How much is enough to retire (your leanFIRE or coastFIRE number)

CoastFIRE and leanFIRE are very different in nature, and I’ll cover them separately, and then you decide which camp you fall under.

LeanFIRE

This financial independence retire early approach takes a “leaner” way of lifestyle to save enough money and retire as soon as possible. Mostly, you will choose to live very, very minimally and save/invest the rest, and your retirement will be more frugal overall. This gets you to retire earlier than most (late 20s or 30s) BUT you trade-off with a smaller investment portfolio due to less time involved.

LeanFIRE approach may mean that the passive income from your portfolio may not allow you lavish lifestyle (so no expensive cars / holidays / spendings) ie retire earlier frugal lifestyle.

The average number to calculate leanFIRE is to take your annual expenses and multiply that by 25.

So if your monthly spend is $3000, then annually you spend $3000 x 12 = $36,000. 25x of this will be $900,000. Assuming you

  • save and invest $1,000 a month into 6% returns per year stable assets
  • reinvest that 6% every year

You can reach your target $900,000 in 28.5 years.

This is a common strategy for people who are wired to retire earlier and/or have overall lower spending expenses than  other households for example people who have no kids / single, senior citizens, living in tiny homes / vans etc.

LeanFIRE is generally about being willing to live simpler in retirement, and people who follow this approach usually try to live on less than $50,000 per year or lesser. They would be okay / willing to

  • move to a lower cost of living area
  • spend less on travel or experiences
  • cut back or simplify food and transport expenses

CoastFIRE

Financial independence, retiring early can be very tough for young people to save a large chunk of money upfront, especially when cost of living is higher now no matter where you go. LeanFIRE can take many, many years to achieve (even the example above is a good 28.5 years). CoastFIRE on the other hand, is another alternative.

The difference between coastFIRE and normal FIRE is that with normal, traditional fire, you have more than enough passive income from your passive income investments to cover your daily expenses. You’re “there”. CoastFIRE is more about the beginning or earlier journey of FIRE, and you focus on

Frontloading your coastFIRE number which will let you achieve FIRE in X years.

I gave an earlier coastFIRE example with Jake here.

The two top principles of coastFIRE are:

  1. you will still need to work to cover the basic living expenses BUT
  2. you no longer have to worry about saving money and investing for retirement

Because you frontload the coastFIRE investment amount as early as possible AND let compounded investment return work hard for you over a period of time (usually the time you choose to retire).

Example, say 25-year old Jane has saved $100,000 and wants to retire at 55. Assuming Jane doesn’t spend much, around $2,800 a month (total $33,600 per year) and Jane’s money grows at 6% per year, she will have $574,349.12 by 55. 6% of $574,349 is $34,460.94. Jane would have achieved her coastFIRE number at age 25.

If I’m 35 want coastFIRE and retire with $1 million at 65, and say I’ve $200,000 to invest. Assuming annual returns of 6%, with the 6% reinvested over 40 years, I would have achieved it

within 28 years, by then I’ll be 63 years old. 2 years early.

Thing about this coastFIRE approach is that I will still have to work to cover living expenses as my investment work its compounding over time, but I will be on point for retirement without needing to add any extra savings – this is what it means to

coast into retirement

Of course, knowing myself, I will want more buffer, so I will top up / add in additional monies over the years to grow the principle more, and this will lead to

  • shaving off the years to hit $1M but more importantly
  • I’d have a larger (and more defensive) amount above $1M for buffers

What I like about coastFIRE is that it takes a lot of mental stress away from the get-go, and I can choose to work simpler or less hours at my work, knowing and having confidence that I can retire at X amount and years which is working for me. This is the biggest benefit in my opinion. To add on to that, secondary benefits are less sacrifices upfront:

  • no longer have to be stressed by counting dollars for vacations or big spends or small spends
  • dont have to choosing higher yielding projects with a lot more stress or tolerate rubbish people at work
  • even if I lose my job, I can choose a simple low paying job to pay the daily expenses and I’ll “still be okay”

This allows me to enjoy the journey of life more.

Why financial independence or retire early at all?

Someone asked in a group chat just the other day when I was sharing about passive income, retiring early and financial independence, and my immediate response in my head was: why not?

Why not have passive income? Why not be able to retire early?

I dont get tired of speaking about this at all, and I’ve been sharing and saying this for years now, since 2009. Passive income is still relevant today, perhaps even moreso than ever before.

