By Dr. Harry Hamann (MBA), September 2, 2022

FIRE Financial Independence Retirement Early - Full Guide

Financial Independence Retirement Early - Summary

Do you wonder what the term FIRE means? And is it possible to achieve early retirement? Can YOU achieve FIRE? Can you reach it faster than most people? This complete guide will help you out.

Financial Independence Retirement Early


Key Takeaways

  1. The author of this article became financially free by Investing and explains how you can do it too, regardless of your background.
  2. FIRE means Financial Independence Retirement Early.
  3. It is a lifestyle where you retire early and live off your retirement accounts that consist of different investments.
  4. Take control of your Personal Finance: Define your current income and expenses. The difference is available for investments.
    Set Financial Goals: Define the Retirement Sum that you need (=your FIRE number). Define the number of years you target to reach Financial Independence Early.
  5. Use an Investing for Retirement Calculator that will show you scenarios of how quickly you can grow your capital depending on your investment contributions and returns.
  6. Optimize your Financial Plan if necessary: Can you achieve your financial milestones with these assumptions? If not, find ways to increase income and reduce expenses.
  7. Instead of saving cash that gets devalued by inflation in the bank, invest your savings in high-quality assets that offer attractive rates of return with limited downside risk.
  8. High-Quality assets to build equity can be found in asset classes such as rental property, public stocks, private equity, crypto assets, commodities, and bonds, to name a few.
  9. Create an Investment Plan: Define which assets you accumulate with your savings and estimate a rate of return.
    Execute your Investment Plan: stick to your plan with discipline and patience. Track your results and continue to optimize income, expenses, and investments. Use good Tools.


1. How did I achieve Financial Freedom?

I started as an employee in Germany, struggled to improve my personal finance situation substantially, and was part of the rat race. I wanted out, fast. And I was looking for ways how to get there.

My passion for finance and investing led me to my path to becoming a better investor, one day at a time.  My financial journey:


I shifted my mindset: think like the rich.

I had a poor money mindset by setting low financial goals and saving too much cash that got devalued by inflation. Although I tried everything to improve my finances, I could feel that my purchasing power was not increasing.

The turnaround was to set high financial targets (10x goals) that scared me but were realistic enough and to invest my capital with a repeatable system.

I cut my expenses and embraced a minimalist lifestyle. 

No one wants to hear it, which is the ugly truth. How do I dare to tell others to reduce their consumption?

Here is why: even if you are a billionaire with a $100M annual income, and if you spend $500M a year, you will soon be financially broke. This finance law always applies: your income must be higher than your expenses.

I optimized my income through hard work.

I improved my knowledge, became better at my job, and asked for a pay increase. I even switched employers to increase my income eventually.

It will take hard work to improve your income, but it will be worth it.

I was doing it: investing.

I invested all my savings regularly and tried to maximize my rate of return. I was always looking for fresh, new investing ideas.

I kept going despite of pain (a $200K mistake).

I made $200K and then lost it even more quickly than I had made it. This experience was harrowing, and I was close to quitting. But I kept going.

I improved by learning from the best investors I could find.

I purchased a lot of different courses on investing and trading. They were worth it, and I learned from them, but they were highly specialized. I tried to puzzle the pieces together and slowly but surely improved.

I developed a simple and robust long-term investing strategy.

Short-term trading (CFD, futures, options) was not for me. I developed a long-term investing system that I could follow over and over again successfully to make more money. It leads to compound growth of capital.

I was going against the herd: be a contrarian.

Roughly speaking, less than 1% of the population are millionaires. Can you get the results of the 1% by doing what the 99% are doing?

The answer is no. That was a revelation to me once I finally understood that for real. I had to invest differently as most people and I did, and the result was that I was getting much better investment returns than most people.

I became financially free.

I made millions of profits and created over 90% of my wealth by investing. I corrected the mistakes I made and finally succeeded. I lived this.

Story of Harry Hamann to achieve Financial Freedom


2. What does Financial Independence Retire Early mean exactly?

The FIRE movement has been growing in popularity over the past few years. Many people are interested in retiring earlier at a relatively young age and living off their retirement accounts. Many others are looking for ways to save money to retire sooner.


FIRE means: you have enough money from passive income to cover annual expenses and can retire early.

To become part of the FIRE movement, you must achieve a high savings rate. Accelerated saving (e.g., saving more than half) will lead to more capital available for your investment account.

Using your savings to accumulate enough investment assets to generate passive income is the idea. Enough money to cover monthly expenses such as living expenses and also pay taxes. Everyone's FIRE number is different.

3. How do you finance your new lifestyle, and which FIRE strategy is best?

To cover annual expenses for your new lifestyle, you need to identify and buy investment assets that perform well. In a straightforward form, this could be mutual funds or low-cost index funds that you can acquire in tax-advantaged retirement accounts.

Accumulate investment assets that will provide cash flow and appreciation to cover monthly expenses.


If you read similar media articles, they talk about three different strategies. I don't think you should pursue any of them, and I will explain why you should not be one of the traditional FIRE followers.

  • fat FIRE: maintain traditional lifestyle (average annual expenses) but requires a high salary and 'aggressive' saving and investing
  • lean FIRE: minimalist lifestyle with 'extreme' saving
  • barista FIRE: a compromise between the two. You quit your 9-5 and work part-time.


fat FIRE is nonsense:

If you want to pursue financial independence retire early, fat FIRE should not even be an option! Don't listen to traditional media. Listen to proven millionaires. Your certified Financial Planner is only worth their salt if they have made significant capital themselves with investing.

