It’s bold, different, and adventurous, but my 2021 FIRE campaign plan has been drawn up. Let’s take a look!
This post is NOT financial advice, nor a recommendation. I am taking on several high-risk investments which are not necessarily a good idea for most people and I am risking losing a lot of money. If you want to know more about how a plan might be adapted to your situation, seek out independent financial advice.
The basics of the 2021 FIRE campaign plan
I started getting into investing about five years ago. Financial Independence didn’t strike me as an option: I just met a lot of wealthy people, all of whom had invested their money.
I’d invested £300 in a little known company called Brewdog before, but that had been a one-off. A lucrative one-off, mind you – that £300 was £8,700 ten years later.
Since then, I’ve experimented with investing in individual shares, in crowdfunding, and through a robo-investor. Having educated myself a lot further in the last five years, I think I’ve learned enough – sometimes the hard way – to attempt this audacious plan.
The ambition
I want to achieve coast FIRE within 10 years, assuming that I live the same lifestyle; or true FIRE in a shorter time frame, assuming that I change my lifestyle and my living costs decrease.
Start state
My 2021 FIRE campaign is the first time I have deliberately aimed at FIRE, as opposed to simply being involved in investments and personal development.
That said, I’m hardly starting from a blank slate!
My resources are as follows:
- House: my partner and I own a 3-bed (ish) Victorian house that we bought for £198,000 and is valued by the bank at £215,000. We currently have a loan-to-value of 68%, but it still needs doing up.
- Workplace pension: my current job contributes 6% of my wages to a Scottish Widows pension as long as I contribute 3%. That’s pretty generous!
- Public sector pension: I have a public sector pension from my previous job that pays £8,000ish, linked to inflation, from state pension age (currently 68). This means that I can be more risky with the composition of my other pensions, as this will perform a similar function to bonds in my overall pension portfolio.
- SIPP: I pay a little into a Vanguard SIPP, which I aim to maintain.
- ISA: I have some money in a robo-investing Stocks and Shares ISA. It has performed well, but now that I’m a little more educated I’m sceptical about its heavy UK weighting and the fact that it has 20% in gilts and US Treasury Bonds. I’m also about to lose a significant fee discount. Time to take the reins!
- Emergency fund: my partner and I have a cash emergency fund. Given that we have no kids and both work, we can take risk on a smaller emergency fund than most. Ours would allow us 3 months’ expenses if neither of us worked.
- Private equities: I have invested a bit into start-ups on Crowdcube.
- Precious metals: I own some gold and some silver.
- Cryptocurrencies: I have invested a little into different cryptocurrencies.
Attitude to risk – an important factor in my FIRE campaign plan!
If I don’t achieve FIRE in 10 years, would I be disappointed?
Well, yes – but I definitely wouldn’t be dead or worrying about my future. I’m quite fortunate in that respect!
This means that I can take a ton of risk that many people would be uncomfortable with, in the hopes of gaining better rewards.
For that reason, I’m deviating from the recommended “stick it all in a passive world ETF” plan that many FIRE communities recommend. You’ll see.
And on that note…
Pillar 1: Investing in Myself
My core strategy starts with investing in myself to improve my income, and my 2021 FIRE campaign plan doesn’t shy away from this challenge.
I’m currently a trainee solicitor. However, I’m also undertaking a Diploma for Financial Advisors. The studies compliment my job, but they also provide a potential alternative avenue, and when I achieve coasting FIRE it might be a good part-time job for the future.
Plus, being qualified as a financial advisor might help my own campaign plans for later years.
I’m also dabbling in coding with the Odin Project. I suck, by the way. However, being tech-aware at the very least should keep me relevant in the modern workforce and that might present new opportunities later.
Plus, it’s free. Seriously, if you have an hour or so a week, you should try it.
I guess I’m also using this blog for education, to develop my skills in SEO and as a writer. I figure that this kind of thing can’t hurt, right?
Pillar 2: Spending Intentionally!
My partner and I have already discussed this at length: we’re considering living aboard a boat after our beloved dog has departed.
This means that investing in our house to make it a readily sellable asset is a smart use of cash. However, that only works as long as it’s for the renovations.
Things like furniture, tat and so on – they’d just be a waste of money.
We sold our car in February 2020 after I took a job that needed me to commute by train. We don’t miss it. We absolutely have no plans to buy or maintain a car, not when we live in a city with good public transport, convenient local amenities and rental cars are getting more affordable. We’d rather pay Uber to drop us in town than get another rust bucket vehicle.
Food is a huge cost, however we aim for £200 a month. It’s more than achievable, we eat like kings, and that includes beer/ wine. If we save money from that, we treat ourselves (lockdown permitting!) to a meal out or a takeaway.
We both still budget for fun and seeing our friends. Obviously, during the COVID-19 pandemic, that’s free investment capital; however, in principle we do intentionally set aside money so that we don’t become robots.
No point achieving Financial Independence if you’re now turbo-boring.
We don’t plan to upgrade any of our electronics or anything this year. We just don’t need them!
