The Investment Inflection Point: The FIRE Starter

Investment Inflection Point

The Investment Inflection Point: The FIRE Starter

Hello $wanigans! Thanks for stopping by The Green Swan. Today I’m here to chat about another one of my investment goals. Back a few months ago I spoke about my 4 Year Goal in my post about my Net Worth Explosion. Feel free to read about it more there, but this is my ongoing goal to double my net worth every four years. Not necessarily a difficult task to achieve in the early stages, but I expect it to get much more difficult in the coming iterations now that I’ve reach the double comma club.

The FIRE Starter

Today I want to reveal another one of my goals. This goal is slightly different in that it does have an “end date”, meaning it isn’t an ongoing goal that will continually reset itself like the 4 year goal does. For this goal, I’ve coined the name “The FIRE Starter”. The FIRE (Financially Independent/Retire Early) Starter is the point in time that I begin sustainably earning more investment income annually than the contributions I make to said investments. That inflection point is The Fire Starter!

Think about that for a moment. At that point in time, what was previously the most important thing to growing my investments (actually contributing to my investments) becomes meaningfully less important. That’s because now the most important thing to growing my investments is my investments itself. The FIRE Starter is when the snowball you started rolling years ago has grown with enough power to begin compounding massively and taking on a life of its own. Another way to look at it is that at this inflection point, my investments are truly self-sustaining…I’ve grown a beast!

An Example

Let me explain this a bit further by sharing an example. I’ll reach back to a prior post where I explained the Millennial’s guide to a path to a million. As you may recall, in that post I laid out three scenarios to reach a million.

Scenario 2 was for folks willing to embrace the frugal life and not let lifestyle inflation creep in. I assumed a starting salary out of college of $30,000 at age 22 and increasing annually by 3%, a savings rate of 5%, and an increase to the savings rate by 1% annually (capped at 25%). As a reminder, the path to a million in this scenario stops at age 58…not too shabby.

Investment Inflection Point

Going back to the data on this post, I found that The FIRE Starter was reached at age 42, or right at 20 years in the making. Once this point is reached, look at how the complexion of the chart changes…

Investment Inflection Point


As you can see, at this point the investment portfolio really takes off and begins growing. The FIRE has been lit…

My FIRE Starter

Needless to say, my goal is to reach this point ASAP. It doesn’t mean I made it or I’m ready to retire yet, but what it signifies is that I’m close. It means maybe I can feel more comfortable splurging here or there and adding some creature comforts to my lifestyle.

Of course I’m not talking about derailing my investment portfolio and my path to early retirement, but it means frugality doesn’t necessarily have to be the top priority anymore. As I explained previously, to me frugality is a means to an end. Well, The FIRE Starter means I’m nearing the end…and that means my mindset can start to change, gradually, as I near early retirement.

Where am I at today though? Well, I’ll say this…I haven’t reached My FIRE Starter yet. But I’m nearing it and it is within range. There was one year in which my investment income / growth did outpace my contributions, but that was 2013 when the S&P Index jumped over 32% in that year alone. As you can imagine, my all equity portfolio saw a nice little pick-up. But The FIRE Starter is only reached when investment income is at a point where it can continuously exceed contributions to the investments, a level that can be reasonably sustained…excluding the impact of routine recessions which are inevitable.

Theoretically, you could reach the inflection point, then suffer a recessionary drop-off in your investments, and then subsequently reach it again when your investments rebound. But for the sake of our discussion today, we will ignore this possibility.

But since 2013, the stock market has only had mediocre or below average performance and, simultaneously, my contribution level has increased driven by continued pay raises and low lifestyle inflation.

So right now I don’t expect to reach My FIRE Starter until maybe 2019 or 2020 if things go according to plan. Granted, if you would have asked me this 5 years ago back in 2011, I would have estimated it to be in 2017 (…ahh the benefit of keeping meticulous excel files…). Why has it moved out two to three years? Not because investment performance has lagged so much, but more so because my pay raises and contributions continue to increase…not a bad problem to have necessarily.

