Doesn’t this lean more towards parasitism than FIRE, if half the year is spent vacationing somewhere in Thailand, enjoying earnings-related daily allowances? Probably nice for them, yes, but not so much for taxpayers.
A kind of lean FIRE can also be achieved in Finland by simply quitting work.
Nowadays, working half a year is not enough for earnings-related unemployment benefit.
Work requirement until 1.9.2024: 26 calendar weeks (approx. half a year)
Work requirement starting from 2.9.2024: 12 calendar months (1 year)
It wasn’t mentioned there at least that they would be on earnings-related unemployment benefits (and nowadays, even basic income support is not paid abroad). In Thailand, one can live like a lord on very little money (I understand, something like under a grand a month), and indeed, as mentioned there, income taxes are hardly paid if the income for the whole year remains low (income taxes start to kick in around 15,000 euros).
In Finland, the costs are indeed exorbitant, especially for housing. Regarding the implementation of FIRE (Financial Independence, Retire Early), I perfectly understand that people move to a country with a lower cost of living and a better climate. I would do the same, and it’s actually under consideration if poker and work no longer appeal to me (with the current 450k net capital, one cannot easily live as a financially independent person in Finland, but in Spain, one can manage quite well).
Do you have experience? I would have thought that even in Spain, one wouldn’t be able to FIRE with that portfolio yet, but it would require moving, for example, to the Philippines, Thailand, or Vietnam.
It would be interesting to hear more stories from FIRE enthusiasts utilizing geoarbitrage or plans from those intending to do so.
What I can say is that we bought an apartment half with my older brother for about 90,000 euros including taxes and minor renovations (a small 44-square-meter one-bedroom apartment by Finnish standards, in the city center of a 100k inhabitant city and almost by the sea) and I was there for almost six months continuously, so I got a reasonably good idea of the price level, which in many respects is lower than in Finland. You can live quite well there with a thousand a month if you own an apartment, which you can get even cheaper if you don’t need to live in the city center (and for a long-term rental, you can get it for under 500€/month even though prices have risen). Flights to Finland from a nearby airport cost tens of euros at their cheapest.
So if you get a 4% return on 450k€ net capital (18k€ per year / 1.5k€ per month) after taxes and inflation, you’ll do quite well. Of course, it’s good to have some buffer outside the stock portfolio so you don’t have to liquidate everything at the bottom, but 20k€ is already enough for a year.
Portugal, however, is, to my understanding, much more affordable and a very popular destination for penny-pinchers who want to stay within the EU.
Thanks for the story. May I ask where in Spain your apartment is located?
The price increase you mentioned might be one potential cause for concern in the long run. Even if prices are reasonable at the beginning of FIRE, they might eventually rise to a level that starts to bother someone operating with a small portfolio. Having your own apartment, of course, helps with this, so rising rent doesn’t bother you, and you get to enjoy the increase in housing prices.
It’s no secret, it’s in Torrevieja. It’s about 40 kilometers to Alicante airport. So, on the Costa Blanca. There are Finns, but not to an extent that it’s a problem, and within a 50-kilometer radius live about a million people (the largest cities being Alicante, Elche, Murcia, Cartagena).
I myself recommend buying a home if you plan to move there permanently with FIRE (Financial Independence, Retire Early) because it limits costs, but due to high transaction costs (e.g., property transfer tax 10%) and other challenges (difficulty of renting due to legislation and, for example, squatters), it’s advisable to first test it out for a year by renting to see if you like it there at all. Of course, the good thing about renting is that you can change scenery much more easily.
There are certainly cheaper places, but there’s a reason why Spain’s coastal areas have long been popular among, for example, Finnish retirees.
It depends on the life situation. It’s not advisable to keep money in stocks that you might need in the near future. If your own finances can go south due to stock volatility, the only way to limit risk is to reduce your stock allocation. Simple as that.
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It occurs to me that everyone seems to be aware that a stock market crash will very likely happen at some point during the long investment career of a FIRE goal. Many seem to have a fallback plan that if there’s a big crash, they will return to working life.
Having made a career in the IT sector myself, I don’t consider that realistic. Universities are churning out large numbers of young people with fresh technological expertise, and if you are out of working life for a year or two, you are hopelessly out of touch with technological developments, and getting a job becomes impossible quite quickly, without really strong contacts. LinkedIn contacts become completely outdated in just a year. Staying up to date requires at least 2-3 hours a day of studying the field just to keep up; you also need to attend all the events to keep your name and face in mind. Those who are working spend 7-8 hours a day keeping their skills up to date while working. It’s practically not about being free if you study hours a day to keep your skills marketable in case of a probable stock market crash.
Where are there jobs without the risk of dismissal and where salary development automatically follows inflation trends? Doesn’t even working involve a considerable risk? You invest your limited capital, i.e., time, and in return you get money, without knowing for how long or if it will have any significance in the future.
If stock markets collapse and listed companies turn unprofitable for years, that would be a consequence of some massive natural disaster or a world war; in such a situation, no job would be secure either.
