Is FIRE dead? 💀🔥

Yes. This is CityChad, your finance and lifestyle consiglieri that helps you make offers that are too good to refuse.

In this week’s edition:

• Markets slightly down after a big rally last week

• Is FIRE dead?

• META keeps cutting jobs, focuses on making money

• Travel Destination: Warsaw

• Chad of the Week: Elon himself

MARKET REVIEW

This week markets traded down after last week’s sweet rally.

Inflation fears had eased with expectations that the Fed will raise rates only once more.

But there is still caution in the market: there were mixed company earnings this week and Central Banks still trying to combat that pesky thing called inflation, with the UK seeing a whopping 10.1% YoY inflation reading!

Crypto assets gave back some of the impressive gains of last week, with some big drops in both BTC and ETH. Gotta love that volatility.

Gold continued its 2023 rally, hitting a near record last week. But is it that impressive given that fiat is worth so much less today?

IS FIRE DEAD?

TLDR: FIRE is under threat as one of its OGs goes back to work. Any passive income lifestyle comes with risks, so better prepare to be able to have other options if needed. Besides, life is more fun when you mix up passive and active income. Don’t forget to always invest in your most valuable asset: Yourself.

• What is FIRE and is it still a viable option in this economy?

• Can you rely solely on passive income for financial independence?

• What lessons can we learn from Sam Dogen, a FIRE pioneer, going back to work?

Is FIRE still an option for a real Chad? Well, it’s complicated.

If you are thinking about retiring and living off passive income, you have to bear in mind that things may not always work out.

I have passive income, like all Chads should. But leaving my future to chance is not prudent either. So if you are considering that option, read on.

WHAT IS FIRE?

First things first, what is FIRE?

FIRE stands for “Financial Independence, Retire Early”.

It’s a philosophy or lifestyle that aims to have you achieve financial independence as soon as possible.

By saving up a big stack of cash (usually from a high paying job) and investing it, you can in theory retire in your 30s or 40s. You draw a safe amount of your pot each month and live frugally, happily ever after.

There are different flavours of FIRE (traditional FIRE, Fat Fire, Barista FIRE and more), but we won’t get into that now.

HOW IT WORKS?

FIRE requires you to save around 25x times your annual expenditure (seems like a lot, I know!).

So if you want to spend €100K a year, you need to have saved €2.5m, and hope your portfolio yields 4% a year to not eat into your capital. Seems pretty reasonable, right?

Yes, historically, a balanced portfolio of equities, bonds and other assets should be able to beat that 4% target, no problem.

However, you have to bear in mind that severe market drawdowns (like we saw in 2008 for example) could see your portfolio lose a lot of its value, and taking money out in those times will hurt your ability to see your asset base recuperate.

In addition to that, you have inflation, of course. Running at 8%, you have to make that, just to stay in the game in real terms.

INFLATION

In a world of relentless inflation, poor asset returns and threats from AI to our ability to make money, FIRE may start to look like a pipe dream for most.

In fact, last week we saw the news that FIRE pioneer Sam Dogen (and the blogger behind Financial Samurai) is going back to work!

The cost of living and the prospect of the cost of higher education for his children was too much for him to sit and hope passive income will take care of it.

We hear you Sam, things have been getting scary out there for a while.

SO IS FIRE DEAD THEN?

Who knows. Historically, investors have been rewarded with higher returns when investing in riskier assets (the S&P500 for example has averaged around a 10% return over the last century).

So if the past repeats itself and inflation goes back to normal, then FIRE could still stand.

In fact, when you look into Dodgen’s reasons for going back to work, a lot of it seems to be driven by other things than just money (like finding more purpose in life). So it may be just a bit of clickbait there.

However, things can change. And things are changing fast with things like AI potentially changing the job landscape and how people and companies create value.

Time will tell whether the FIRE gets put out.

WHAT DOES CHAD THINK?

Diversifying your income sources and having passive income is always a must.

But leaving it all to chance, particularly if your portfolio is not the biggest, is just asking for trouble.