This brings up another interesting point to discuss…what’s unique about this goal is that if you increase your annual contributions, it makes the goal tougher to meet, but it makes reaching your “FIRE” goal easier to meet…hmmm ironic how these two goals conflict with each other…

So maybe I need to rephrase my goal, it isn’t necessarily to reach this inflection point ASAP because that would actually lead me to cutting back on contributions so that I can reach it next year! Instead, my goal is to rich this point ASAP without sacrificing contributions.

Your Path toward The FIRE Starter

So what can you do to help you reach your FIRE Starter? Boost your contributions! This will help you build that snowball so that it can in turn build on itself. And you can boost your contributions by the common sense ways…finding ways to make more money and reduce your cost of living.

In theory, if you have a savings rate of 50% or more and you reach The FIRE Starter then you are ready to retire (albeit there are many other considerations to be made…it’s never that simple).

I’m continuously on the lookout to lower my cost of living and I outlined a number of unique ways in my recent frugal millionaire post.


Now that I’ve shared with all you fine readers another one of my investment goals, you may have noticed a trend starting. My goals aren’t numeric specific, i.e. I don’t have an investment goal to reach $1 million or $3 million or $10 million…instead they are designed to help me reach a certain stage or phase in my journey.

So do I have other goals to share…maybe eventually. How about you? What are your investment goals? Would you consider adopting The FIRE Starter and the 4 year goal for yourself?

Thanks for taking a look!

The Green Swan












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  1. Great post, I love the FIRE starter concept. In “Your Money or Your Life” by Joe Dominguez and Vicki Robin they call it the “crossover point”. It’s the point at which your returns are enough to cover your income. Of course, they used treasury bills and interest rates were much higher back then. I remember the first month where my net worth went up as much as my income – that was amazing! Compound interest is amazing.

    1. Yes the crossover point is another interesting concept. Thanks for sharing! Compounding is definitely amazing, it should be everyone’s best friend! 🙂

  2. Interesting concept this “Fire Starter”. But to be brutally honest, I’m just focussing to get to the end goal of FIRE and stopped worrying about all the goals in between. In our case FIRE will consist of Mr. CF actually quitting his work, whereas Mrs CF may continue on a while longer. Ah, the difference between not loving your work and loving it a lot! Needless to say I’m a bit more motivated 😉

    1. Our household may not be too different when in FIRE. Lucy enjoys her work more than I do, but it’s still a ways off so we’ll see.

      Thanks for the comment, CF.

  3. Ahhh, I’m loving the idea of having a FIRE Starter of my own one day. Obviously if you can live only off dividends from your investments without touching the principal amount, you’re set for a while. 🙂
    We’re still in the Paying Off Debt part of our frugal journey, but I’d obviously love to grow our investment income exponentially after that point. We’ll see how it goes!

  4. Last year, we noticed our portfolio was pretty flat – sad sort of year, and essentially we grew just a shade over what we invested. Meaning if we invested about $130k overall, our portfolio grew only $145k.

    However, looking at our contributions versus our gains for this year and moving forward, we realized that our contributions have WAY less effect on our overall portfolio than the market, yeah compounding! So, I would bet that we’re close to that point, because the projected growth of our portfolio over the next 2 years (fingers crossed no major crashes – then we just buy more so meh) our non-contribution growth will be more than our contributions. Yeah!

    If you’d asked me to predict this 2 years ago, I’d look at you like you were a monkey trying to teach me how to code a rocket launch. Exactly! I’d be that confused looking, because I’d laugh and say, “Yeah that’s probably not happening for another 5 years or more.” Just goes to show how choosing a great wife can help you out immensely! Mrs. SSC is the brains behind our outfit, lol. I’ll ask her about our FIRE starter timeline, but I think if we haven’t hit it, we’re really really close.

    1. Yeah this year has been better so far! That’s great you guys are nearing that point if you haven’t reached it already, expect huge growth going forward so long as no market setbacks. That’s awesome! Thanks for sharing Mr SSC.

