FIRE: Financial independence, retire early in Hong Kong
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FIRE: Financial independence, retire early in Hong Kong

18 May
18 May

Surging inflation today can make retirement feel more elusive than before.

So the raging question you may have today is this: just when will you be able to retire?

For those aspiring to escape the clutches of employment as soon as you can, the Financial Independence, Retire Early (FIRE) movement may appeal.

What is FIRE?

FIRE stands for “financial independence, retire early”, and is a lifestyle movement that enables you to retire well before the statutory retirement age, by living frugally and saving aggressively during your working years. The main idea behind FIRE is to save enough money during your working years, to enjoy freedom earlier.

FIRE originated from a book titled Your Money or Your Life by Vicki Robin and Joe Dominguez. The book aims to help to transform readers' relationship with money, and empower them to achieve financial independence.

Over the years, the topic gained widespread popularity and many people around the world started adopting this lifestyle. 

Key aspects of FIRE

In a nutshell, the FIRE movement requires three things: earn more, save more, and invest more. The sooner and more you can do these, the earlier you can retire. 

Earn more

To have sufficient money to retire, you naturally have to amass as much money as possible before retirement. To do so, you can either decrease your expenditure, or increase your current income. There is a limit to how much you can scrimp and save, but if you are willing to stretch your working hours at the early stages of your life, you can bring in additional income streams.

A secondary stream of income, such as a side hustle, can greatly increase how much you earn. If you have skills you can monetise, such as graphic designing, photography, or baking, turning them into a business can largely boost your income. 

Save more

After earning more, it is crucial to also save more. Many FIRE adherents save a whopping 50% to 70% of their income by aggressively cutting expenses. They live a prudent lifestyle and cut unnecessary costs — eating home-cooked meals instead of eating out, taking public transportation instead of owning a car, or forgoing vacations altogether. How draconian you want to be would ultimately depend on you.

After accounting for your emergency fund, the money you saved should be parked away in a high-interest savings account or in a lower-risk cash management solution (such as Endowus Cash Management Model Portfolios) to try to have the savings outpace inflation. If you store your savings in your bank account with measly interest rates, the purchasing power of that sum of money will eventually be eroded by inflation, and the promise of retirement will slowly slip through your fingers.

Invest more

Part of your monthly savings should be channelled into investments, to achieve more returns on your money. Most FIRE devotees choose to invest in index funds or mutual funds over more volatile instruments such as individual stocks or cryptocurrency. A mutual fund is typically well-diversified across industries, which helps to diversify away some investment risks. The monies that will fund your retirement should not be exposed to too much risk, lest you have insufficient funds for your monthly expenditures.

Based on your investment horizon, risk tolerance, and financial goals, find an investment strategy that best suits you. By starting investing and retirement planning early, you can take on more risk and potentially gain more rewards.

Types of FIRE

There are different ways to FIRE to suit different lifestyles. 


LeanFIRE is essentially regular FIRE, but on a tight budget. The goal is to lead a modest lifestyle, spend below your means, and save diligently. You still can cover your essential expenses on LeanFIRE, but affording discretionary expenses might be a stretch. 

LeanFIRE proponents usually lead minimalist lives and are masters of being frugal, cutting costs, and tracking expenses. LeanFIRE followers can likely retire with a smaller amount of savings, since they spend less during retirement.


In the other camp, FatFIRE is for those who want to lead a more comfortable lifestyle in retirement. With FatFIRE, you can enjoy a higher standard of living and afford more indulgent purchases without having to pinch pennies.

Someone may pursue FatFIRE if they want to have more discretionary funds during retirement, or if they want to mitigate any potential financial risk brought about by market volatility. Having extra funds to travel and eat out often is gratifying, but so is having peace of mind that your extra funds saved up would last you comfortably through retirement.

Naturally, FatFIRE would take longer and require more funds saved up at retirement, but it enables the greatest financial flexibility down the line.


BaristFIRE is where you lead a fairly modest lifestyle and take on part-time or freelance work to supplement your income. This allows you to maintain employability should you ever want to rejoin the workforce, while not being chained down by 40+ hour work weeks. Working part-time can also potentially provide you with some company-covered health insurance.

BaristaFIRE is an attractive option to those who want to retire early, but do not want to spend their entire working life saving aggressively for retirement, and do not mind not being fully retired. BaristaFIRE also allows you to explore your passions without having to worry about monetising it.


CoastFIRE is investing sufficiently early and often, then relying on the power of compound interest to cover your retirement expenses so well that you won’t have to save or invest anymore. The earlier you start investing, the more compound interest can work its magic, and the more money you will accumulate at retirement. Essentially, CoastFIRE is about “coasting” to retirement.

FIRE in Hong Kong

While alluring, FIRE can be quite hard to achieve in a expensive city such as Hong Kong, especially if you are not raking in a high income, may require moving to a new city with a lower standard of living. For people who are willing to grow crops and raise livestock in the countryside to be self-sustainable, their costs of living would be even more drastically lowered. 

In Hong Kong, such alternatives are less viable.

Meanwhile, the sandwich generation here has to be financially responsible for both their ageing parents and their own children. This further limits Hong Kongers’ ability to reduce expenses and channel funds to retirement.

Having said that, Hong Kongers have MPF savings on their side when it comes to retirement planning. MPF payouts can supplement your retirement income, and make funding your retirement less daunting.

Of course, that said, the amount of payout you receive would be contingent on your contributions while you are still in the workforce. Also, the earliest you can receive these payouts is when you are 60 — a little too late if you plan to retire before then.

Is FIRE right for you?

As attractive as it might seem, FIRE might not be for everyone. For those with many financial dependents and struggling to save 50% of their monthly income, FIRE may not be practical. For those who derive meaning from their careers, retiring early may not seem like the fairytale everyone else makes it out to be.

FIRE is often misconstrued as quitting your job forever as soon as you can. Perhaps, more emphasis should be placed on the FI portion — financial independence — of FIRE. Achieving financial independence affords you the option to choose whether or not you want to work. It frees you of the need for a corporate pay cheque to cover your living expenses. 

Weighing the pros and cons of the FIRE movement can help you decide if it is right for you. The bottomline is that retirement planning begins earlier than you might think. It all starts with a plan for financial independence through earning, saving, and investing, to ensure peace of mind in your retirement years — whenever that may be.

To get started with Endowus, click here.


Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance or returns. Projected performance or returns is not guaranteed to materialise. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

General risk warnings relating to collective investment schemes

Before making an investment decision, you are reminded to refer to the relevant prospectus/ offering document for specific risk considerations and related fees and charges. Funds are not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested. Some of the funds also involve derivatives. Do not invest in them unless you fully understand and are willing to assume the risks associated with them.

Complex Products

Some of the funds contained in this article are complex products and investors should exercise caution when investing in these products. Though these products have been authorised by the SFC, authorization does not imply official recommendation. SFC authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance.


Whilst Endowus HK Limited (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.  Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endowus HK Limited (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus HK Limited, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

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This article  has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

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