Especially

  • during 2020 – 2022 during the COVID lockdowns and fears and lots of job losses and changes
  • 2022’s Russian’s parasitic, invasive war of Ukraine
  • ?future

Passive income isn’t complex. It’s a necessity of life.

With so many different case uses and benefits, because everyone’s preferences and needs are different right? Me, I will work less and spend more time with family and pursuing / doing projects that matter to me including more time in nigelchua.com and video making. Maybe hire personal trainers and nutritionists to improve my and family health.

For others it may be

  • retiring their partners or parents
  • spending time with sick or elderly parents
  • having (more) kids
  • being able to NOT put down their sick pets
  • travel the world
  • maybe move to another part of the world (vanlife, anyone?)
  • volunteer
  • finally have the mental bandwidth to meet people, date and maybe even marry
  • focus on your first love, be it acting, drawing, writing, baking – whatever

There’s so many more examples of what one can do with passive income and retiring earlier.

Surely there’s downsides to passive income?

Of course there’s some downsides, such as

  • maybe you’d start to have people sticking to you cos you have money (and they want money from you)
  • maybe you’d get bored
  • maybe…traveling and the beach was boring after all

Who knows? You then have the luxury of time to explore and find out what you dislike, what you like and want more of, which is still a net positive in my books.

And that what keeps me going and sharing this message again and again to those who will hear.

Rich dad’s #1 lesson that made me $1,000,000+ (will make you rich)

I stumbled upon Robert Kiyosaki’s Rich Dad Poor Dad book in my 2nd year of my occupational therapy diploma studies, when I was in Ratna’s place doing group work or some assignment. Somehow, I just saw it and it stood out to me. Without thinking, I immediately blurted out to her if I could borrow it from her, and she graciously said okay.

That was the beginning of a money change in my life.

You see, I grew up in a poor to middle class family, and I dont tire of telling this story. I have very loving parents and siblings, and we love each other. But I remember growing up seeing my parents fight over money, there was so much money stresses and strain. My dad would loan money to pay for stuff, but we manage by. There was not much money talks, so watching them was sort of front-row seats of my learning.

In school, I realized I too started borrowing money from my friends whenever the month-end was too far away, and that happened almost every month (thanks Pei Fen and Julia) for helping me all those years. I was embarrassed to have done that, but I realized it’s something

Monkey see monkey do

Rich dad’s #1 lesson that changed my life

It’s just “an” idea, that assets put money into my pocket or bank account. So, the natural conclusion is that I need more and more assets to put in more and more money into my pockets. The simplicity worked for my simple brain, especially when financial intelligence was a new concept to me.

Robert then expanded that point, on how he went into entrepreneurship because he’s not super smart to become a doctor (I could relate to that), and not talented enough to become a highly paid actor or entertainer (well…dang, me too). So it’s entrepreneurship for me too, which led me to start my entrepreneurship journey.

First, as a freelancer, then as an agency owner, then a clinic, then a clinic chain.

This allowed me to

Earn more

Earning more has always been helpful.

It’s a stark difference of earning $2000/month (and taking home $1700+) as opposed to my first month as freelancer where I took home $4800. I will NEVER forget that feeling of amazement, disbelief, and this sense of hope. I knew that if I could do it once, I can do it again and again.

Then I leveled up, instead of just earning $5K/month freelancing as a freelance therapist, what happened if we opened our own clinic? We didnt have the skills or knowhow, but we were willing to learn, and then we started earning $10-20K+/month, with a clinic. Then multiplied again when we had people joining us. Then multiplied again when we have 2, 3…and more clinics.

Investing

Robert was (still is) very big into

  • real estate
  • teaching and intellectual property books / boardgames
  • precious metals such as silver and gold
  • and more recently, cryptocurrency

He taught me broadly about the idea of investing, and after we started earning more, we started to look at what and how we can do more when it comes to investing and working our hard earned monies even harder. This is a skill that I’m improving and honing everyday, on top of running and growing my businesses.

I’ve since gone for other courses and books and courses, but I wont forget this very first book. I still pick it up once in a while, and it’s a great gift to give.

The man who called my preferred wine apple juice

Brown Brothers White Wine - Moscato | NTUC FairPrice

I’m kinda bad at alcohol, so I cant really drink.

One day, during a church gathering-celebration, I brought my favorite bottle of wine to share. When Eddie tasted it, he laughed and called it Ribena and apple juice. It both embarrassed and tickled me so, so, so much.

In a good way.

When we were closer, back in the early 2010s, he shared stories about how he grew up so poor, he had to start working from a young age to support himself and the family. It was hard and hard, but it was what it was. Until he met his wife, they got married and kids, and he continued working.

