The articles in the blog are intended for informational purposes only, with the aim of encouraging thoughtful discussions. The articles should not be relied upon as financial advice. Please read the important disclaimer at the bottom of the page before proceeding.

Seeking FIRE - Route to Financial Freedom

Been months since I wrote a post here – I’ve started a full time role in the financial sector, which means that active investing has taken a back seat, as all my transactions have to be pre-cleared. I had sold off a number of positions right before I started my role, reducing my single stock holdings to just a handful of companies. Pursuing FIRE (Financial independence, retire early) has been a goal of mine for some time, and this post serves as a summary of the steps I’ve taken as well as the plan ahead. This might also be the last post here in a while, as I intend to mainly post updates on my Instagram page (@alpacainvestments).

Investment Portfolio

Going forward, I intend to post monthly portfolio updates (if any) mainly on my Instagram account. Working full time means that I don’t have the luxury to thoroughly research individual stocks and write lengthy posts on them. The majority of my portfolio is in ETFs – about 50% currently and with the intention to increase my allocation over time. I will still selectively take positions in single stocks, but these would mainly be large cap names simply to get exposure to a certain sector, for example, if I am bullish on the payments sector, I may buy V/MA/PYPL to be “overweight” on the sector in addition to ETF positions such as IVV/QQQ of which these are already constituent stocks.

SRS Account

Recently opened my SRS account by depositing $1. If you’ve yet to open one, please remember to do so before the end of this year because the retirement age will be increased from 62 to 63 next year. Correspondingly, the withdrawal age for our SRS monies will be increased to 63 too. There’s this good article by Seedly explaining the rationale for opening an SRS account with $1 here.  


I am a complete beginner in this space therefore I don’t think there’s much for me to share, but I have started buying some cryptocurrencies and this will form a small part of my portfolio going forward. Current allocation is capped at 1-2% of portfolio.

Credit Cards

Applied for a number of credit cards mainly for the deals for new customers – perhaps too hurriedly which was detrimental to my credit score. The lesson learnt here is not to apply for a number of cards in a short period of time, as this may give the impression of a weak credit profile.

I try to use credit cards for nearly all my expenses. I see this as a way to reduce my “working capital”, similar to how companies seek to optimise their receivables and payables. If I were to pay for most expenses using cash/debit cards, it would mean that I have to keep a cash balance in my bank account for monthly spending. But with credit cards, I am literally living “paycheck to paycheck” (with emergency funds set aside, of course) where my current expenses are funded by the following month’s salary, and any excess cash can then be put to investments. The additional benefit of credit cards would be the cashback perks, but for now this is rather insignificant given my low expenses.

Seeking FIRE

The idea of FIRE has been a goal for me for some time. Recently, there was an article on Today which found that around 6 in 10 of young adults in Singapore aimed to retire early, which I found rather ironic given that the Govt has just announced that the retirement age will be raised. I think that there are too many variables to account for at this point of time, thus I would not want to set a specific net worth or age for FIRE. Instead, I believe that a simple three step strategy will eventually lead to attaining FIRE, whether it is 10, 15 or 20 years away. But it would be inevitable. My three steps involves: (1) Maximising income, (2) Keeping expenses below average, and (3) Investing consistently and prudently, and let compounding work its magic.

For point (1), the caveat would be what trade-offs one is willing to take – for example, one could take on various side hustles in addition to a full time role to maximise income, but that would be at the expense of burnout or sacrificing time spent with loved ones. Therefore, I think this should be framed as “given X number of hours I’m willing to work, what would allow me to maximise my income?”.

For point (3), “prudently” is open to interpretation and I think there will always be the temptation to bet on riskier stuff such as options or cryptocurrencies and hope for a 100x return. For me, I think that a more balanced approach would be more practical, keeping most of my investments in ETFs and perhaps having a small allocation to hopeful moonshots.

I’ve ran the preliminary numbers based on the expectation of having $4,500 SGD (in 2021 dollars, adjusted for inflation) of passive income monthly, which I consider to be Barista FIRE or Coast FIRE. This $4,500 figure represents the median income in Singapore and my perspective is that being able to generate this income would be sufficient to live the lifestyle of an average Singaporean. Any additional “luxuries” can then be funded through part-time employment.