Be smart about it, and plan properly. Chad also loves to create value and not just sit around, so full FIRE is a No from me.

Most importantly, FIRE can encourage you to neglect investing in the most valuable asset: You.

NEWS: META KEEPS CUTTING

Meta has been a stock darling this year, rallying over 80%, after a very bad 2022.

It was pretty clear that Zuck’s foray into the Metaverse was not the massive success he had expected.

In fact, they seem to now be chasing the next shinny object, AI, leaving the Metaverse dream behind. They recently announced even more job cuts and an emphasis on shareholder value.

Seems that the trend of just showing up to work in Sillicon Valley to make TikToks about your free breakfast no longer cuts it in a world of high interest rates and no free money.

What do Chads make of this?

We think it’s great.

At the end of the day, cold hard cash is what investors care about, and so should CEOs.

It is important to be innovative and invest in new technologies, but not to lose sight of your main goal while doing this.

Time will tell if this was a Power Move, or just another attempt for a tech giant to not be left behind.

TRAVEL DESTINATION: WARSAW

We spent this week exploring Warsaw. Man, what a city! It is clean, cheap and lots of fun.

Warsaw has a reputation for being… actually it doesn’t seem to have much of reputation.

Our expectations were low, and man, how wrong were we? Very wrong my friend, very wrong.

The city is vibrant, with lots of modern buildings, new places to eat and go out.

It has all the amenities of Western capitals, at half the price and with far less crime and hassle.

You can see how their booming economy since the fall of the USSR is translating into a real viable option as a base in Europe.

The influx of Ukrainians since the war has also added a new social flavour to the city, which we found very appealing.

The generosity of the Polish people is incredible.

• Stay: Near the centre, but avoid big avenues. We stayed in this perfect studio, walking distance to cool restaurants, bars and cafes.

• Work: From home or many of the cafes in the neighbourhood. We loved Coffedesk, great for remote working and great coffee.

• Stay Fit: We love doing CrossFit in new places, so no surprise there. Try Crossfit MGW, and meet the super friendly owner Tomasz.

• Eat: One of the best steaks I’ve ever tried at Koneser Grill in the Praga district, over the river.

• Go out: Level 27, super classy yet friendly club with an amazing terrace.

• Transport: Uber is very cheap, with most 10 minute fares around 3 euros.

CHAD OF THE WEEK: ELON MUSK

This week we have Elon Musk shutting down a journalist's career in about three minutes.

The BBC journalist failed epicly in backing up his most aggressive claims about misinformation and Twitter bias.

Elon responded calmly and it's almost like he's toying with his food.

Anyway, a picture is worth a thousand words, and a video is worth a thousand pictures. So, check it out for yourself.

Our Twitter

If you're not following us on Twitter yet, you're missing out on some fire content.

We've got news and insights on investing, finance, and technology. Also, we would love to interact with our followers and answer any questions you might have. So come on and give us a follow!

Chad Meme

Disclaimer

The material on this email and our website is for informational and entertainment purposes only and we make no guarantees as to the accuracy or completeness of its content – it is subject to change. Please conduct your own due diligence and research.

None of this information is financial advice, and you should consult your financial advisor before making any investment decisions. Your capital is at risk and you may lose more than you initially invested. We do not provide any offer or solicitation to buy or sell any investment products, nor does this constitute an offer to provide investment advisory services.

The Chad index (“the index”) is a combination of historical returns for the following assets:

Equities: Vanguard FTSE All-World UCITS ETF USD Acc
Fixed Income: iShares Core Gl Aggregate Bd UCITS ETF USD Hgd Acc
Real Estate: iShares Developed Markets Property Yield UCITS ETF USD (Acc)
Gold: Gold Bullion Securities Limited
Ethereum
Bitcoin

The index is rebalanced quarterly to the target weights shown in the table. The target weights are subject to change. The index does not represent the performance of a real portfolio and does not imply a recommendation to invest in any of those assets. Past performance is not an indication of future performance.