The FIRE movement consists of people who want to retire early with a nest egg that can fully support their living expenses. FIRE (short for Financial Independence, Retire Early) sounds like an awesome goal to me.
The problem is that most people try to achieve FIRE by radically cutting expenses and saving every penny left over to build that nest egg.
It’s a hard life, and even with that level of sacrifice, it can take decades for the pay-off.
But what if there was a faster and better way to retire early? Now I am not talking about tightening your belt even further to accelerate your progress. That may be faster, but it’s certainly not better. I am talking about finding investments that will generate the required cash flow to support your early retirement.
That’s the topic of this article. We found 6 strategies that can generate that type of cash flow and get you to early retirement fast, without crushing your lifestyle in the process.
They are as follows:
- Buy a Profitable and Passive Blog
- Buy a FedEx Route for Passive Income
- Buy a Bread Route For Passive Income
- Purchase a Passive Income Laundromat
- Buy Vending Machines
- Rent Out Cars
We’ll cover each of these strategies in detail below, but let’s start by answering some introductory questions about FIRE, including what it is, how much you need to achieve it, and some of the standard advice out there about how to get there.
Want to skip the introductory stuff and jump ahead to the 6 strategies? Just click here.
The information contained in this post is for informational purposes only. It is not a recommendation to buy or invest, and it is not financial, investment, legal, or tax advice. You should seek the advice of a qualified professional before making any investment or other decisions relating to the topics covered by this article. All investments carry some degree of risk and you are never guaranteed any returns.
What Is FIRE?
FIRE stands for Financial Independence, Retire Early, and is a movement that emphasizes aggressive saving to achieve a nest egg that is big enough to support retirement before the traditional age of 65.
How Much Does it Cost to Achieve FIRE?
Using the 4% rule (which is the generally accepted safe withdrawal rate), you need 25 times the amount of income you want to spend in early retirement. So if you expect to spend $40,000 per year when you retire, you will need around $1 million in assets.
What Are Common Ways to Achieve FIRE?
The standard advice on how to achieve FIRE revolves around austerity. The idea is that if you want the reward of quitting your soul-sucking job before everyone else can, you’re going to have to tighten your belt and aggressively build up your retirement funds.
Here are some of the standard strategies on how to achieve FIRE:
- Save every available penny.
- Relentlessly cut back on expenses.
- Lower your retirement expectations
- Increase Your Income with a Side Hustle
- Invest in low-cost index funds
Look, I’m not hating on these strategies. They are perfectly sound. But I just think there’s a better way. On that note…
Six Strategies to Achieve FIRE Fast
Ok, this is the secret sauce, the ninja stuff.
Up until now, we have based all of our assumptions on the 4% rule. But what if you could invest in assets that generate far more than 4%?
I am talking about cash flow that generates returns of 20% or more. Note: what I mean by “cash flow” is income that is generated by an asset after all expenses are paid.
Let’s stay with our example of needing $40,000 in income to achieve FIRE. If you invest in an asset that generates cash flow equal to 20% of your investment amount, you would need to buy $200,000 worth of that asset to generate $40,000 in income. Compare that to $1,000,000 in assets you would need to generate that same $40,000 under the 4% rule.
That’s a difference of $800,000. How long would it take you to save $800,000?
For most people, you are talking decades. That‘s a lot of extra years to work at a high-stress job that you may hate.
So what are these high cash-flowing investments? Well, we teased them at the top of the article, but now it’s time to dive into them.
Note: These options have the added benefit of generating passive (or mostly passive) income. Why do we need passive income? Well, the “R” in FIRE stands for “Retire.” It’s not really retirement if you are just working at another high-stress job or business.
Ok, let’s get into it!
Buy a Profitable and Passive Blog
Blogs are probably my favorite high-yielding passive income investment. The strategy is simple:
Buy an existing money-making blog and collect checks.
Starting a blog is hard work and it can take a long time to make money. I am not talking about that. You want to buy a blog that has all of the articles written and is producing steady cash flow. Doing this can be a perfect way to get passive income that produces killer cash flow.
How good is the potential cash flow? Based on some real-life examples I pulled from blogs that were for sale on Empire Flippers (a leading website for buying and selling online businesses), you are looking at an average cash flow rate of 28.3%.
The bottom line: Based on that cash flow rate, you would only need to invest $141,342 to generate $40,000 in income.
FIRE doesn’t seem so far away anymore, right?
Want to learn more about buying a blog, including some of the key risks you need to address? Check out my article here:
Buy a FedEx Route for Passive Income
Did you know that you could buy a FedEx delivery route?
It can be a highly profitable business and, if you structure it right, it can generate mostly passive cash flow of more than 20%.
The business is very simple. You get a bunch of packages from FedEx each morning. Your job is to deliver those packages to locations within your territory. The great thing is that your discrete little piece of the FedEx delivery process is easily outsourced.
In fact, most owners do this.
