FIRE (Financial Independence, Retire Early) is a financial movement and long-term strategy that aims to achieve financial independence as early as possible, turning paid employment from a necessity into an option.

The concept emerged in the United States in the late 1990s and early 2000s, inspired by the seminal book Your Money or Your Life by Vicki Robin and Joe Domínguez. It exploded in popularity during the 2010s thanks to personal finance blogs, Reddit communities, and online forums that shared real-life success stories. At its core, FIRE rests on three foundational pillars:

  • An exceptionally high savings rate (typically 50–70% of income).
  • Deliberate control and optimization of living expenses.
  • Disciplined, long-term investing to grow wealth efficiently.

Traditional FIRE approaches often emphasize capital appreciation through low-cost broad-market index funds and equities, relying on the famous 4% rule for sustainable withdrawals in retirement.

However, as practitioners near or reach independence, many shift toward income investing—a natural and increasingly popular evolution.Income investing fits seamlessly with FIRE goals because it prioritizes reliable, recurring cash flows over pure growth.

Portfolios built around dividend-paying stocks, income ETFs, bonds, REITs, MLPs, BDCs, and covered call strategies can generate predictable distributions that directly cover living expenses. This reduces sequence-of-returns risk—the danger of large market drops early in retirement—forces less reliance on selling assets during downturns, and eases the psychological burden of volatility.

For example, a $1.2 million portfolio yielding a conservative 5% through carefully selected dividend aristocrats, REITs, and high-yield vehicles could produce $60,000 annually in passive income. In this setup, investors can live comfortably off distributions alone, leaving principal intact and often growing over time.

This cash-flow-focused variant appeals particularly to those who value visibility, stability, and true autonomy. Rather than calculating safe withdrawal rates each year, they build a “yield shield” that funds their lifestyle regardless of market swings—making FIRE feel safer and more sustainable in the long run.

While classic growth-oriented FIRE remains dominant, the rise of income investing reflects a maturing movement: one that increasingly prioritizes sleep-well-at-night reliability alongside the original promise of early freedom.

FIRE is also dividend between growth and income investors.

See also: Dividend Aristocrat, REIT, mREIT, MLP, BDC, Covered Call Income Strategy, Yield on Cost, Total Return

Fire Definition