Calculate your Financial Independence number and how many years until you can retire. Based on your income, expenses, savings rate, and expected investment returns.
The FIRE (Financial Independence, Retire Early) movement is gaining traction among young African professionals. While the concept originated in the West, it applies equally to Africans — with some unique considerations like higher inflation rates, extended family obligations, and different investment landscapes.
Your FIRE number is simply your annual expenses multiplied by 25 (based on the 4% safe withdrawal rate). Once your invested assets reach this number, you can live off investment returns without working. In Africa, consider using a more conservative 3-3.5% withdrawal rate due to higher inflation volatility.
Yes, but you need to use real (inflation-adjusted) returns. If your investments return 12% and inflation is 7%, your real return is ~5%. This means it takes longer to reach FIRE, but it's still achievable with discipline and the right investment mix.
A diversified portfolio: FGN bonds (stable returns), mutual funds, REITs, index-linked bonds (inflation protection), and potentially some USD-denominated assets to hedge against naira depreciation. Real estate rental income is also popular.