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The concept of bitcoin trading has been trending quite a lot in the last couple of years. It is especially relevant with the mindset of the millennials. FIRE refers to financial independence, retire early. Like the name suggests, it talks about the freedom from all kinds of liabilities to work for the whole life, instead of getting an earlier retirement and enjoying the time off.
This strategy talks about extreme savings, in which the person adopting it tends to save as much as possible to keep the money flowing after retirement. Apart from the saving strategy, it also talks about investing to the maximum, ensuring that life after retirement would be full of ease and comfort.
Millennials have seen their parents working way too hard throughout their lives. They don’t want to live a similar life, rather aim to retire earlier compared to them. Therefore, they opt for conventional strategies and set strict targets for themselves. The core of the FIRE strategy is frugality. This requires the adopters of this scheme to save huge chunks from their income. This amount is sometimes even more than fifty percent of their monthly revenue.
Why the FIRE strategy?
The Fire strategy ensures that the person adopting it can live a stress-free life once the required savings are achieved. The goal of one person could be different from the other. If you want your retirement savings to be in the millions, someone else may aim for even a higher amount. Once this goal is achieved, you can take make periodic withdrawals. Most of the time, it is the 4% rule that the adopters of this strategy opt for. They calculate this percentage from the savings and take it out for regular usage. All that is saved is mostly put into investments in various manners.
How to follow the FIRE strategy?
What makes the FIRE strategy possible is keeping strict discipline in your lifestyle. You must make sure not to spend even a single penny extra than your basic living necessities. Reduction in expenses is the sure way to add to your savings. At the same time, augmenting the income is also something you might need to do. For that matter, you must opt for as many investments as possible. All the cash you save every day must be put into a reliable investment to ensure it multiplies.
Bitcoin and the FIRE strategy
Most of the FIRE strategy proponents are those who believe in the bitcoin currency quite a lot. They find it a reliable investment to put their savings in. However, many people come up with the argument that bitcoin doesn’t come with any intrinsic value. Hence it is not capable of creating any cash flows.
This makes it highly volatile, and one shouldn’t prefer it over the traditional investment methods. Nonetheless, the fact that you don’t need the cash right now. Rather, using Bitcoin in the FIRE strategy to make future profits makes this argument inefficient. You can easily buy multiple cryptos and manage them through the bitcoin trading software.
Bitcoin showcases promising returns. Consider the annual growth rate of this coin in the last ten years. Even though the market it works in is highly volatile and full of risk, you would be amazed to know that its annual growth rate has been around 200%.
This figure is enough to motivate anyone to put his money into Bitcoin and make it his future investment. However, to be on the safer side, it is necessary to create a buffer and not let the market affect you much. You can do so by assuming lower returns for the future.
Compared to the fiat currency, the return that Bitcoin offers also makes it a great choice for investing for the future. However, to avoid the loss offered by market volatility, you may need to make periodic withdrawals. There will be no lumpiness, and market volatility might not affect you much. If you are new to the FIRE strategy, it is recommended that you do enough research before opting for an investment scheme. Opting for a particular method just because your friends are doing so might not be a wise decision to make!
