FIE Formula 25: Everyone dreams of becoming rich, but for most people, this dream remains a dream. However, do you know about a formula that can fulfill this wish of yours? Nowadays, the FIRE model i.e., Financial Independence Retired Early, is trending rapidly among the youth. The most important formula in this is 25, according to which you can decide when you can leave your job and live a comfortable life, and stay away from the tension of money.

What is FIRE model?

FIRE model means Financial Independence Retired Early i.e. early retirement. The most important thing in this model is that you invest a large part of your income in savings and investments. Usually people are able to save only 20 to 30 percent of their income, while those who adopt the FIRE model have to save 50 to 70 percent. Its purpose is to reduce expenses and quickly create a large corpus.

How does FIRE Formula 25 work?

The backbone of the FIRE model is Formula 25. It simply means that you have to estimate your annual expenses and multiply it by 25. For this, suppose you need Rs 6 lakh every year, then your FIRE number will be 6 lakh, which will become 1.5 crores when multiplied by 25. That is, you will have to deposit Rs 1.5 crore. Now when you have accumulated so much corpus, you can safely withdraw 4 percent of the amount every year. This is called the 4 percent rule. It is believed that if you withdraw money at this rate, you will not run out of funds and your expenses will be easily met throughout your life.

Why is this formula becoming popular?

Today's youth, especially professionals from the IT and corporate sectors, are rapidly adopting this model. The reason for this is to get financial independence at a young age, spend more time with family, travel and fulfill hobbies. This is the reason why Fire Formula 25 is becoming popular. At the same time, this model is considered better for those people who can save with discipline and are experts in managing money.