Financial Freedom:Guide to Retiring Early in HK
What is financial freedom/financial independence?
Financial Independence, Retire Early (FIRE) is a movement of devotees committed to a lifestyle involving extreme savings (saving up to 80% of monthly salary) and investment that aims to allow them to quit their day jobs or retire from work altogether.
So, when can you retire? Some people suggest that when your savings reach approximately 25 times your yearly expenses, then you may quit your jobs or and retire. This is calculated based on FIRE devotees making small withdrawals from their savings, typically around 4% of the balance yearly, to keep pace with the inflation.
Financial independence retire early calculator
4% rule: What is it?
The 4% rule is a common rule of thumb when it comes to how much you can withdraw from your money in investments in your first year of retirement. As its name suggests, you should be able to comfortably live off 4% of your money in investment during the first year of retirement and then adjust for inflation each subsequent year. If you follow this, you shouldn’t be outliving your money during a 30-year retirement.
See below an example of the 4% rule:
| Situation 1 | Situation 2 | |
|---|---|---|
| Monthly Expenses | Situation 1$20,000 | Situation 2 $10,000 |
| Yearly Expenses | Situation 1$240,000 | Situation 2 $120,000 |
| Retirement Savings Required | Situation 1$6,000,000 | Situation 2 $3,000,000 |
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Best Online Brokers and Trading platform in HK
| Stock Trading Platform | Commission Fees (US Stock) | Commission Fees (HK Stock) | Features |
|---|---|---|---|
| Stock Trading Platform Valuable Capital Brokerage Account | Commission Fees (US Stock)US$0.99 | Commission Fees (HK Stock)HK$0 | Features
|
| Stock Trading Platform SoFi Hong Kong Brokerage Account | Commission Fees (US Stock)US$0 | Commission Fees (HK Stock)HK$0 | Features
|
| Stock Trading Platform Webull Securities Account | Commission Fees (US Stock)US$0 | Commission Fees (HK Stock)HK$0 | Features
|
| Stock Trading Platform Saxo Markets | Commission Fees (US Stock)US$3 | Commission Fees (HK Stock)HK$18 | Features
|
FAQ
How can I achieve financial independence？
- You can achieve financial freedom/financial independence through saving and building passive income. You can work out when you can retire using an online FIRE calculator. If you are determined, it’s not impossible to set yourself on the path to FIRE.