Indians must adapt FIRE to indigenous needs
Financial independence, retire early, or FIRE, has taken off around the world as people try to escape corporate drudgery and pursue an independent and fulfilling life. This movement is gaining in India as well, but with its own set of challenges.
Based on the principles of disciplined saving, strategic investing and mindful spending, FIRE tactics seek to prepare individuals to retire 10, 20, even 30 years earlier than the traditional retirement age. But with the worlds of work, healthcare, and financial stability changing, Indian aspirants have to adapt these strategies to homegrown conditions.
The core tenets of FIRE
FIRE is achieving financial independence by saving and investing enough money to support your lifestyle without the need for active income. It usually means following a three-pronged approach: Save aggressively, spend frugally, and invest wisely. Advocates aim for a savings rate of 50% or more of their income, and investment income that produces passive income streams. The objective is to achieve a 'crossover point" at which passive income surpasses living expenses, enabling early retirement.
Also Read: How WATER can put out the euphoria of FIRE - The key factor of early retirement
FIRE is not a one-size-fits-all approach, especially in India, where cultural attitudes about money are deeply entrenched in familial obligations, social expectations and economic disparities, thus requiring an overhaul of traditional mindsets.
Specific challenges in India
Rising expenses and inflation: The most pressing issue on the path to FIRE in India is the increase in living expenses. Inflation, especially in basic categories such as health, education and housing, is a significant headwind.
Healthcare costs: Healthcare is the most critical issue for FIRE enthusiasts in India. We have very limited health insurance options. Medical costs are often borne out-of-pocket, unlike in countries with strong public healthcare systems. Even those who have health insurance may find that coverage comes with gaps.
Also Read: Is early retirement a good idea? Not for your health
Family obligations: In Indian culture, individualistic pursuits take a backseat to collective accountability. Funding siblings' education, supporting ageing parents, or helping with family weddings strain even the best-planned budgets.
Hence, Indians need to localize FIRE to indigenous needs.
Here are some strategies
Choose phased retirement rather than full retirement: Instead of leaving the workforce, phased retirement provides more flexibility and security. Gradually cutting down on professional commitments, while looking into other sources of income, such as consulting jobs, freelance projects or hobbies that you can monetize, helps you ease into retirement while maintaining a comfortable financial situation.
Diversified investments: With India's markets proving to be volatile, diversification is imperative. A blend of equities, real estate, mutual funds and fixed deposits will help balance risk and guarantee returns.
Stocks provide growth potential but entail more risk. Index funds or diversified equity mutual funds can equally provide exposure to consider (once again with much lower risk). Real estate investments can generate rental income and have the potential to appreciate. Both PPF and NPS have tax benefits and long-duration savings options, which are suitable for FIRE goals. Seniors should also enrol in the new PMJAY government health insurance scheme.
Don't forget the emergency fund: Having a sufficient corpus for emergencies is the basic tenet of a secure financial life, whether FIRE or not. When considering the FIRE path, build up at least six months' worth of living expenses in liquid assets when you start.
Also Read: How you can calculate your early retirement fund
Living under one's means is a central tenet of the FIRE philosophy. Being frugal is not about sacrificing your quality of life; it's about valuing what you spend money on rather than spending it on extravagance. Small steps like cooking at home or using shared mobility rather than owning multiple vehicles can compound.
Finding freedom: Technology has led to the democratisation of opportunities to generate side incomes. Leverage platforms like YouTube, Etsy and Fiverr to monetize skills and hobbies. From creating online courses, selling traditional supplements, or offering online coaching services, there are many ways to generate additional income alongside a full-time job.
Balancing purpose and leisure: After all, achieving financial independence is not enough—learning how to retire and finding a post-retirement purpose is equally important. Early retirees often struggle with loneliness, the lack of purpose and social disconnect. In doing so, they should develop hobbies, contribute to charity, help young workers, or engage in lifelong learning.
A sustainable FIRE journey: FIRE in India is not just about accumulating riches; it is about building a system that supports both independence and a better life. By adopting a phased approach to retirement, by taking advantage of the benefits of diversification through investments, by spending judiciously, and by focusing on those things which add a sense of purpose in retirement, Indians should be able to navigate the challenges of early retirement.
