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As a real estate investor myself, I can assure you that not everyone should invest directly in real estate. Only consider it if you have a passion for it and plan to invest in properties as a side business. FIRE Movement: Can I Achieve Financial Independence & Retire Early?

For the average person, you’re better off diversifying into real estate through more passive means. Try one of many indirect ways to invest in real estate, such as real estate crowdfunding investments like Fundrise, Streitwise, and Groundfloor.

While you can easily invest in publicly traded real estate investment trusts (REITs), and they do provide excellent liquidity, they come with several drawbacks. Most notably, they move with too much correlation with stock indexes to provide any real diversification benefits.

In my own investment portfolio, I use real estate as a stand-in for bonds. My real estate investments provide strong income yields with far more stability than the stock market. They don’t offer the same liquidity, but I don’t need liquidity from my real estate investments. My emergency fund and stock investments offer plenty. FIRE Movement: Can I Achieve Financial Independence & Retire Early?

And if you do decide to invest in real estate directly, you can score some excellent tax benefits to boot!

Minimise High-Risk Speculation on FIRE Movement: Can I Achieve Financial Independence & Retire Early?

It seems like everyone has a grungy cousin who made $100,000 on Dogecoin speculation or the like. But that doesn’t mean you should go out and put all your savings into cryptocurrencies or other speculative investments.

I have a little money in Bitcoin, Ethereum, and other crypto assets. Emphasis on “little” — I set aside no more than 5% of my portfolio for fun money investments and speculations. It would annoy me to lose it, but it wouldn’t break me.

If you feel the need to show off how smart you are by picking stocks or speculative investments like fine art or cryptocurrencies, go for it. But only do so with a small percentage of your total assets.

Which, come to think of it, is no different than how everyone else should treat these investments.

Final Word

When you retire young, don’t expect help from Social Security or Medicare. You won’t qualify for many years, if at all.

Of course, the purchasing power of Social Security benefits has been declining for decades, losing 30% between 2000 and 2020, according to The Senior Citizens League. And the Social Security Administration admitted in 2018 that its spending deficit puts it on track for insolvency by 2034. FIRE Movement: Can I Achieve Financial Independence & Retire Early?

As for health insurance, if you retire young, you can exercise the same health insurance options as the self-employed.

A 50%, 60%, or 70% savings rate is not easy. It’s not fun to drive a 10-year-old beater while your friends drive brand-new BMWs. But it’s a lifestyle choice based on priorities: Would you rather build enough wealth to retire young, or would you rather spend most of your pay cheque now?

There’s no wrong answer. But those willing to spend less today get to play tomorrow while their colleagues continue grinding away at work.