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!

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