Later, he started his own company in his 50s which I think is called ET (Eddie Tan) Marine Engineering. And it was fairly successful from the getgo from his previous networks.

He’s  who I will call the cool uncle – often cool, steady, and ever ready to help and chat.

Unfortunately, from the busyness of life, we all had our own things going on, own struggles and wins, we drifted apart. I reached out a couple of times, but it seems like it was hard to breakthrough. Maybe it’s guilt, pride, busyness or just general awkwardness to broach and reconnect.

A shame, really.

Eddie passed away in 2021 amidst the pandemic. He fought a good fight against an aggressive cancer, and the Eddie I know, is a fighter. He doesn’t go down without a fight at all.

A reminder that one of the key benefits of the passive income lifestyle is to be less bogged down with busyness of life and work; freeing up time to spend time with projects, causes and people you care about. Or at least, have space for randomness and serendipity, which matters to me. I find that if I’m too busy chasing, I miss the random variance that brings spice and colors to my life.

Eddie, I miss you. Your laughters were one of the most disarmingly good. See you in heaven later.

PS: will be buying a bottle of Moscato later to sip on.

Don’t Settle And Don’t Sell Yourself Short

Silver lining of COVID-19 is that it shook everything and turned many things upside down.

I hate that people suffered health-wise, and many died due to this pandemic. There is nothing that can change this fact and pain.

On the small upside, this pandemic forced to change.

We had to stay home, stay safe, and not surprisingly, we had many downtimes.

It’s in the silence of the downtime that we can usually hear ourselves and our thoughts, and I think the common question is that “is this it?”

As in, is this the kind of life we want?

Comfortable, Peaceful Living?

I live in peaceful, safe and stable Singapore.

Women and children can walk outside at 3 AM in the morning and they’d be 99.9% safe.

I run a business called Phoenix Rehab, a physical therapy, hand therapy , TCM and massage business.

I sleep well at night (other than my newborn waking me up) – I’m alive.

I thought this was okay.

I thought it was okay to be living a quiet-ish life where I

  • mind my own business (and dont bother others)
  • have food and water
  • and enough, money’s okay (we’re doing not bad as physical therapists)

And that running my business would be enough.

But i’m starting to ask myself if i’m shortchanging myself.

As in, am I wasting my own time?

My abilities?

Am I settling?

In 2022, I’m 40 years old.

As I mentioned earlier, for a hand therapist with a physio wife, we did (and do) pretty okay with growing a business, selling our first business for 7-figures.

My wife then went on to start a business and I even got an 18 month sabbatical before I decided to help her out.

We’ve a wonderful team and business as well as 3 beautiful kids.

I’m grateful but also uncertain

Like there’s a nagging sensation or sense…

like a spider-sense eh

As I started off earlier, one of the key benefits of the pandemic is that it turned almost everything on its head. In 2020, Singapore goverment got most of us to stay home for a good 1-2ish months.

It was uncertain times, and many of my competitors and people were very vocal about how dissatisfied they were yada yada…but I felt at home because of my 18 months sabbatical, and I could be more with my kids and wife.

I like(d) it.

The downtime gave me a reminder and question if the life we’ve been living is the one we want to keep doing.

Hey it’s not just me, it’s many.

Like many others, I too question.

It seems that it’s a movement where people are taking action en masse, see some examples:

We’re talking millions of people quitting jobs as they pivot.

No longer willing to settle, or maybe they’re just tired of lockdowns.

Then again, there are many bullshit jobs out there –

bullshit jobs are jobs you dont care for that you do to pay the bills…the kind of jobs where you dread Mondays and look forward for end of day on Fridays.

Bullshit jobs…have bad negative effects.

The highest problem is that they make you sad. They make people sad…but ironically, many people will do their level best to NOT lose their bullshit jobs.

Why?

Cos it pays the bills, and it’s pretty easy to “coast”. It’s easier in big companies where there are many layers of people that support other layers of people and more.

Ew, typing that was painful reminder as to why I stay an entrepreneur, cos I’ve met many bullshit individuals in corporates and even competitors.

If you love your job, you’re the top 15% lucky ones.

According to Gallup’s State of The Workplace Report, 85% of Americans are extremely disengaged at work and 81% are actively looking for new jobs.

85% and in my book, that’s majority of people have bullshit jobs they dislike or gasp, hate.

And that’s where the pandemic are shaking things up.

