Do you find the prospect of working 9 to 5 for the next 40 years monotonous and un-feasible? Do you wish to travel and explore without having to worry about attending your next corporate meeting? It’s time you start thinking about FIRE!

FIRE stands for Financial Independence, Retire Early; and it is a movement that has gained a lot of interest over the past few years, especially among our generation. The goal is to accumulate a retirement portfolio large enough to safely withdraw small amounts from to cover daily expenses.

In short, Financial Independence is freedom from having to worry about money to sustain your normal lifestyle and Retire Early is freedom from having to worry about employment to sustain your lifestyle forever. The main catalysts behind FIRE-ing earlier than the suggested age of 60 are financial awareness and frugality. In this blog, I’ll go over how can you plan your FIRE journey, and what can you do to FIRE earlier.

Is FIRE for me?

There is a general misconception that people think FIRE is only for those who pull in a substantial income. This is not always true; the rule of thumb is to maximize your investments and minimize expenses. A person earning 15 LPA, spending only 5 LPA could FIRE earlier than a person earning 40 LPA, spending 20 LPA if the right investment choices are made.

Rather than questioning whether you can FIRE based on your income, here are a few questions that you can ask yourself to know if FIRE is for you:

  • Want to find your career of choice without worrying about the pay?
  • Not a fan of following schedules and deadlines that others impose on you?
  • Afraid of not doing well at your job?
  • Always wanted to travel and explore the world?
  • Don’t mind cutting back on expenses, with the goal of getting to retire early?
  • Not sure how would you utilize your “free” time once you FIRE? Start by easing yourself into the retirement life by switching to a part-time job – without worrying about the pay, since you can already afford your retirement! 🙂

How to know if FIRE is not for you?

  • Can’t live frugally, and don’t want to cut back on your expenses?
  • Don’t mind working 9-5, and find a sense of discipline in working? (it’s normal!)
  • Too risk averse to be involved in the market?

Types of FIRE

  • Fat FIRE – The most aggressive of all FIREs. You are looking to maximize your savings, on an above average income so as to ensure that you don’t have to cut back on the standard of living after FIRE.
  • Lean FIRE –  If you’re not into fancy materialistic possessions and your expenses are considerably below average. You’re on track for a Lean FIRE.
  • Barista FIRE – If you’re not too keen on lowering your living standards pre-FIRE, Barista FIRE is for you. You don’t mind having a part-time job along side your investments to help cover your expenses.

I am aiming towards a Barista FIRE as I like to have my investments support the expenses of my current standard of living, but I also do not mind having a part time job or a side hustle to ensure that I would have “enough” if I ever decide to splurge (and to also keep myself busy).

How much do you need to FIRE, today?

The calculations are simple, you need to earn enough from your investments to sustain your daily expenses. I will demonstrate the calculation with a semi-realistic expense for a middle-class lifestyle. However, the calculations can be altered as per your expenses.

Let’s say you have an all inclusive expense of 50k INR per month, adding a buffer of 15k INR for miscellaneous expenses that may turn up un-announced. That’s a total of 65k INR per month, or 7.8L INR per year. To achieve this amount as investment income, assuming a risk free return of 5% (achievable via Fixed Deposits), we need an investment of 1.56 crores.

Is that enough for us to be financially independent? Not yet. We haven’t accounted for taxes. Assuming this would be the only income, we will be taxed on the 7.8L earned every year –  that’s 71,240 in taxes every year. Thus, we would need our investment income to be roughly 8.7L per year pre-taxes. This would mean that our investment size must be 1.74 crores.

Now, is that enough? Not yet! We need to be able to sustain ourselves for a long time, and the requirement of 8.7L would not remain the same in even the next 5 years due to inflation. Here’s a table that shows our yearly expense requirement each year assuming an inflation rate of 5%:

Year Expenses Delta
2022 870000
2023 913500.00 43500.00
2024 959175.00 45675.00
2025 1007133.75 47958.75
2026 1057490.44 50356.69
2027 1110364.96 52874.52
2028 1165883.21 55518.25
2029 1224177.37 58294.16
2030 1285386.24 61208.87
2031 1349655.55 64269.31
2032 1417138.33 67482.78

What does that mean for us, and how much more do we need to accommodate inflation?