  5. With a large savings rate over last few years and boosts from large bonuses and stock options, the supra-growth from the contribution is impossible even in a good market. But this is certainly no complaint. No, quite the opposite. We are excited to be in finanancial independence land and arguably even at financial freedom already. it is arguably time we pulled the cord instead of analyzing to death when to pull the cord.

    One more year syndrome is so real and so seductive. For a conservative couple like us, it is doubly hard.

    1. Wow that’s great you folks were able to hit FI before reaching the FIRE starter! All the more power to you. It shows the benefit of a frugal lifestyle and a growing income. Kudos to you! Thanks for sharing.

  6. This is really a great way to think about the impact of exponential growth. I think like with a lot of things, the key is sticking it out until you see the effects. At the beginning, the growth doesn’t look like that much. But at some point, you end up with enough money that your growth is probably more than what you can even invest in a year! That’s when you see that firestarter really take off.

    1. Absolutely! It’s hard to have patience, especially in today’s need for instant gratification. But it’s imperative to stay the course as it’ll eventually osu off in spades!

      Thanks for the comment, Panther.

  7. Love the concept GS. I’m not sure that you have come up with an entirely new idea, lol, but the fact that you fully understand how it works for you justifies naming it whatever you like.

    As a result of a recent property sale, I’m in the process of investing the funds into various ETFs to give me a diverse and hopefully safe portfolio that will endure for the rest of my life. Once the dividends start rolling in, it’ll replace the income I use to earn until I retired.

    This is my FIRE starter project at the moment. Short and sweet for me but exactly as you describe in your own concept.

    1. No I’m probably not the first person to come up with it, but I hadn’t seen it elsewhere so figured I could take naming rights! 🙂

      Glad you’ve reached your inflection point! I like the sounds of moving the real estate into a diversified equity portfolio.

      Thanks for the comment, Martin.

  8. Not a bad way to look at a stepping stone goal. It’s a bit hard to apply to all situations, but meets many. In my case my salary and thus my savings is highly variable. Thus I try to look at the cost picture which is more static for me. I’d guesstimate our income has varied up and down as much as 30 percent these last 5 yrs. Given our spending is fixed it means so goes my savings. This year is fixing to be a high one. So far next year looks to be low.

    1. I hear you, FTF, that would make it more difficult in finding your FIRE starter for sure. Those are some big income swings! Perhaps to get a rough estimate you could average the prior couple years worth of contributions?

      Thanks for the comment!

  9. Interesting thoughts! The power of compounding sure is marvelous! I think it’s a great midway goal to have until you reach FIRE. I’m certainly not at FIRE Starter status yet, but the net gains in my portfolio are getting bigger every month! Only a matter of time!

  10. Compounding is truly a marvelous force. Even though I understand it intellectually, seeing the actual effect on my portfolio never ceases to surprise and amaze. I hope you get to your inflection point sooner than you expect.

  11. Hi there Green Swan,

    Its a great idea as it shows when you are on the “last leg” of the journey, knowing that compounding is now doing more of the hard work, although I think for a lot of people in the FIRE community its likely to be very close to the end of the journey, but that is only a guess 🙂

    For me, I wont adopt the 4 year goal, I am too simplistic and I just try and put away as much as I can each month and see where we get (some automated, some not). I will however now start looking each year to see where the growth in my portfolios came from – how much was contributions and how much was growth / income. I do know that this year will be the first year I have hit enough passive income to pay the bills (not including the mortgage or eating / drinking) to run the home and that is a great feeling, its another step along!

    FIREin’ London

    1. Hi FIREin London, yes for many in the FIRE community it is near the end due to the typical high savings rate. And as Mr Pie even mentioned above, he won’t even reach it before retirement!

      That’s great your passive income this year should pay the bills considering the market growth is in line with the average! Definitely a good sign for you.

      Thanks for the great comment!

  12. I like it! Any goal that motivates you to increase your investment portfolio is a good one in my book. Interesting how it does conflict with your FIRE goal somewhat. At the same time, there is some limit on how much you can increase your contributions (unless you’re really killing it by increasing your income every year), and those increased contributions will eventually help you reach your goal after they get some compounded growth.

