hopefully I’ll be able to keep topping this up as well as the ISA, but I think the ISA is the priority – certainly at the moment.
I came across a fascinating blog post the other day. I’d never delved so far into my ESTJ personality type as I did when I read this, it felt like the writer knew me! If you’re not familiar with Myers Briggs personality types then you probably don’t know what I’m going on about; but I’m an ESTJ and we ESTJ’s don’t half love a good list… the lack of a plan makes us seriously uncomfortable!
Here are the projects I want to start in the next few weeks:
- Outgoings review (that includes you too Mrs Payslip Pauper)
- Goal setting – how will I know I’ve caught FIRE?
- Goal progress, current/projected net worth on an Excel dashboard (the J in ESTJ tells you I’m partial to a nice graph)
- Re-balance finances – we’re overpaying £150 a month on the mortgage, just because… is it worth it or can I be smarter with that £150?
- Research other investments – ETF’s, P2P Lending, Real Estate, etc(?)
- Compile a reading list (just finished Rich Dad, Poor Dad)
I’m a terrible overthinker and there’s loads more going on in my head but for now I’m going to leave it there and focus on these six. I’ve just started a ~6 month PRINCE2 online course and I’m taking a big career step up starting a new job at a different company in September. That’s going to take a lot of my focus so I’m really going to try and make some headway into this list over the next seven weeks.
What other investment methods should I research?
What’s your Myers Briggs personality type?
Can you recommend any books for my reading list?
– The Payslip Pauper