For multi-millionaire and best-selling author Ramit Sethi, the moment he realised he didn't have to work anymore was pivotal. At 42, Sethi's investments were generating far more income than his expenses. In a recent YouTube video, the host of Netflix's How To Get Rich explained how the FIRE (Financial Independence Retire Early) movement combines long-established financial concepts developed by experts.
Sethi believes that financial independence is achieved when you reach the "crossover point," where your investments produce enough income to cover expenses. This idea of "money making money" was first introduced by Vicky Robin and Joe Dominguez in their influential book Your Money or Your Life. Once you hit this point, Sethi says you have the freedom to work—or not—because your investments can sustain your lifestyle.
Together, these concepts form the foundation of the FIRE movement, which can be divided into two main branches: Lean FIRE and Fat FIRE. Lean FIRE vs. Fat FIRE Lean FIRE is for those content with living on a modest $30,000-$50,000 per year, adopting a minimalist lifestyle and rejecting materialism.
On the other hand, Fat FIRE appeals to individuals who aim for a more luxurious lifestyle sustained by their investment returns. Both paths ultimately lead to financial independence, but spending and lifestyle differ drastically. The Flaws in the FIRE Movement While the FIRE movement has helped boost Americans' savings rates, Sethi highlights some inherent flaws.
One .