We have budgeted for a holiday in Devon (which may or may not happen), attendance at some weddings (also may or may not happen…), Christmas and our anniversary. Apart from that, our spending is rationed and controlled, keeping it intentional!
Pillar 3: INVEST!!
The main part of the 2021 campaign plan is my investment strategy.
Assuming that I’m still commuting to work (obviously with COVID, I’m not right now) and excluding my rail ticket, my budget looks like this:
For FIRE, “housing renovations” don’t really count. However, in my case, the house needs to be improved before it’s sellable and our current plan is to sell the house, so maybe it does count.
The SIPP is a big chunk of my pay. I also have a workplace pension that comes out as salary sacrifice. That’s not in this budget, as the money never comes into my possession.
The temporary COVID boost – a kick start to the 2021 FIRE Campaign PLan
OK, to show how much transport eats into my pay, here’s the budget when I don’t have to pay a few hundred pounds a month on rail fares:
The exercise of working this out has taught me a few things:
- I could take a 26% pay cut and not have to commute without damaging my lifestyle.
- I’m very lucky to have a job that’s continuing over COVID.
- I actually only live in 43% of my pay.
The COVID chart also assumes that I spend all my “living” budget – which, with pubs and restaurants shut and gatherings forbidden, I don’t.
The investments part
I overpay my mortgage. There is a good argument for not doing that, but as we already have an emergency budget I see it as more conservative savings. My interest rate is a little over 2%, so it’s more effective to pay into that than use a cash ISA. Also, if we’re planning to sell the house at the point of FIRE, it’s just another way of storing capital.
At the moment I invest my ISA in a robo-investing stocks and shares ISA. Now that I’ve learned a bit more, I’m concerned about its heavy UK weighting and the fact that 20% of it is in gilts or government bonds, so I plan to switch that out to an MSCI ESG World Index ETF. This is a fund that tracks the world, with a (light-touch) filter in favour of companies that meet an Environmental/ Social/ Green minimum threshold.
This isn’t just for “morality” reasons. I don’t have a problem investing in a few vice industries. I like that it excludes “dirty” energy – oil and so on. I don’t see dirty energy companies doing particularly well in the next decade, so I don’t think I want to put my money into them.
Seriously? A Pension?
Although the FIRE community would generally vote to put more weight into an ISA than a pension, I am conscious that I will be adding in a few more exotic and speculative investments. Paying a bit more into a pension is comforting.
I see it as a safety blanket. Plus, the rate I’m paying in, I could always retire before state pension age if I miss my target. Retiring at 57 when everyone else is retiring at 68 is still retiring early!
More “exotic” savings…
For most FIRE plans, a global ETF portfolio bringing in 7% after inflation would be sufficient.
However, my FIRE campaign plan involves achieving coasting FIRE in 10 years. I have to be a bit more of a risk-taker and add a few other assets in.
[I feel comfortable doing this because I have an emergency fund AND a generous pension. This is a high-risk play if you don’t have a safety net!!!]
I mainly use “spare” money from the budget – or side hustle money – to invest in a few other things, some of which are conservative and some of which are speculative.
Private equities
I used the platform Crowdcube to invest in private equities: shares in companies that aren’t listed on the stock market.
This is incredibly high risk, as it’s investing in start-ups that are quite likely to fail.
My experience has been that returns are significantly better than the stock market, but you have to accept that not every investment is going to turn a profit.
Gold and silver
Frankly, I want to be a god-damned pirate. It’s my money, I’ll do what I want!
I do put a bit of money into gold. It’s non-producing, but it’s a nice diversification away from equities that tends to increase in value over time and if you buy the right stuff is capital gains tax exempt.
As I don’t plan to hold bonds, any other diversification options need to be considered!
Cryptocurrencies
I’ll start with this: I don’t own any Bitcoin.
Nothing. Nada. Zippo. Zilch.
I like cryptocurrencies, I just don’t believe in the first generation technology of BTC, so I don’t put my money in it.
I do however really like the smart contracts systems and DeFi. I’ll cover these another time, but Decentralised Finance is a really cool concept that I genuinely want to be part of if it takes off. It’s a risky strategy, but investing in these kinds of platforms is just tempting enough to make crypto worthy of a spot in my FIRE campaign plan.
I don’t put much money into crypto tokens, as it’s just speculation at this point, but the growth in perceived value of a blockchain can be astounding and there are some things I’m willing to take a risk on. If smart contracts and DeFi become the mainstream, a lot of things in commerce and law will become significantly faster and cheaper to access.
Crypto is cool, but it doesn’t make up much of my portfolio, because the impact to a crypto-heavy portfolio of a blockchain getting delisted like Ripple is huge.
That’s it? That’s your FIRE campaign plan?
This FIRE campaign plan is for my first year of 10.
I plan to side hustle a little to boost my savings rate. This is money that might well be used in my ISA, used to buy extra stocks, or used for an exotic investment.
I’m a trainee until 2022, so there’s a limit to how much I can invest. However, my wage potentially doubles on qualification, which is where I will start to make the serious additions to my portfolio.
Will it work? Who knows!