Rushi Anandan is an associate professor of general management at K J Somaiya Institute of Management.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
32 minutes ago
- Mint
Best pharma stocks to buy today, 16 June, as recommended by expert Raja Venkatraman
The Indian pharmaceutical sector is experiencing significant growth and transformation, moving beyond generic drugs towards innovation and globalisation. With a robust run seen in this space lately and the strong surge in pharma names in the last few weeks, we are covering some names that are holding some promise. Here are three stocks to trade as recommended by Raja Venkatraman for Monday, 16 June Buy MAXHEALTH (Current price ₹1232.80) Buy BIOCON (Current price ₹355.40) Buy STAR (Current price ₹882.45) Also Read: The capital goods sector gets a power-up, its weight rises in Nifty Outlook for Trading Most of the sectors ended the week in red with Realty, FMCG and PSU Banks leading the way down. The Bank Nifty has not been so strong after the breakout and has actually met with some selling, thereby keeping the pressure on the Nifty too. Fortunately, there has been good activity form the IT index and it is seen heading towards its highs, and this has contributed to some gains in the Nifty as IT majors are well weighted on the main index too. The gap left on the move down on 13 June continues to remain and that keeps a lid on the bullish flag. From the chart above we can see that the trends are down into some strong supports yet again. The dips into the previous supports at 24500 remain an important value support region that can now be considered as an inflexion point going into the coming days. Looking at the Open Interest data, the Put writing at 24500 continued to hold on with the PCR just below 1 highlighting that the bullish camp has more work to do. Markets continued to see uncertainty with no clear global or domestic cues. As a result, we are now in the dark of the outcome of the trends in the coming week. We are likely to witness a volatile scenario in the coming week. Also Read: Escalating Israel-Iran conflict to keep markets on boil in near term IT sector leads from the front as the strong showing midcap IT stocks have been faring better than the leaders. The strong move seen in majority of the IT stocks clearly suggests that the upward traction we can look for some continued upward traction in the coming days. The strong charge above resistance zones around 37500 has clearly signalled a new wave in this index. Until these zones are given up, this index and its component stocks will be in demand. Overall, markets are pointing to a bullish setup, and this can help fuel more upside in this index. Since no signs of a let-up in the trends, we can continue to look for every opportunity to initiate long position. Raja Venkatraman is the co-founder of NeoTrader. His Sebi-registered research analyst registration no. is INH000016223. Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
32 minutes ago
- Mint
Auto part makers look beyond cars to dodge global headwinds
Facing shifting trade dynamics, geopolitical tensions, and cooling demand especially in the key US market, top Indian auto component makers Samvardhana Motherson, Sona Comstar, and Bharat Forge are either getting into new growth areas or beefing up existing presence in alternative sectors. During management calls with analysts and investors in May after declaring their Q4 results, Sona Comstar (listed on the bourses as Sona BLW Precision Forgings Ltd) said it is looking at railways, Motherson at aerospace, and Bharat Forge said it is eyeing defence and electronics to boost growth even as the core auto business faces challenges. The tweak in strategic direction follows the March announcement by US President Donald Trump that all automobile-related imports into the US would attract a flat tariff of 25%. For these three companies, which have among the highest exposure to the US market among Indian auto component makers, that is likely to hit revenues and margins. Sona Comstar's managing director and chief executive officer (CEO) Vivek Vikram Singh said in an analyst call on 30 April that the developments in the US could impact 3% of its total revenue. 'In our opinion, they (US tariffs) will adversely impact the demand for cars and light trucks," Singh said. Also read | Automakers urge Indian govt for diplomatic outreach to China for rare earths In FY25, Sona Comstar earned 41% of its ₹3,545 crore consolidated revenues, and Motherson 19% of ₹1.13 trillion, from the North American market, the bulk of which comprises sales in the US. Bharat Forge generated 70% of its total exports from the Americas (both North and South America) in the same fiscal year. Sona Comstar said that acquisition of railway equipment business from Escorts Kubota, which was completed this month, will make India its largest market from second largest in the previous financial year. The company had announced the acquisition of Escorts Kubota in October 2024 for ₹1,600 crore, marking its entry in the railway equipment space. Motherson's revenue from aerospace components rose from ₹339 crore in FY24 to ₹1,749 crore in FY25, growing at a pace of 415%, albeit on a low base. The company is also diversifying and expanding into areas like consumer electronics and semiconductor manufacturing machines. 'We expect this to grow even further in the coming quarters," said Laksh Vaaman Sehgal, director at Samvardhana Motherson, on the non-automotive revenue. Per its investor presentation for Q4 FY25, Motherson plans to spend about 70% of ₹3,000 crore earmarked for growth capital expenditure on non-auto related business in the current fiscal year (FY26). Read this | From red to black: India's top automakers see EV business turning around Meanwhile, Bharat Forge identified defence and electronics as key growth areas. 'Industrial saw growth across verticals with Defence, Heavy Horse Power Engines registering robust performance. In the medium term, scale up of the Defence business and opportunities for components supply to Small Nuclear Reactors would be key to growth," its investor presentation said. To be sure, Bharat Forge, which has been in the defence business since 2010, is the most diversified among these three companies with more than seven lines of business, including auto parts, defence, aerospace, and electronics, among others. The core auto segment now forms just 53% of its overall business. Amit Kalyani, vice chairman and joint managing director at Bharat Forge, also noted that electronics is going to be a key growth area as its role increases in the industrial sector. 