Sorry for the tough love. Reducing unnecessary annual expenses is essential in quickly improving your financial situation and getting to your FIRE number, and it does not mean your lifestyle has to suffer.

lean FIRE is nonsense:

Extreme saving is counter-productive. You only want to cut unnecessary expenses and should not sacrifice a healthy lifestyle for it. Your mental capital is most important.

Spend money on sensible things (e.g. education -> you increase income). In short: invest in YOURSELF!

barista FIRE is nonsense:

To quit your 9-5? That is the stupidest idea that I have ever heard! You want to INCREASE income, not reduce it. Enough said.

What is the right  strategy, then?

  • Use common sense. That will bring you much further than 'conventional wisdom'
  • Have extra money in an emergency fund
  • Keep your 9-5 job and increase income as much as you can.
  • Keep your expenses low, and live a more minimalist lifestyle by cutting avoidable costs WITHOUT sacrificing essential expenses (e.g., health insurance)
  • Invest your savings regularly

    Ignore conventional wisdom regarding FIRE strategies. Increase income, reduce avoidable expenses, and invest regularly. Please keep it simple.

    4. What are the basics for early retirement, and How do you set your Financial Targets?

    You must follow some guidelines, or the FIRE movement will remain just a dream for you. They are simple but essential for early retirement. Understand how much money is coming in and out of your bank account. Get rid of high-interest debt such as credit card debt. Try to be debt-free (exception: real estate). And be mindful of your financial decisions.


    Define your  income and your expenses. The difference is your savings that are available for investments.

    Earn more than you spend. Income higher than Expenses.

    In the FIRE concept, you want to avoid the traditional retirement age. Therefore, you  need to figure out how much retirement savings you need and define when you want to retire.


    Define the Retirement Sum that you need (=your FIRE number). Define the number of years you target to become financially free.

    5. Are there any helpful tools to calculate how much I need to invest to retire early?

    Yes, I have created a calculator for this. You have to plug in your monthly income, your monthly living expense, your tax rate, and the annual investment return that you want to achieve.

    Then click "submit", and the calculator will show you a visualization of how quickly your capital will grow if you invest regularly and lets you see when you can expect retirement.

    Moreover, it will show you some interesting statistics: how many years does it take to end up with six figures and $1M of retirement savings, respectively? The calculator will give you a rating regarding your saving and investing.


    Use an Investing for Retirement Calculator that will show you scenarios how quickly you can grow your capital.

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    6. How can you optimize your Financial Plan even more? 

    It is a straightforward formula if you want to retire early. Income must be higher than your yearly expenses, and you should increase it continuously. Remove avoidable costs and get to retirement faster.

    There are always ways to improve income: work overtime, ask for a raise, change employer that pays more, create a business side hustle, and more! Regarding the expenses, it is the same.

    Does it make you happy to have a nice car or this lovely apartment? Sometimes less is more, and I have experienced that myself. When cutting unnecessary things out of my life, I did not feel I had lost something.


    Find ways to increase income and reduce expenses.

    7. What factors do I need to consider if I want to use my savings to buy investments?

    First of all, understand what money is. Money printing by central banks means an increase in the money supply, but at the same time, the economy does not necessarily get stronger.

    The result is inflation, a reduction in the purchasing power of money, or in simple words: your money buys you fewer goods and services in the real economy over time.

    Never exchange your cash savings for low-quality investment assets. In the case of real estate, for example, a low-quality investment would be a rental property in a very unpopulated region.

    You want high-quality real estate in high-demand areas, such as in city centers of major business hubs. You will always find a reliable tenant with a high income, and you can most likely increase rent over time.


    Instead of saving cash that gets devalued by inflation in the bank, invest your savings in high-quality assets that offer attractive rates of return with limited downside risk.

    8. In which asset classes can you find high-Quality assets?

    High-quality assets exist in nearly every asset class. For beginners in the FIRE movement, I suggest you pick one or two asset classes and start investing in them to retire sooner.

    Otherwise, you will lose the forest for the trees. Even in my investing style, I favor simple but effective strategies. Public stocks are liquid (you can easily buy them and sell them when you want), and their past performance shows that they offer higher rates of return than commodities, gold, or bonds (see the graph below).

    Moreover, crypto assets are an emerging, very liquid asset class for investors with higher risk tolerance with a lot of growth potential compared to traditional assets. Another good way to accumulate assets is real estate with stable cash flow and unique tax advantages.


    High-quality assets can be found in asset classes such as real estate, public stocks, private equity, crypto assets, commodities, and bonds, to name a few.

    Historical Total Real Return for Stocks, Bonds, Gold, and US-Dollar

    9. How can you create an Investment Plan, and what is vital for the execution of your Plan?

    FIRE adherents need a clear Investment Plan. First, you must define which assets you want to acquire. In the case of stocks, you can obtain index funds (e.g., ETF), mutual funds in tax-advantaged accounts, or even pick particular stocks yourself.

    Also, the future performance of your assets will determine how quickly you can retire early, and both factors will affect your retirement plans.

    Use good resources to invest better.


    Define which assets you accumulate with your savings and estimate a rate of return.


    Stick to your plan with discipline and be patient.


    Use the resources below to get your investment results to the next level 👇


    Top Investing Resources (1): Free
    Achieve Financial Independence Retire Early

    Do you want more FREE information? Watch Investing Unlocked, a Video Course by Dr. Harry Hamann (MBA) from H2 Intel, that will teach you to learn how to invest with financial success. Click below.


      Top Investing Resources (2): Paid
      Achieve Financial Independence Retire Early

      Are you serious about achieving financial independence and retiring? Accelerate your learning curve and boost your financial results even more by getting help from investors that have done it, such as Harry.


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