Considering the inflation rate to be 5%, with a fixed deposit giving us exactly 5% returns, we are not beating inflation. Instead, we’re using the 5% returns as our expenses and effectively depleting our money in the long run.

There are two possible pathways to accommodate inflation in our calculation of how much do we really need to FIRE:

  1. Go for riskier investments that give more than 5% annual returns – Assuming the same investment of 1.74 crores, at a 10% return, we would get 17.4 lakh per annum.
  2. Increase the investment size, so that the leftover amount (after expenses) can be re-invested at the same rate. If we double our investment size to 3.48 crores, at a 5% rate of return, we would get 17.4 lakh per annum.

Evaluating both the options , it’s obviously safer to go with option #2, as we can’t always rely on the market to give us 10% returns. Some years may end up in negative returns, while some may end up giving more than 10% returns. Due to the dependence on the market performance, it’s ideal to go with a Fixed Deposit. Some other options for fixed returns are bonds, or stocks that offer dividends. However, they are susceptible to capital appreciation/depreciation – and must be evaluated accordingly.

Elaborating on the 2nd option: Considering that our expenses for the first year are 8.7 lakhs, we’re left with another 8.7 lakhs. We can re-invest this amount at 5% to cover the inflation delta (43,500 INR) we would need for the next year’s expenses. But, if we do the calculation further, in 42 years, we would end up with no left-over money to cover our expenses. Thus, the calculations are slightly more complex than this as our inflation delta increases at a faster rate than our investment income does. To make your life easier, I’ve made a FREE calculator ( that figures out the expected year, and the amount you need to retire with keeping into consideration factors like:

  • Taxes on your Investment Income post FIRE (according to the Indian Tax System).
  • Inflation Adjustment on your expenses.
  • Taxes on your Income pre FIRE.

The calculator assumes the average life expectancy of 73 years, and considers that you will be left with close to no money around that age. So yes, it could definitely use some work. But it’s good enough of an indicator of how much you need at the least!

How can we FIRE early?


The journey always starts small and gradually accumulates our minute actions into larger results. A simple rule to live by is to fulfill your needs, and question your wants/desires. It may be difficult to start off with to bring in a change of thought process. But as you start questioning yourself before making a purchase for your wants, you will eventually limit yourself in doing so without any regrets.

A possible way to bring a shift to your thinking would be to correlate each purchase (of wants/desires) as a time investment. Here’s a scenario:

Let’s say you make 1 lakh INR per month. Assuming there are 22 working days in a month, you make roughly 4545 INR per working day. You now decide to upgrade your phone to the latest model which costs 60k INR. A simple correlation would be that you have to work for 13.2 days to make back what you will be spending. This puts things into perspective, and could result in you questioning your choices!

However, this is a case of wants/desires. If you now wanted to buy a phone with a purpose of making better quality videos for your YouTube channel, you would definitely want to go for something with a good camera, so you can’t go for the lower range models, which is fair.

It is important to focus on cutting expenses, as that is much more powerful than increasing your income. This is because every permanent drop in your spending has a double effect:

  • It increases the amount of money you have left over to invest each month.
  • It permanently decreases the amount you’ll need every month for the rest of your life.

Earn More

It is also important to focus on maximizing active income streams. If you have time remaining in your day – with the recent work from home culture shift, this is very common – try looking for part time jobs, freelance, make a blog/YouTube channel or start a Dropshipping business. Focus on maximizing your time utilization and minimizing the time you spend on Netflix, Twitch and other distractions!

This would be a short term grind, but will definitely pay off by helping you reach your financial goals earlier.


FIRE may seem like an extreme grind for some individuals, however, there is plenty for everyone to learn from the principles of the movement that can help people save for their own retirement, regardless of whether they plan to retire early, or at the expected age.

Even though FIRE may not be everyone’s cup of tea; Financial Independence practices should be taken into consideration as I’m sure Financial freedom is something that no one would say no to. Keep an eye out on your expenses, invest as much as you can every month, and focus on participating in the market, rather than beating the market!



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