In this thread, you can find both those who are on their way towards FIRE (or at least FI). Then there is also a separate thread where the free lords and ladies share their updates.
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You don’t need a million-euro portfolio, but apparently, it’s an achievement/goal that one can be publicly proud of. Even if you don’t need 50k a year, it’s nice to have it if you happen to need it.
A rarer goal would be to settle for a portfolio that barely provides a long-term unemployed person’s standard of living after resignation, and, for example, a broken washing machine would plunge the finances into ruin.
True FI (Financial Independent) status is only achieved in a completely self-sufficient economy where one begs, barters, and dumpster dives for what one cannot produce oneself. Then one would be quite independent of the economy, as no money would be needed to live at all.
So, one just picks a suitable goal for oneself; it’s more about a standard of living goal than numbers.
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What do you mean by self-sufficient? Do you mean that the FIRE-achiever lives on a small farm and grows their own food? That term remained a bit unclear to me. Among Finnish FIRE-achievers with less than a million euros, the “Mihin se raha kuluu” (Where does the money go) blogger comes to mind; she started her early retirement with a 500k net worth, and monthly expenses are something like 400-500 euros:
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By self-sufficiency, I mean precisely that a large part of the food is grown, fished, and hunted by oneself. My own life is modest enough that expenses are small. I have hobbies, and money is rarely spent on equipment. I’ll have to check out that blog.
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I myself stopped, for example, small-scale potato farming a few years ago, as it was by no means worth the effort (it was otherwise just a “good hobby”). This week too, from the store, one could get a 5 kg bag of potatoes for 1 EUR (some weekly offer), and usually, without offers, one can get a couple of kilos for a little under two euros. Of course, home-grown ones are always much better, but financially, only fishing seems sensible (if one happens to be a fisherman), and of course salads (as they are expensive per kilo).
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Add berry picking and mushroom foraging to this. It’s better to return to proper hunter-gatherer activities. It also does good for the mind when one gets out into nature.
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Some of the food I grow isn’t economically viable, but I mainly like the idea of most of the food on my plate being self-grown. Mushrooms and berries are gathered from the forest, and at the same time, my body gets good activity in the woods. Fish and game are obtained in varying amounts. Once I can reduce my workload sometime, there will be more time for acquiring my own protein. I plan to get chickens so I can get eggs from them and sometimes meat too.
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Certainly good skills for all ages to learn. Financial independence (FI) can be buoyed by large balances and investment accounts (temporarily), but they don’t carry very far if the situation truly escalates into a crisis. What is the resilience of one’s own FI position, and life in general, against major upheavals and changes?
I’ll give one example. Currently, it’s “fashionable” to own Nordea, and many FIRE strategies are probably partly based on this company – the P/E is good, the dividend yield is excellent, and it has a history. I can tell you, it wasn’t a particularly great company to own from 1990-1995 (I have experience). Only now has Nordea’s share price reached the levels it peaked at in 1989. And this is not a sell recommendation. Just some free thinking about this resilience. Of course, in the 90s, not much stock trading even happened before the Nokia cluster started to take off. There were many days when there was hardly anything at buying levels (for smaller companies). Could it come back? I don’t know.
KOP/Nordea historical share price development until 2009:
https://www.is.fi/taloussanomat/porssiuutiset/art-2000001619495.html
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Nordea had a 1.283:1 split in 2009, so the situation is a bit better than your graph shows. Nordea has paid out a large percentage in dividends for years, so the situation is not actually bad, even when compared to the 1989 peak share price. In a FIRE portfolio, Nordea would have generated good dividends.
It is true that an individual stock can perform well or poorly. It’s impossible to see into the future beforehand. That’s why diversification is absolutely crucial. In my own FI portfolio, the largest single stock’s weight is 8%, and I have tried to reduce that even further.
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Good point about the split. I haven’t really been able to own bank stocks long-term after my experiences in the 90s.
There was this FIRE-thinking (or something referring to it) in the 80s too; for example, the then KOP bank was bought based on good dividend yield (as security for a small pension and/or salary, or in addition to these). However, that “security” was quite short-lived, meaning in the 90s, there was a zero-dividend policy for about five years (1991-1995), and even after that, dividends weren’t anything special (would they have been some cents and finally in the 0.1-0.2 range). Of course, there were also all sorts of rights issues (1993-1994) during that crisis (meaning cash flow was indeed going in the wrong direction). This is, of course, just an example. The situation is much better now than in the 90s, isn’t it (?).