    My goals are more dollar-based – i.e. I want to become a millionaire to open up more investment options as an accredited investor, and I’m in the process of coming up with my plan to reach FIRE. I might have to look into goals like this that will help me reach my ultimate goal of FIRE.

    1. Thanks! Interesting, I’ve never heard much of being an accredited investor before and what that would bring to the table. I’d love to hear more.

      Thanks for the comment!

      1. An accredited investor is basically what the government defines as someone being sophisticated enough to invest in more complicated investments. You see it a lot in the new real estate crowdsourcing investment platforms that have come out, such as Realty Shares. To be an accredited investor you need to either make $200,000 a year (single, $300,000 for married) or have a net worth of $1 million not including your primary residence.

  13. Sounds like you’re doing everything right and as long as you keep on the path, your FIRE Starter will hit! I’ve been trying to invest somewhat balanced in the market, real estate and a few home run possibilities like angel investing. I’m working most heavily in real estate to provide monthly cash flow for FI and real financial freedom, and I expect the market someday (when it hits my fire starter moment down the line) will be a bonus.

    Like Go Finance Yourself mentioned, being an accredited investor does open you up to a good number of different investment opportunities both in the stock market, real estate deals, and angel investing. Doesn’t mean you should do them necessarily but it’s nice to have some more options on the plate.

    Nice post!

    1. Sounds like you’ll be plenty diversified and have some solid passive income streams (your name is very appropriate…!). I’d love to hear more about any success you have on the anger investing front, very interesting!

      Thanks for the comment, Doc.

  14. Interesting concept. I would think that I’m probably past the inflection point, but of course, with the volatility of equity returns every year you can beat or underperform your contribution. Applying a roughly 7% expected return on my investments I should have surpassed the inflection point by now. But then again, I don’t want to make too much of a deal out of it, for fear of getting complacent with my contributions, haha! Great read as always!

    1. Yeah good point, I certainly don’t want to get complacent with my contributions either! Definitely a good thought, I don’t want to take my foot off the gas.

      Thanks for sharing, ERN!

  15. Great point & illustration of that “sweet spot” when investments really take off. It’s interesting that for super-early retirees, savings rate is really important because compound interest doesn’t have that much time to work, though it’ll be important in their future.

    1. Yes absolutely! That is an interesting takeaway. And like Mr Pie mentioned above, that future benefit of compounding can also entice and result in one more year syndrome for early retirees.

      Thanks for the comment, Kalie!

  16. I only wish I would have started saving in earnest at age 14 or 15 so I could reach the inflection point earlier! But thankfully I’ve realized the power of compounding and have put it to work for me. Although it may end up benefitting my kids more than me in the end, I still think it is wise to take advantage of it. Nice post.

    On being an accredited investor, if you use futures and ETFs in the correct way you can just about do what many hedge funds are doing on your own. There are some more customized contracts that you can’t do but I’m not sure how much better those are! I use futures in my portfolio to hedge against dramatic market declines. Just like a hedge fund!

    1. Interesting point on your kids benefiting more from you reaching the inflection point than yourself… That’s not all that bad of an outcome either! Thanks for sharing, Patient Wealth.

      Also, good info on being an accredited investor. Didn’t realize this at all so it may be something for me to look into more myself! Thank you.

  17. I love the concept that you came up with. Such an easy title to remember 🙂

    Interesting that you bring this up. I think this is the year that I hit the FIRE starter. It’s crazy to think that I reached this point and for all I know we have a massive bear market next year that will wipe out my FIRE starter. But I believe at this point that the FIRE starter has finally hit for me 🙂

    1. Awesome news! Major accomplishment, no doubt, so kudos to you folks. Hopefully you’ll have a pleasant ride and the market continues to do its part!

      Thanks for sharing, Mustard Seed.