My base case assumes a conservative 5.5% CAGR for my investments (100% equity), which I think is reasonable given that pension funds are projecting similar expected returns on their portfolios, which include fixed income. What I noticed when running the numbers was that the sequence of annual returns actually makes a difference on the portfolio’s growth trajectory. For example, having a -30% drawdown in the earlier years is better than a -30% drawdown in the later years, even though the CAGR over the period remains the same – meaning that $1 today still grows at a 5.5% projected rate over the projected period. The main difference would be because there would still be capital injections into the portfolio over time, thus it would be more ideal for the years with higher returns to be the later years when the portfolio is considerably larger.    


My perception is that the idea of early retirement is still pretty controversial, and there are people who are puzzled by the idea pursuing FIRE. My view is that it is simply to have the option to retire once one has accumulated enough wealth, regardless of which age you achieve it by. If someone attains a net worth of X million by 60 and retires, then why shouldn’t some who attained the same X million by 40 be able to retire? To me, as long as both portfolios generate the same amount of passive income, there is no difference.

In any capitalistic society, there is always the battle between Capital vs Labour. And more often than not, Capital is better rewarded than Labour. While most of us begin as salaried employees (Labour), the goal should be to invest in income generating assets over time (Capital), and eventually being able to depend on passive income instead of active income.

Ultimately, I view all our choices as trade-offs that we have to make. In our 20s and 30s, we are trading our time for money; the wealth accumulation stage. At some point, we would have to use that accumulated wealth to “buy” time – that is, to have earned yourself the freedom to pursue whatever you want. To me, that’s the true purpose of seeking FIRE.

1 comment:

  1. Hi Alpaca,

    Quite a lot of thoughts there! Thanks for sharing.

    As a senior (60 yo), let me share some of my thoughts on the FIRE (Financially Independent, Retire Early) movement. Being able to FIRE is an alluring proposition for many. Achieving FIRE means one can break free from being tied down to a mindless and energy sapping work, and pursue one's passion and interest, and basically have control over your time.

    Now lets look at the pros and cons of FIRE, and for ease of reading and clarity, I put my thoughts into three headings:

    FI (Financial Independence)
    From my readings on the topic, it seems that different people define FI differently. On one extreme, some define FI as the point where their passive income (from their investment without drawing down their capital) cover their annual expenses as well as inflation. This means that their investment capital would be untouched throughout their life.

    On the other end of the spectrum, there are people who defined FI as the point where they can start drawing down their savings including any passive income to last their lifetime leaving little or nothing at the end of their lives.

    It is obvious that which FI definition provides greater peace of mind. If your FI definition involves drawing down your capital / savings, there is always this worry you may outlast your savings. So aim closer to the first definition of FI.

    FI and RE
    I support the objectives of attaining FI because it inherently inculcates the following virtues:

    1. Hard work (people will be motivated to work more to increase their income)
    2. Thrift (people would want to save more to increase their savings)
    3. Increased awareness of expenses, investments and risks
    4. Looking and planning long term and scenario consideration

    Also being FI can surprisingly enable you to handle stress better at work. For example, you may no longer be stressed about getting that promotion or bonus, and you may end up enjoying your work more. Which in turn enable you to do your work better resulting in better bonus and promotion. 😃

    So, do work towards attaining FI. Now the RE (retiring early) part is questionable. Mathematically it just does not make sense to retire early just when one attains FI. Attaining FI, means that one can now save 100% of one's income. At this point, it is the best time to boost one's savings. So I would not encourage RE when one just attained FI.

    Secondly, what does one do when RE? A friend who retired at 48 confided to me that if he had not had his hobby to occupy him, he would have gone crazy. Too much time, too much energy but nothing meaningful and purposeful to do. So think carefully about the RE part.

    The bane of being FI
    While being FI is generally a good thing, be aware of the following pitfalls:

    1. One might start to slack off at work. This would be unfair to your colleagues who may have to pick up your work.
    2. Every little inconvenience or disagreement with superiors / colleagues at work can become big issues and trigger your thoughts of RE.
    3. You start to slow down on your effort to add to your savings
    4. You may start to spend more

    And finally something fun to end my comments.

    There has been some arguement in cyberspace about who can qualify for FIRE. A man in the US said he FIREd at 62 and was immediately slammed by netizens who said he didnt qualify. They said he was too old at 62 to qualify for FIRE, while he maintained that he still qualified as the retirement age in the US was 65.

    Some kind soul tried to mediate the arguement by suggesting the following acronyms:

    1. FURY - Financially Unfettered, Retire Young (for those who retire below 45)
    2. FIRE - Financially Independent, Retire Early (for those who retire below 55)
    3. FART - Financially Assured, Retire Truly. (for those who retire at 55 and above)