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What is the FIRE movement? Spoiler alert, it has nothing to do with lighting up a fire. It’s an acronym for Financial Independence, Retire Early. The objective of FIRE is to aggressively save and invest (between 50 and 75 per cent of your income), so you can retire in your late 30s or 40s.


The FIRE movement started in the late 1990s to early 2000s and has since gained popularity among the youth. After all, who wouldn't want to retire comfortably at a younger age? 


But in today's increased cost of living, can we still implement the FIRE movement and plan to retire in our 40s? Let's find out! 


How To Start your Own FIRE Movement

So, how does it work? Since FIRE movement is all about achieving financial independence, its followers usually live a frugal lifestyle with minimal expenses. They save or invest most of their income and concentrate on building their retirement fund. 


If this strategy strikes your fancy, then it's time to start your retirement calculation! Read on to learn about your FIRE number. 

Start by Calculating Your FIRE Number

Your FIRE number is the total amount of invested assets you'll need to amass before you can stop working and subsist solely on yearly returns. Assets are tangible or intangible items acquired for the purpose of generating additional income or held for speculation in the hopes of a future increase in value. Mutual funds, stocks, bonds, real estate, and retirement savings accounts are examples of investment assets. Here are several ways you can decide your FIRE number: 

The 25x Rule

With the rule of 25x, you must save 25 times your yearly costs. To get this figure, multiply your monthly spending by 12, and you'll have your yearly expenses. The yearly expenditure is then multiplied by 25 to reach your FIRE figure.

FIRE Number = Annual Expenses x 25


The 4% Rule


The 4% rule allows retirees to withdraw 4% of their retirement portfolio per year, adjusted for inflation, and so provide themselves with an income for 30 years. However, if your plan is to retire early then 30 years of income will very likely be insufficient to meet your retirement needs.

Your FIRE number fluctuates based on the FIRE approach you choose. To help you choose the FIRE variation that best suits you, let's look at each of them in more detail.


  • Lean FIRE: People interested in Lean FIRE expect to survive on less than RM40,000 a year in retirement, and frequently much less. The benefit is that it takes substantially less time than other ways to reach financial independence. However, this option forbids you from taking out money from your retirement account, advocating for followers to save aggressively today so they can live on less tomorrow. 

  • Fat FIRE: If you lack the motivation and commitment required to adhere to Lean FIRE's strict requirements, Fat FIRE can help you achieve early retirement without making as many sacrifices. The catch is that in order to succeed, you must master two tasks; generating a high income and making wise investments over an extended period of time. The objective is to retire early while saving enough money to live off of RM100,000 annually.

  • Barista FIRE: This is for those who desire a middle ground between the two options mentioned above. They gave up their typical 9 to 5 employment, but they maintain a less-than-minimal way of living through a combination of savings and part-time work. 

Ways to Fulfil 25x and 4% Rules



1. Make a list:

To find out how much money you’ll need to retire, you need to accurately estimate how much money you’ll spend each year taking into account what you will spend on rent or mortgage, health care, medications, food, clothing and everything else.


2. Expect the unexpected:

Unexpected events inevitably occur in life, and whether we like it or not, we usually end up spending money because of them. Therefore, after totalling your projected expenses for the year, be sure to leave room for some discretionary spending.


3. Start to invest and diversify:

Long-term investments pay off; the more you gather these assets early on, the larger your eventual return on investment you’ll receive.


4. Work hard:

Since you want to retire as soon as feasible, follow the Malay idiom saying, “usaha tangga kejayaan (hard work leads to success).”  For example, start a company or take up a secondary job. Make every effort to boost your income and cash flow so that you’re able to save as much as you can on your road to financial independence.

Should You Pursue FIRE?


FIRE is unquestionably one of the most effective models you may use if your objective is to work hard in order to live a life of freedom as soon as it’s feasible.


While it may not be for everyone, if you’re someone willing to put in the work, and sacrifice comforts in the short term for long-term independence, the FIRE movement should be able to provide you with enough tools, encouragement, and inspiration to keep your inner FIRE ablaze.




This article is for informational purposes only and CIMB does not make any representation and warranty as to the accuracy, completeness and fairness of any information contained in this article. As this article is general in nature, it is not intended to address the circumstances of any particular individual or entity. You are advised to consult a financial advisor or investment professional before making any decisions based on the information contained in this article. CIMB assumes no liability for any consequences arising from your reliance on the information presented here.