And it’s good if there’s diversification, and really good if it’s across asset classes.
Lasse Nordlund, mentioned earlier on the forum, lives completely self-sufficiently in the Finnish forest, making everything himself from food to clothes. His annual budget was probably around 100 euros. Not a true FIRE-person, as Nordlund, if I recall correctly, was against the entire monetary economy. But a FIRE-person could do something similar by buying a forest plot of about 10 hectares.
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Yep, even a million-euro portfolio can fluctuate in both directions, so it doesn’t really matter if it’s a couple of hundred over or under, but what’s in the portfolio does matter. If one had retired based on the Inderes model portfolio at its peak, they would be in a tight spot now, even though the portfolio was worth almost 800k at one point. Now the figure is just over 300k. So, one really needs to critically evaluate the portfolio’s content, size, and where in the cycle one is.
And one also has to get used to that fluctuation. After all, 20% of a 1M portfolio is 200k, and a 20% fluctuation is still quite normal on an annual basis. So, one really needs to train their nerves quite a bit so as not to get nervous based on general fluctuations. And indeed, there must be enough leeway to get through a bad cycle one way or another.
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A good way to test one’s own resilience is to consider what it would have been like in 2008-2009, when indices fell across the board by 50-60% and individual stocks even significantly more. What it would have been like to watch a million melt to less than half a million, while simultaneously reading how several “dividend companies” drastically cut their dividends or stopped paying dividends.
Even then, no one knew in advance when the decline would stop and how long recovery would take.
Another good point of comparison is the turn of the millennium, when recovery took quite a long time. When one would have had to eat into a collapsed portfolio significantly before a proper stock market rally (which then quite quickly ended in the aforementioned crisis).
That dividend payment is indeed treacherous – precisely when those dividends would be most desperately needed (a big crash), many good dividend payers often cut their dividends severely or stop paying them. Then one is forced to liquidate their collapsed portfolio.
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This extreme example illustrates well how there is no “right” number for achieving FIRE. With Nordlund’s €100 annual budget, one could manage for 30 years with just €3000 in savings. Of course, in such a self-sufficient lifestyle, one’s age and stamina will eventually become a limiting factor, making it physically impossible to cultivate crops or forage from nature.
Generally speaking, food production in large units is the most economically sensible form of food production (input/output ratio), which is why the average size of farms has grown many tens of times compared to the crofter era. Cultivating most crops makes no economic sense, and one certainly doesn’t earn an hourly wage from it – 5kg of potatoes for 1 euro was a good example.
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There’s really no point in potatoes and carrots; you can get them cheaper from the store. However, some productive and easily storable/freezable vegetables like zucchini and beans are a great addition to a frugal person’s diet; even with a two-three-meter plot, you can grow enough for one person’s winter needs. Add a couple of good berry bushes to that, and you can afford to lose a couple hundred more in the stock market 
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It feels like in FIRE, an even more central issue than the portfolio size is the ability to scale consumption downwards if necessary. With my own consumption needs, I could easily start FIRE right away, but with a family, sufficient buffers might be achievable in about ten years.
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This ability to significantly reduce my own consumption level when needed is exactly what I have focused on. Basic living expenses, such as housing and a car, don’t cost much, so, for example, in the event of a major collapse, it’s easy to start reducing consumption when those essential expenses have been kept low. This way, frugality also doesn’t turn into hardship when it’s not full-time but temporary periods. This also suits my nature much better than if I had struggled at work to accumulate a larger portfolio just in case.
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Sometimes it’s hard to put one’s thoughts into words. Then it’s good to quote earlier thinkers. The Taoist poster Laozi said centuries ago:
"There is no greater crime than unrestrained desire, no greater mistake than wanting everything.
There is no greater misfortune than not knowing what is enough.
He who understands to be content when he has enough, is always content."
On the other hand,
“Contentment kills development.”
-Christian Ruuttu
Happy weekend to all contributors and dreamers!
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Wise words from Laozi. A hockey player cannot achieve complete satisfaction. When you sometimes lose or younger ones get ahead, same thing with stocks. Then when money turns into play money in your mind, it’s already easier. It’s also better to forget about the money in ETFs than to have 90% of your portfolio in Sotkamo Silver 
In stocks, when half a million has been reached, you can, for example, watch Charlie Munger on YouTube every now and then..
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Even though Charlie Munger’s output has been used, “This video uses AI-generated voice and content inspired by Charlie Munger’s publicly available wisdom, speeches, and writings.” It would be good to always mention something like that as well.
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