7 Types of FI/RE

What is FI/RE?

FI/RE, which stands for Financial Independence/Retire Early, has become a popular movement in recent years. It is a lifestyle in which individuals aim to achieve financial independence at an early age, usually in their 30s or 40s, and retire from traditional work. This movement is based on the idea of saving and investing a significant portion of your income to achieve financial freedom and live life on your own terms.

While the core concept of FI/RE remains the same, there are different approaches and variations of this lifestyle. In this blog post, we will explore 7 different types of FI/RE and how you can choose the one that best suits your financial goals and lifestyle.

1. Traditional FI/RE

The traditional FI/RE approach is the most commonly known and practiced type. It involves saving and investing a large portion of your income, typically 50-70%, in order to achieve financial independence. This approach requires strict budgeting, frugal living, and a high savings rate for a period of 10-15 years.

One of the key principles of traditional FI/RE is the 4% rule, which states that if you withdraw 4% of your invested assets each year, your portfolio should last for at least 30 years. This rule is based on the assumption that your investments will earn an average return of 7% per year and you will withdraw 4% annually to cover your expenses.

2. Lean FI/RE

Lean FI/RE is a more extreme version of traditional FI/RE. It involves saving and investing an even higher percentage of your income, usually 70-80%. This approach requires a minimalist lifestyle, with a focus on reducing expenses to the bare minimum.

While traditional FI/RE aims to achieve financial independence in 10-15 years, lean FI/RE can help you achieve it in just 5-7 years. However, this approach requires a high level of discipline and sacrifice, as you may have to give up on luxuries and live a very simple lifestyle.

3. Barista FI/RE

Barista FI/RE is a more flexible approach to achieving financial independence. It involves saving and investing a portion of your income, usually 25-50%, and working part-time or in a low-stress job to cover your expenses. This approach allows you to retire from traditional work at an early age and have the freedom to pursue your passions and interests.

The term "barista" comes from the idea that you can work in a coffee shop or any other low-stress job that you enjoy, without the pressure of earning a high salary. This approach is ideal for those who want to achieve financial independence but also want to have some form of income and structure in their lives.

4. Slow FI/RE

Slow FI/RE is a more relaxed and gradual approach to achieving financial independence. It involves saving and investing a smaller percentage of your income, usually 10-20%, and taking a longer time to reach financial independence. This approach allows you to enjoy life and spend money on things that bring you joy, without sacrificing your current lifestyle.

Slow FI/RE is a popular choice for those who want to achieve financial independence but are not willing to make drastic changes to their lifestyle or give up on their current job. It also allows for a more balanced approach to saving and investing, without the pressure of achieving financial independence at a young age.

5. Coast FI/RE

Coast FI/RE is an approach that involves front-loading your savings and investments in the early years of your career, and then letting your investments grow over time. This approach allows you to "coast" or take a break from saving and investing later in your career, while still achieving financial independence.

For example, if you save and invest a significant portion of your income in your 20s and 30s, you may be able to retire in your 40s and let your investments grow until your traditional retirement age. This approach is ideal for those who want to enjoy their youth and have the freedom to take a break from work later in life.

6. Geoarbitrage FI/RE

Geoarbitrage FI/RE is a unique approach to achieving financial independence. It involves moving to a location with a lower cost of living, while earning a high salary from a remote job or freelancing. This approach allows you to save and invest a larger portion of your income, as your expenses are significantly reduced.

For example, if you are earning a high salary in a city with a high cost of living, you may be able to save and invest more by moving to a smaller town or a different country with a lower cost of living. This approach can also allow you to travel and experience new cultures while still working towards financial independence.

7. Fat FI/RE

Fat FI/RE is the most luxurious and extravagant type of FI/RE. It involves saving and investing a significant amount of money, usually millions of dollars, in order to achieve financial independence and live a lavish lifestyle. This approach requires a high income and a long time to accumulate enough wealth to retire early.

While traditional FI/RE aims to cover your basic expenses, fat FI/RE allows you to maintain or even increase your current lifestyle. This approach is not for everyone and may require a high-risk investment strategy, but it can provide you with the ultimate financial freedom and luxury.

In Conclusion

FI/RE is a lifestyle that allows you to take control of your finances and live life on your own terms. Whether you choose to follow the traditional approach or one of the variations mentioned above, it is important to find the type of FI/RE that aligns with your goals and values. Remember, achieving financial independence is a journey, and it is important to enjoy the process and find a balance that works for you.

Thank you for reading our blog post on the 7 Types of FI/RE. We hope it has provided you with valuable information and insights on this popular movement. If you have any questions or would like to share your thoughts on FI/RE, please leave a comment below. Stay financially independent and retire early!