  18. Interesting post JW. My contributions, on most years, exceed the passive income and capital gains. So, by your definition, I am not at the FIRE starter stage. But our living expenses are below the passive income generated over the last 2 years so by that definition, my FI journey is over. Interesting contrast, thanks tor making me think.

    1. Ah yes, you and Mr Pie appear to be of the same mold where reaching FI comes before the FIRE starter due to low cost of living. That’s an interesting scenario so thanks for making me think as well!

      I appreciate you stopping by, 10!

  19. JW, that’s an interesting metric. I think that I’ve probably passed the inflection point in my retirement accounts, but If I include the extra money I’m putting towards paying down our mortgage each year then I’m not sure, it’s probably close. I’ll have to check at year end to see – now I’m curious!

    I don’t have a set net worth goal or investable assets number that I am trying to hit either. At this point, it’s more about maximizing tax-deferred savings and having the house paid-off in 8 years. At that point, the kids will be out of college, I can take early retirement from my job (which includes medical insurance) and we’ll have more than enough to live off.

    Speaking of inflection points, there are financial ones and there are lifestyle ones. I suppose the next two inflection points for us are the kids leaving home for college and then having them out and on their own entirely. I’m targeting potential retirement at the latter, so more of a lifestyle milestone than a financial metric at this point.

    1. That would make sense to include advance mortgage payments since it sounds like you are aggressively paying that off, interesting point there.

      I share that goal in maxing out tax advantaged accounts! I’m not sure what I’ll do with my mortgage upon early retirement myself, given the low rate I may leave it out there. But I have time to figure that out.

      I like that thought of lifestyle inflection points too! We are on the opposite end of the spectrum though as I have a little one and another on the way. I think my first lifestyle inflection will be when they are both out of daycare (although that may be financial too :)). I hope to retire around that time

      Thanks for the great comment, Jon!

  20. JW, I really like the concept and congratulations on achieving the 7 figure portfolio. Related to your explosion concept, I’m right inline with driving toward doubling my networth every two years: 500k (Q3/2010), 1M (Q2/2012), and 2M (Q3/2014), and I expect to double that by Q1/2017. Most of the gains have been from pure savings, deferred compensation, capital gains, and rising value of vested stock options. I haven’t tracked total gains on investments, but I have been using dividends generated by my aftertax investment account to pay the majority of our living expenses, while I defer most of my compensation through non-qualified deferred compensation plans and exercising vested stock options to balance tax obligations. I think I’ve crossed over the inflection point, but I never thought of it that way. Great article!

    1. That is some impressive growth in your investment accounts. Being able to take advantage of the deferred comp plans available to you is a great way to drive growth and defer taxes.

      Sounds like you have a fairly high salary and by contributing the majority of it you drive great increases in your portfolio but inherently make it tough to reach that inflection point.

      Congrats to you on quickly reaching your third mill and nearly your fourth! Thanks for stopping by and sharing.

  21. A very interesting analysis. What I understand is that, to get to the FIRE starter point, one must increase his savings/investment rate and at the same time reduce his cost of living.

  22. That’s a nice concept, another level in the financial Freedom stair. I’d put it between financial integrity and Financial Independence but… wait… I just realized I’ll be financially Independent BEFORE being a FIRE starter 😀

    This is true for those with high income and high saving rate (my situation).

    i broke your game! 🙂

  23. Super fascinating concept (and a wonderful name). I read this a couple of weeks back and tried to figure out how to include it in my own goals / pat-on-the-back moments and realised I’m not wired that way.

    If I was going to chase this goal, I would end up sneaking money past myself in other ways so I was saving but could pretend it wasn’t a portfolio contribution, paying down a mortgage for example.

    I’ll be thrilled to reach this point, but I won’t be chasing it. Like a pot of gold at the end of a rainbow – the harder you look for it, the less likely you are to find it.

  24. It’s a great concept you have going here but someone already got in there with the name first.

    You will be hearing from my lawyers imminently.


    All the best from “the real FIREstarter” 🙂

    1. Haha! Needless to say I love your name! I guess it goes to show there are no unique concepts out there in the personal finance realm 😉

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