07 October 2019

Quit Like a Millionaire - The FIRE Strategy

Have you read the book "Quit Like a Millionaire" by Kristy Shen and Bryce Leong yet?  They offer a pretty compelling approach to achieve FIRE.

Their broad FIRE strategy is as follows:
  1. Have a global medical insurance policy in place.
  2. Determine investment portfolio needed - i.e. Annual_Expenses x 25.
  3. Invest in low-expense Exchange Traded Funds (ETF) that track indices for a balanced equity-bond portfolio.  
  4. Weigh it more heavily with higher-yielding ETFs for the initial 5 years to reduce the negative impact of retiring in a downturn market - i.e. mitigate against sequence-of-return risk.
  5. Perpetually withdraw at a 4% rate per year during retirement.
  6. Income yielding portfolio provides a Yield Shield - i.e. even if the market tanks, there is still distribution.
  7. Create a Cash Cushion to cover the shortfall in those bad years. Bad years typically did not last beyond two years before the market recovers to previous levels. 5 years is however assumed as a margin of safety. Cash_Cushion = (Annual_Expenses - Annual_Yield) x 5.  In good years, use any surplus to top up the Cash Cushion.

Steps 5 (Yield Shield) and 6 (Cash Cushion) are part of the mitigation strategies against bear markets. Additional options include:
  • Geographical Arbitrage. Live in lower cost-of-living countries till market recovers!
  • Side Hustle. Create alternate streams of income. 
  • Part-Time Work. This needs no explanation.

There's a fair bit of treatment on dealing with taxes due to Canadian and US laws. But taxation in Singapore is much easier without the capital gains tax to worry about. And prevailing tax avoidance means of SRS and CPF schemes are much simpler to understand.

Based on this strategy, they retired with a $1,000,000 portfolio for a lifestyle that requires $40,000 a year.  It turns out they were able to travel around the world, living more months in low-cost countries, yet they still managed to keep their expenses within $40,000 a year.  In the meantime, their portfolio has actually grown to $1,300,000.

I must say their very low annual expenses may seem extreme (minimalistic) as it probably involves not having a house that is a home (perhaps a StoreHub will do?), and being prepared to lead a fairly nomadic lifestyle.

It's also easier for them as they do not have children. In their book, they did address those situations involving children though. Nor are they tied down by having to look after their parents - a trait that is perhaps less common for western cultures.

There are various other strategies to optimise expenses that they described in their book. Have a read. I enjoyed it.

Quit Like a Millionaire - By Millennial Revolution


Jacky said...

hi there - was wondering if u'd be happy to share the book? i can buy it second hand from you if there are no plans for it. :) just trying my luck!

Anonymous said...

You hear of FIRE, but have you heard of FURY?

Let me share something funny. The FIRE movement or idea probably started in the US, where the retirement age is 65 yo. So if you achieved FI and retire before 65, so rightfully you can be considered having "FIREd!"

But this was not to be. In an internet post, a 60 yo man (in US) proclaimed that he FIREd at 60 only to receive comments that he did not as he was already 60 and therefore it was not an "early retirement". In the ensuing exchange of views and opinions, a new term was coined.

This new term was "FURY". It stands for Financially Unfettered, and Retire Young.

Financially Unfettered means you are not tied down by financial commitments and are thus financially free.

So the 60 yo man insisted he "FIREd" and those younger ones did "FURY".

How about those who achieved FI and retired passed the retirement age? What should we called them? I called them "FART"! - Financially Assured, Retire True.

Those folks who achieved FI and retired passed retirement age, FARTed!


Lizardo said...


Am not planning to let go of the book. Haha. Sorry.

Lizardo said...


From FIRE to FURY and FART! Wow. Hah.

Anonymous said...

I read the ebook from the NLB app. It is free. Definitely worth a serious read.

Lizardo said...


Nice! I couldn't even get my NLB app working. Sigh.