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How to be financially independent by the age of 50

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By startdig Wealth Planning

FIRE stands for Financial Independence Retire Early.

One of the first people to write about it was the financial author, Andrew Hallam.

Andrew elaborates on his introduction to this theory, “I met somebody who was a mechanic, who was a self-made millionaire. He said to me, ‘if you want to become a teacher, you’re not going to have a high salary, but if you learn to manage your money effectively, you can build wealth even on a middle class income’. So, because there’s a lazy bone in all of us – and I think especially with me – I really took to that. I thought: yeah, I’ll get money to work for me, so that I work less for money”.

Andrew also attributes his financial security to the fact that he doesn’t have children, however he stresses that it is still possible to those who really want it, to be financially independent by 50.

So, what did that mechanic Andrew mentioned teach him?

“What he taught me was: one – the power of compound interest; and if I started at an early age, I could invest less than most people over my investment lifetime but then end up with more money. So that was the most appealing thing. That and the fact that, if I wanted to build wealth – especially on the income that I was going to have, which would have been a middle-class salary, I had to ignore the temptations that so many other people fall victim to. Which are the materialistic urges to want to chase the latest phone, to want to chase buying new cars, when really – as he said to me – a new car is the biggest wealth destroyer you can buy”.

Early financial independence isn’t for everyone. Most of us are happy to reach it rather later than Andrew did. But there are valuable lessons that we can all learn from his achievement.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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