People are quitting bullshit jobs to find one that either

  • makes more money for them
  • provides more flexibility
  • more meaningful

There are more taking up entrepreneurship too:

A whopping 5.4 million new businesses registered in 2021!

Bloody good if you ask me – it’s easier and easier in the history of mankind to launch your own business and make money on your own terms. It takes lots of passion, gusto, and work.

Problem: It’s easy to hide.

I see this everywhere I go.

In fact, I’ve also faced individuals and corporations who daringly do blatantly wrong things…because they likely wont get caught. These guys and gals? Fuck them, I dont care.

But those I care about, the everyday people, who reach out and tell me that they feel stuck.

I reach back and tell them that they usually know it in their sense and intuition.

And then they write back that they’re scared (behind multiple layers of fears and what-ifs).

I empathize.

I’ve been there, and in some levels, I am still there.

I’ve been stuck many times.

Sometimes it takes months for me to overcome, sometimes its longer for it to “click” or for me to just give it a go.

Let me tell you something about intuition – your intuition is one of the most powerful sensors and inner compasses that you can have. The more I use it and hone it and trust it, the better and better it becomes.

…and the more it works for me.

Recently my intuition has been saying that I’ve been playing and thinking too small.

That I’ve been playing it “safe”.

I’m paying attention and putting my senses to writing, on paper.

One thing I realize is that my intuition is pretty spot on, and the more I resist it, the worse I usually get.

Upset I mean.

No, upset is not the word.

It’s really like tingling spider-senses which gets stronger and stronger, and eventually I cannot ignore it.

And when I do it, it’s like

Why did I take so long to do that?

Usually it leads to growth

Why I ignore these “spider-sense tingling” is because there is change and effort…which means it can lead to

  • failure
  • confrontations
  • changes
  • growth
  • insight

I like growing and learning – this is so “sexy” on paper.

Just that real learning and growth sometimes the process is painful and annoying, ugh.

I look back at my 20 year old self and my Lord, I wouldn’t recognize him.

And neither would he recognize me – I was a sucky, lumpy idiot back then.

Less of an idiot today, and I’ve grown so much too.

It’s easy to settle…but it’s costly

Coasting and settling is easy…but it’s very very costly.

Not in terms of just money (which we can count easily), but moreso in terms of opportunity cost.

No one lies in their death bed asking themselves:

I wished I earn $2M more, ah I could die better now.

Of course not.

On our deathbeds, I imagine we regret all the opportunities we do not take.

AKA settling.

We settle cos we’re scared.

We settle when we dont know what else to do.

We settle when it’s just easier to stay status quo or do nothing as compared to thinking hard and doing and failing again and again to figure out and course correct what we actually want to do.

When you’re doing well, everyone will tell you to keep doing what you’re doing.

You see, capitalism runs on that – doing X gets Y, and if we want more Y, do more X. Model that, and do it again and again. Squeeze processes and things and stuff and sometimes people.

Rinse and repeat.

Knowing yourself is the beginning.

I know I dont need $1B.

Heck, I dont even aim for $100M.

I dont even want to run a big company, or take a company public, or become a celebrity or politician.

All I want is…to be free, healthy and happy.

And that remains the same.

Alright back to my intuition: I’m starting to sense that I am on the cusp of something.

That I cannot play small or safe any more.

Like I need to go deeper, double or triple down.

Stop wasting time.

Make a bigger impact as I live and leave the world.

What about you?

Are you shortchanging yourself?

Retire Early To Take care Of People You Love

I got a call the other day from one of my friends, and he shared with me very sad news of how his loved one had a fall during a vacation and now is bedbound and needs full time care.

Oh, the sting in my heart, it hurts.

One of the reasons why I speak again and again on getting our finances sorted out, including insurance and retiring as early as possible, is not just to retire and move to another country and chill out, but…also where need be, we can take care of those we love if they’re ill, sick or hurt.

Can be for

  • parents / in-laws
  • spouses
  • fiance / fiancee
  • girlfriend / boyfriend
  • pets
  • ourselves

***

Deep breath.

This was one of the harder calls of my life, and I choked a few times thinking about it, and it reminded me heavily on “living and traveling light” ie

  • not taking unnecessary loan or mortgage burdens
  • not taking / agreeing to commitments that are long term unnecessarily

The key operative word here is “long term commitments that are unnecessary” as time is a very important finite resource that I will deeply respect and not waste wherever possible.

It doesnt make sense to take on a commitment I dont care about that will lock me in terms of time, energy and effort for longer than I need to.