Our FIRE Journey
As most folks out there, we used to put most, if not all, our savings into regular savings accounts and a cash ISA. At some point we also discovered Premium Bonds, but that's a story for another day.
We started to dabble in stock market investments, each of us investing in what seemed like sensible choices of companies at the time. In retrospect, of course, it was anything but, and we simply ended up being reasonably lucky. The Apple (AAPL) shares I bought in 2013 were up by 1100% by the time I sold them a few months ago. Many others didn't fare that well, but it was overall still profitable.
Even though we had each opened a Stocks & Shares ISA, most of our savings still went into our Cash ISA instead. As much as we seemed to be able to make a profit on the stock market, it never felt right.
Self-invested pension pots?
It wasn't until Miss Sloth had accumulated a handful of pension pots at various providers from various jobs over the years that we started to think about investment choices. After some research, she decided to open a SIPP to consolidate all the previous pension pots in one place. That's the first time either of us had a solid bit of money in one place, ready to be invested in something other than cash. We researched our options, and it finally dawned on us that investing in stock of individual companies wasn't the way to go. Instead, Miss Sloth invested in various mutual funds, including one tracking the MSCI World index. Some other mutual funds were actively managed funds promising good performance and diversifications - at least according to their fact sheets.
I still had all my pension with a single provider, so didn't feel the need to open a SIPP. Instead, I tried to make sense of the funds on offer, and picked funds with a lower ongoing cost than the default ones. Our plan for retirement was mostly unchanged - we'd work until at least our late 50s if not 60s, and hope we'd have accumulated enough into our pension pots by then to live on in retirement.
Armed with all of this new knowledge, we also started to shift some of the investments in our Stocks & Shares ISA away from stock in individual companies and towards mutual funds and ETFs with relatively low OCF. However, we still weren't comfortable with having more than a relatively small amount in the stock market, and preferred cash for the most part.
The beginning of FIRE (for us)
In January 2022 we came across a web application called ProjectiFi whilst browsing Hacker NewsHacker News is a tech news aggregator, but its main value is the comment section for each of the submitted articles. In fact, ProjectiFi was mentioned in the comments section as an alternative early retirement calculator that had better support for non-US persons.. Promising to help us estimate when we could retire, it piqued our interest, so we gave it a go.
Plugging in the numbers and seeing the results completely changed our perspective on financial independence, early retirement, and our finances in general. It highlighted that changes in the way we approached savings and our expenses could have a huge impact on when we'd be able to retire, and it most definitely highlighted the cash isn't king, certainly not when inflation is a thing. I'd say this was the moment our journey towards FIRE really started.
Since then, we've been spending a lot of our time reading books, blogs and any other material we could get our hands on. It further changed our perspective on things like holding individual company stocks vs index trackers, active vs passive investments, equity vs bonds, etc. I wish we had known about all of this 10 years ago.
As we are both engineers, we've since taken it beyond just reading. We've also been writing some of our own software tools to evaluate drawdown strategies, resilience of portfolios, etc. We hope to share more of that research in future posts, in the hope others on the same journey will find it useful, too.