To the list, one could also add various bubble formations and their bursting, and the demographic development already mentioned here. For example, Japan’s Nikkei index. I deliberately chose the period this way - but in the early stages of investing, visibility can be poor, or even distorted “everything has succeeded for the past couple of years, it doesn’t matter where I put it, surely it will come back 2x or 3x within a couple of years”:
There has been surprisingly little discussion here about the over-indebtedness of states. Taavetti’s frontal lobe vaguely recalls that it doesn’t matter whether the debt is collected domestically or from abroad, but that when there is enough debt and trust disappears, bankruptcy is imminent.
Nevertheless, there are several examples of such difficult developments originating at the state level from recent years as well. Who remembers or knows which states were, for example, global economic pioneers at the turn of the 20th century? (Nowadays, they are not usually thought of this way.)
One could, for example, become a cleaner, a store cashier, etc.
I’ll challenge this to the extent that, for example, in the 2000s, stock markets first halved in the dot-com bubble and a few years later, again in the financial crisis. If one invested a lump sum at the peak of the dot-com bubble, it took about 17 years for the investment to be permanently in the black again in real terms. The halving of the stock market and a long period of stagnation do not ultimately require any catastrophes comparable to world wars.
This is what is advised everywhere, and everyone who makes a living by investing naturally does it, right?
In reality, no one went all-in at the stock price peak on shares that never paid dividends; instead, investments were made earlier/later and dividends were received.
But what happened to those who took out a large housing loan at the price peak, imagining that their well-paid job at Nokia would continue until retirement age?
Then the job on which one has built their house of cards of life will be lost.
Academic research says that one is most likely to get the best return when investing all money (including large lump sums) immediately into the market. A large portion of people receive significant sums as inheritance, so that risk is surprisingly common. And yes, such a long period of stagnation can occur even when the stock market is not clearly in a bubble. For example, if the next 20 years see a clear setback in terms of globalization, stocks might perform poorly.
This does not apply to Finland; here, a significant portion of inheritances are 70s false-foundation houses from areas of Finland experiencing population decline and dilapidated dry-land wooden cabins.
Of course, there has been significant regional differentiation in this regard. Some receive a huge inheritance, while others receive very little, depending, for example, on where in Finland they live. However, the size of nuclear families has continuously shrunk, and currently/in the future, there is often only one child as the sole heir, which in itself significantly increases the scale of inheritances.
Regarding this discussion about returning to work, in my experience, if you don’t even have one foot in the door at a place where you could return later, it can be quite a difficult task.
Over the years, I have both applied for various odd jobs and been on the recruitment side receiving applications from those returning to work, and I certainly wouldn’t rely on this “return card.”
I once researched the possibility of working as a cleaner/warehouse worker/cashier, with the result that applications from a typical office worker don’t get much attention. A couple of times I even received a reply, both of which stated that I would be a very short-term employee and would leave as soon as I got bored or found “jobs in my own field.” Downshifting or FIRE (Financial Independence, Retire Early) are not familiar concepts to recruiters; instead, you appear as an oddity among the applications.
Of course, I didn’t try outright lying, like putting 16 years in the cleaning industry on my CV, then I’m sure interest would be found.
When trying to return to one’s own field, one very quickly encounters the issue of skills becoming outdated, which someone above already mentioned.
In addition to this, there’s the general fact that you’ve been out of work. As a recruiter, I’ve encountered a few people who, after living on unemployment benefits for 1-2 years, were ready to return to working life. Such individuals were immediately dropped because they are assumed to do the same again soon, and fundamentally, a long-term person is desired for the job.
Of course, if you’re applying for a fixed-term position, this isn’t such a big problem in itself, but it’s worth noting that from the recruiter’s perspective, even a couple of years away from the job market can be “too much,” let alone a FIRE enthusiast looking for work after 10 years.
I don’t quite buy into the idea that in any field whatsoever, after a few years, you’re unemployable. In leadership positions, the competition is certainly tough, and the risk of that is high. In the IT sector, technology also advances at a completely different pace.
But then, for example, in a machine shop, they weld the same steel as before, and the standards or manufacturing methods haven’t significantly changed in a few years, or even a decade, at all. If you understand the methods, can read drawings, and lead people, then you can certainly do the same at some level later on.
Or as a project manager in almost any industry, no one who truly understands things is interested in whether you know the latest trending acronyms for different methods on a theoretical level, if, as a counterbalance, you can present merits from successfully completed projects. Not every seasoned professional masters these, but they are paid for the fact that, if necessary, they can hold more than just a pencil in their hand, and their life experience is sufficient to handle even the most challenging situations. The biggest challenge is to prove that it’s not about a prolonged drinking spree, but a genuinely voluntary step away from working life.
And if you’re not returning to working life with completely empty pockets, what you lose during your absence, you can offer yourself as an additional resource and handle invoicing, perhaps as a sole proprietorship, when bureaucracy isn’t bothering your mind. As these additional resources are needed on an irregularly regular basis in industry, depending a bit on the cycle. You also sometimes see those leadership-level people working in roles like project manager/marketing manager/procurement manager/sales manager/salesperson.
Of course, if one is not willing to start a notch or two lower and be flexible in the beginning anyway, then perhaps returning to work is almost impossible.