They usually own many routes, so they are not driving a truck and making deliveries. They hire drivers and put in place managers that oversee the deliveries. Once you have good managers and reliable drivers in place, the day-to-day operations of this business can be run without your involvement.
If you want to learn more about this business, check out my beginner’s guide to owning FedEx routes for passive income.
So how good is the cash flow of a FedEx delivery business?
I took a sample of ten FedEx routes for sale in bizbuysell.com (one of the leading online sites for buying and selling businesses) and found an average cash flow of 26.1%.
The Bottom Line: With that type of cash flow rate, you would only need $153,256 to generate $40,000.
Buy a Bread Route for Passive Income
Like a FedEx route, you can buy a bread route that covers a territory.
Once you own that territory, you can sell bread to various retailers and pocket a commission for each sale. Best of all, you can have drivers run these routes for you and operate this as an absentee-run business.
To discover more about this business, read my article on buying bread routes for passive income.
How much cash flow can a bread route generate? According to my sampling of ten bread routes on routesforsale.net, they can provide cash flows of around 46%!
The Bottom Line: With that type of cash flow rate, you will only need $86,956 to generate $40,000.
Now, you should temper your expectations here because most of the sampled bread routes are likely operated by the owner. If you want a more passive income source, you will have to hire drivers to run the routes. Of course, in that case, the cash flow will go down, but you should still have a lot of room to play with.
Purchase a Passive Income Laundromat
Laundromats can yield cash flows that easily clear 20%. On top of that, they can be operated in a mostly passive way.
After all, the machines are doing the hard work of washing and drying the clothes (with your customers doing the work of loading and unloading the clothes).
The process is mostly automated, but not completely. There are things you will need to do to successfully run this business as an absentee owner. If you want to learn how to do this, check out my article about starting a laundromat in six easy steps.
So what type of cash flow can you get from laundromats? According to my sampling of 10 laundromat businesses on bizbuysell.com, you can generate an average cash flow of 29.6%.
Bottom Line: With that type of cash flow, you would only need $135,135 to generate $40,000 in income.
Buy Vending Machines
A vending machine can be a great passive income source that produces very strong cash flow.
You just place it in a high-traffic location and make money every time someone buys something from your machine. The cost to get started varies, with a simple gumball machine costing only around $200 to a more expensive vending machine running between $3,000 to $5,000.
Still, that’s far less expensive than buying an entire business and it’s a terrific way to start generating some stellar cash flow.
The only part of this that requires some work is restocking and collecting money from the machine, but you can easily outsource this function.
For more details on this business, check out my beginner’s guide on how to start a vending machine route for passive income.
How strong is the ROI for vending machines? Based on my sampling of ten vending machine businesses on bizbuysell.com, I found the average cash flow to be 49.2%!
Bottom Line: With that type of cash flow, you will only need $81,300 to generate $40,000 in income.
As with bread routes, most of the sampled vending machines were operated by their owners. If you want a more passive income source, you will have to hire a route runner to take care of the routes. If you choose to do this, the cash flow will go down, but there is a lot of room to still get healthy cash flow, even after paying for a route runner.
Another strategy is buying ATM Machines. They are conceptually similar and can have comparable or even better cash flows. If you want to learn more, check out my step-by-step guide to starting an ATM business.
Rent Out Cars
I like this one a lot.
You can rent out your car on Turo.com and make great passive income. One option is to use your existing car and rent it out when you don’t need it (perhaps on the weekends).
But you can also buy a car just for this purpose and rent it out. This a legitimate business model and there are people who own fleets of cars and rent them out through Turo.
So what type of cash flow can you generate doing this? Let’s find out.
Turo has a tool called the Carculator, which allows you to type in the year, make, and model of your car. The Carculator will then give you an estimate of how much you can make renting out that car on Turo. I love these types of tools because they give you amazing data!
I typed in a 2017 Toyota Prius Three Touring and the Carculator indicated that I could earn $388 per month.
That works out to $4,656 per year.
I then hopped onto cargurus and searched for a Toyota with that same year and model. They all seemed to hover around the $19,000 range. So if you take $4,656 and divide it by $19,000, you get a potential cash flow of 24.5%.
Now I just randomly typed in a year, make and model for this example. But you may want to play around with the Carculator and type in different car models to see what you can earn. I have no doubt that you can find car models that can generate better ROIs.
Bottom Line: With a cash flow of 24.5%, you would only need $163,265 to generate $40,000 in income.
So there you have it.
Six ways to achieve FIRE fast. Even better, you can achieve this without having to go through suffocating austerity. It just takes a little bit of investment in learning how some of these alternative investments work and getting good at managing them.
There can be a learning curve at first, but like anything else, once you get the hang of it and do it for a while, it becomes easy.
Want more great strategies to achieve FIRE fast by earning 20% (or more) ROI on your investments? Check out my article on how to get 20% ROI.