'You need to build scale, you need to build supply chain capability, and I think we are going to do that in multiple areas," Kalyani told analysts in the post earnings call. 'The Indian government wants to create Indian electronics players in niche areas where imports are not wanted to be used. So, I think there is an opportunity and that's what we are pursuing." Also read | Froth clears from Bharat Forge's valuation, but it lags on a crucial metric Jugnu Sakuja, managing director at consultancy firm Alvarez & Marsal, told Mint that the pursuit of leading auto component players to diversify into high-end tech areas like electronics, robot parts manufacturing etc. will continue to intensify as these players will look to find new avenues of growth and expand margins. Facing Global Challenges Companies and analysts alike agree that the growth environment for the country's auto component players is becoming increasingly challenging. 'Muted global production due to geopolitical issues, evolving platform mix and trade dynamics; growth in India and China offset by degrowth in developed markets," were some challenges outlined in Motherson's investor presentation on 29 May. Echoing a similar sentiment, Bharat Forge's management highlighted in its presentation to investors on 8 May that an 'unpredictable policy environment in the near future can lead to lower discretionary spends impacting overall volumes in North America". The imposition of restrictions on rare earth magnets by China in response to the US's decision to impose tariffs has further sparked concerns about automobile production. 'Global automotive production, and in this I include every market, may see disruptions due to supply chain complexities and high dependence on China, especially for rare earth material," Singh of Sona Comstar said. And read | Indian auto stuck in queue as China clears rare earth magnets for others Meanwhile, analysts at Ambit Institutional Equities wrote in a 25 April note, 'We identify three key risks for Ancs-USMCA/tariffs, EU weakness and Chinese competition, and EVs–given the industry's export reliance on US/EU and good salience of engine components." Nifty Auto index has gained 0.81% this year as against a 4.11% rise in the benchmark Nifty 50.
Mint
44 minutes ago
- Mint
TCS demands better talent, offers this incentive to recruiters for right candidates
Unhappy with the quality of candidates being provided for hiring, India's biggest IT services firm has urged its third-party vendors to raise their game, and promised a sweetener to help them step up. According to two vendors who spoke with Mint on condition of anonymity, Tata Consultancy Services (TCS) Ltd said vendors can get 50% higher payouts for candidates who pass its quality checks. This aggressive push comes as TCS, despite postponing its own wage hikes, looks to swiftly close critical software programming vacancies and capitalize on what it sees as a 'promising" first half of the current fiscal year. In a series of virtual meetings with its vendors in April and May across Delhi, Mumbai, Hyderabad, Bengaluru, and Pune, the company's senior HR officials, including chief human resources officer (CHRO) Milind Lakkad, pointed out that barely 10% of the mandates that the recruiters got have been filled, the vendors cited above said. 'The company informed the vendors that they have 3,000 open oppositions, plus 600 other critical vacancies that need to be closed by June end," one of the vendors cited above said. 'They said that the first two quarters of the fiscal look 'promising' but cautioned that the quality of profiles need to improve." Also read | AI is replacing humans in early-stage screening of potential hires. Is it a fad? The critical vacancies include 200 open positions in Java in BFSI; 100 in SAP; 300 in testing, .Net etc., this person added. To be sure, like other Indian IT firms, TCS has a multi-pronged recruitment method: direct from campus, through its own HR teams, using third-party vendors for junior and middle positions, and headhunters for senior roles, typically for senior management or C-suite. Emailed queries to TCS remained unanswered till press time. Recruiters told Mint that plucking the right candidate is getting tougher despite sufficient resumes in the market. This is especially because the sector is sending mixed signals—some companies are rolling out hikes, while others, like TCS, have put wage increases on hold. TCS, with a workforce of 607,979 as per its latest annual report, has postponed wage increases citing the 'uncertainty in the environment". CHRO Lakkad told analysts in a post-earnings call that the company will wait for clarity to emerge before deciding on wage hikes. Read this | India Inc bets on internal hires but recruiters warn of risks According to one of the vendors cited above, the hiring agents had asked for an increase in the flat fee for normal hiring (for very senior profiles, search firms get a percentage of the candidate's compensation). But the company did not agree to change the structure, and instead proposed the 50% incentive. To be sure, TCS uses three rate slabs for its hiring vendors. The first, 'general' is largely meant for junior profiles and vendors can bill ₹30,000-50,000 per candidate. The second, 'special', fetches vendors ₹50,000-80,000 for candidates with four to six years of work experience. The last slab is for candidates with six plus years of experience. The vendor can bill ₹80,000-100,000 for each candidate who gets placed in these roles. Each slab has different skill sets. 'The vendors were informed that if they get through the quality checks and the person gets hired and if it was a tougher than than usual mandate, then they can bill more than the slab the candidate's resume was sent for. So that means, for a General vacancy profile, the vendor can charge rates applicable to a Special profile," one of the vendors quoted above said. Over the past few years, the IT firm has become stringent about its recruitment methods. Vendors are no longer allowed to contact company officials for any queries regarding their mandates. Instead, the mandates are posted on a portal and vendors are required to feed the resumes here. And read | Primer: Is geopolitics to blame for your missing pay hike?
