One big problem with FIRE is making the switch from earning/accumulating to enjoying/spending in a fairly sudden manner. What habits will I have developed over say 20 years of focus on earning that will allow me to flip a switch and start relaxing? Will I have been invested in my community, friends, and family enough to enjoy those relationships? What is meaningful contribution to society have I made- either through my work or activities beyond work? Will that continue, or do I have to start that up from zero at mid-life?
Its a very good point. I think the things one prioritizes in one phase are going to have to change to a fairly substantial extent, especially if you're extreme in some of the ways I mentioned.
Regarding the index fund point, there is a fair amount of debate around the topic: https://youtu.be/qy7SlWI6PlQ (another RR episode, but I'm not going to pretend like I understand what they're talking about lol).
But I lean on the side of them always generally being a good investment based on the concept that the stock market is pretty efficient and if there's a profit to be made someone will jump on the opportunity to seize it, which will bring the market back into alignment (which will be good for index investors too). Index investors might even help the market absorb shocks by preventing money from being pulled out too quickly in downturns (since index investors are generally passive). I think this is the video I got the idea from: https://youtu.be/ltuqXTwWsZ8 (but he also has a video on why index funds are bad, but it's not really the concept that's bad but certain practices that go along with it in it's current implementation: https://youtu.be/mqIHa6URUPk)
But I don't mean to nitpick too much. The first RR episode I linked to mentions that FIRE became popular during a time when the market was doing really well and people maybe shouldn't expect those returns into the future (which, if I understood correctly, is your general point).
I certainly think there are *worse* ways to invest, and I understand index funds have done well over a long period of time. It's just hard to imagine that they might *change* how these dynamics work as they become a greater and greater part of the capital in the market. I also think they are probably too susceptible to trends (I think many tech companies are dramatically overvalued at the moment), because of the way weighting works.
It certainly makes sens that *that* would have been when it took off. I certainly think it's interesting to consider how many people exit when things go down!
The other thing to consider is that it's not a one size fits all situation. Not everyone wants to live their life the same way. While some people might be happy enjoying and spending more in the younger years at the expense of working later in life or having a more frugal retirement - there is nothing wrong with that. As there is nothing wrong going full FIRE if that is what the person wants. We are not all wired the same (thankfully) and enjoy and aspire for different things. The important part is understanding the option available and the pros and cons of different strategies.
A nice summary Reece. I've had very similar FIRE-curious journey, and also discovered Die With Zero recently. A turning point for me was having a job with flexible part time hours - it's made me realise I can cash in hypothetical future retirement bliss for more free time right now, when kids are young, fitness is better, my standards are less bougie than they might be later in life).
I think thats a pretty reasonable move. Some FIRE bloggers almost sound like they believe suffering is necessary to feel financially independent! I also think the point about being able to have more time when kids are young is huge!
One big problem with FIRE is making the switch from earning/accumulating to enjoying/spending in a fairly sudden manner. What habits will I have developed over say 20 years of focus on earning that will allow me to flip a switch and start relaxing? Will I have been invested in my community, friends, and family enough to enjoy those relationships? What is meaningful contribution to society have I made- either through my work or activities beyond work? Will that continue, or do I have to start that up from zero at mid-life?
Its a very good point. I think the things one prioritizes in one phase are going to have to change to a fairly substantial extent, especially if you're extreme in some of the ways I mentioned.
It's funny seeing this after just listening to the Rational Reminder episode about their concerns with FIRE: https://youtu.be/Kg8R6ovgOb8?si=Yv-nQTTudgDAoyEF&t=3290 (the more concise version here: https://youtu.be/pGgpGP3swmE?si=bEXtooO4FnmzGpk7&t=803). There must be something in that Canadian water :P.
Regarding the index fund point, there is a fair amount of debate around the topic: https://youtu.be/qy7SlWI6PlQ (another RR episode, but I'm not going to pretend like I understand what they're talking about lol).
But I lean on the side of them always generally being a good investment based on the concept that the stock market is pretty efficient and if there's a profit to be made someone will jump on the opportunity to seize it, which will bring the market back into alignment (which will be good for index investors too). Index investors might even help the market absorb shocks by preventing money from being pulled out too quickly in downturns (since index investors are generally passive). I think this is the video I got the idea from: https://youtu.be/ltuqXTwWsZ8 (but he also has a video on why index funds are bad, but it's not really the concept that's bad but certain practices that go along with it in it's current implementation: https://youtu.be/mqIHa6URUPk)
But I don't mean to nitpick too much. The first RR episode I linked to mentions that FIRE became popular during a time when the market was doing really well and people maybe shouldn't expect those returns into the future (which, if I understood correctly, is your general point).
Funny to find someone else who listens to RR.
I certainly think there are *worse* ways to invest, and I understand index funds have done well over a long period of time. It's just hard to imagine that they might *change* how these dynamics work as they become a greater and greater part of the capital in the market. I also think they are probably too susceptible to trends (I think many tech companies are dramatically overvalued at the moment), because of the way weighting works.
It certainly makes sens that *that* would have been when it took off. I certainly think it's interesting to consider how many people exit when things go down!
The other thing to consider is that it's not a one size fits all situation. Not everyone wants to live their life the same way. While some people might be happy enjoying and spending more in the younger years at the expense of working later in life or having a more frugal retirement - there is nothing wrong with that. As there is nothing wrong going full FIRE if that is what the person wants. We are not all wired the same (thankfully) and enjoy and aspire for different things. The important part is understanding the option available and the pros and cons of different strategies.
For sure, I really think those promoting the lifestyle ought to be a little less dogmatic and talk about how all of this lies on a spectrum.
A nice summary Reece. I've had very similar FIRE-curious journey, and also discovered Die With Zero recently. A turning point for me was having a job with flexible part time hours - it's made me realise I can cash in hypothetical future retirement bliss for more free time right now, when kids are young, fitness is better, my standards are less bougie than they might be later in life).
I think thats a pretty reasonable move. Some FIRE bloggers almost sound like they believe suffering is necessary to feel financially independent! I also think the point about being able to have more time when kids are young is huge!