February 12, 2020

2 min read

How to retire early
because everybody has that one retirement dream, right?
Nicholas Flaherty Image

Nicholas Flaherty - Investment Strategist - FWU Invest S.A.

Retiring early is a dream for many, as millennials sick of the office rat race seek their financial freedom, fuelling movements such as FIRE – Financial Independence Retire Early – which have hundreds of thousands of followers.

So, how to do it?

Well first things first, you must define what retirement means to you. For some, retirement means hanging out in the south of France on a yacht, enjoying the nightlife, without having to work, while for other it means simply financial independence, even if the income is minimal. Whatever it is, this is the first crucial step: defining what it means to you.


Once you’ve defined retirement, the next step is coming up with a plan for how to get there. And no matter what your ambitions are, central to this plan is saving – constantly. And by saving, we don’t just mean placing some money aside each month, but also actively investing this money, allowing it to work for you. You, of course, have to work to produce income to save, but this income can also work alongside you.


This point about saving is extremely important, especially in Europe, where we have an extremely conservative view on what savings means. We have this idea in our heads that savings is not associated with risk at all, but if we have the ambition to retire early and build the biggest nest egg possible, we also need to embrace risk to an extent. This does not, however, mean putting all savings into a couple of hot stocks your neighbour recommends; it means placing them in a structured way across stock and bond markets, thereby allowing your savings to flourish.


If you can manage to save a large portion of your income every month and systematically invest it in the markets, over the next 10-15 years, you will have built up a large base from which you can at the very least think about retirement. Indeed, looking at the stock market and going back over the last 100 years of history, as long as you are globally diversified, you can expect returns in or around 10% per annum, which if you continuously compound, while adding extra savings on top on a continuous basis sets you on the path towards independence.

In a nutshell, the dream of retiring early is on the rise and the good news is that it is not impossible. You need to have a clear idea of what it means to you and develop a structured plan to get there, the key to which is saving, but not just saving but also investing and learning how to embrace some risk.

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