What Is FIRE and Why Is Everyone Talking About It?
FIRE = Financial Independence, Retire Early
The FIRE movement originated in the USA in the 1990s after publication of the book "Your Money or Your Life" (Vicki Robin, 1992) and spread through the Mr. Money Mustache blog (2011). Today it has millions of followers worldwide.
Basic idea: Save and invest enough money so that investment returns cover your living expenses — without needing to work for money.
"I'm thinking about FIRE, self-securing for retirement, I don't count on the state."
FIRE Variants
There are multiple approaches to FIRE:
| FIRE Type | Annual Expenses | Capital Needed (25x) | Characteristics |
|---|---|---|---|
| Lean FIRE | €12,000 | €300,000 | Minimalist life, low expenses |
| Regular FIRE | €24,000 | €600,000 | Average living standard |
| Fat FIRE | €48,000+ | €1,200,000+ | More luxurious lifestyle |
| Coast FIRE | — | ~€200,000 at 35 | Let investments grow, work less |
| Barista FIRE | — | ~€400,000 | Part-time work to supplement income |
Why FIRE Makes Sense in Central Europe
1. State Pensions Are Uncertain
According to projections from financial policy institutes:
- By 2060 there will be only 1.3 workers per retiree (today 2.1)
- Pension system deficit could reach 4-5% of GDP
- Average pension today represents only 45% of average wage
Conclusion: If you're 30 today, you cannot rely on state pension covering your needs.
2. Living Costs Are Significantly Lower Than in Western Europe
Comparison of monthly costs for single person (source: Numbeo 2024):
| City | Rent (1-bed) | Monthly costs | FIRE number (25x) |
|---|---|---|---|
| San Francisco | €2,800 | €4,500 | €1,350,000 |
| London | €1,900 | €3,200 | €960,000 |
| Vienna | €900 | €1,800 | €540,000 |
| Bratislava | €650 | €1,400 | €420,000 |
| Prague | €750 | €1,500 | €450,000 |
Advantage: To achieve FIRE in Central Europe, you need 3x less than in San Francisco.
3. Investment Options Have Dramatically Improved
Just 10 years ago, investing in Central Europe was complicated. Today you have access to:
- Zero-fee brokers: Trading212, XTB, Degiro, IBKR
- ETF funds: iShares, Vanguard, Amundi — all available
- Robo-advisors: Finax, Portu — automated investing
- Crypto: Coinbase, Binance, Kraken
- Fractional real estate: HomeGrif, various platforms
FIRE Math: How Much Do You Need?
The 25x Rule (or 4% Rule)
This rule comes from the Trinity Study (1998), an academic study that analyzed 50+ years of historical stock and bond market data.
Finding: If you have a portfolio of 50-75% stocks and 25-50% bonds, you can withdraw 4% of the initial sum annually (adjusted for inflation) with 95% probability that money lasts 30 years.
Calculation:
- Annual expenses × 25 = FIRE number
- Or: FIRE number × 4% = Annual passive income
Why Real Estate Belongs in a FIRE Portfolio
Real Estate Advantages for FIRE
- Passive income: Rent provides predictable cash flow
- Inflation protection: Property values and rents rise with inflation
- Low volatility: Property prices don't swing like stocks (max -20% vs -50%)
- Leverage effect: With mortgage you can control larger assets
- Diversification: Low correlation with stock market
Problem: High Entry Barrier
Buying an investment apartment in major CEE cities:
- Average price: €200,000-280,000
- Required own capital (20%): €40,000-56,000
- Fees and modifications: €10,000-15,000
- Total: €50,000-70,000
For most young investors, this is out of reach.
Solution: Fractional Ownership via HomeGrif
With HomeGrif you can gain exposure to Central European real estate from smaller amounts:
- Minimum investment: Significantly lower than buying whole apartment
- Diversification: Investment across multiple properties
- Passive: No management, tenants, repairs
- Transparent: You know exactly which property you own
Time to FIRE
How many years to reach FIRE at different savings rates (assuming 7% annual return):
| Savings Rate | Years to FIRE |
|---|---|
| 10% | 51 years |
| 20% | 37 years |
| 30% | 28 years |
| 40% | 22 years |
| 50% | 17 years |
| 60% | 12 years |
| 70% | 8 years |
Key insight: Time in the market is more important than timing the market. Start today, even with small amounts. Every month of delay costs more than a bad investment decision.
Sources: Trinity Study (1998), Mr. Money Mustache, Numbeo Cost of Living Index, National Banks, MSCI World historical returns