Every term in financial independence, defined. Click any term for a full explanation with examples and links to related concepts.
4% rule
The 4% rule is a retirement withdrawal strategy suggesting you can safely withdraw 4% of your portfolio annually without running out of money.
80CCD(1B)
Section 80CCD(1B) allows an additional tax deduction of up to ₹50,000 for NPS contributions, over and above the ₹1.5 lakh Section 80C limit.
Asset Allocation
How you divide your portfolio between asset classes (equity, debt, gold, etc.) to balance growth and risk. Critical for long-term FIRE success.
barista fire
Barista FIRE is when you have enough investments to cover most expenses but work part-time or low-stress jobs to cover the rest and maintain benefits.
career break FI
Taking time off work during your FI journey. Sabbaticals, travel, or family—how it affects your timeline.
children education FI
Funding education while pursuing financial independence. Corpus planning, trade-offs, and strategies.
coast fire
Coast FIRE means you have saved enough that your investments will grow to your FIRE number by retirement age without further contributions.
coast fire examples
Real-world scenarios of Coast FIRE—when your corpus will grow to target without further contributions.
corpus
Corpus is the total amount of investable assets you have accumulated for retirement or financial independence.
credit card strategy
Using credit cards for rewards and cashback while avoiding debt. Pay in full, never carry a balance.
critical illness cover
Lump-sum payout on diagnosis of specified illnesses. Complements health insurance for FI planning.
currency risk India FI
Rupee depreciation and exchange rate risk when building or withdrawing from foreign-denominated assets.
debt fund
Debt funds invest in fixed-income securities like bonds and government papers. Lower risk and volatility than equity—used for stability in FI portfolios.
debt-free FI
Achieving financial independence without the burden of loans. Why paying off high-interest debt before or during FI matters.
direct vs regular plan
Direct plans are bought without a distributor—lower expense ratio. Regular plans go through agents or platforms and cost more.
Early Retirement
Leaving the workforce before traditional retirement age (typically 60+), often through financial independence achieved by saving and investing aggressively.
ELSS
ELSS is a tax-saving mutual fund with a 3-year lock-in. It qualifies for Section 80C deduction up to ₹1.5 lakh and invests in equities.
EPF
Mandatory retirement savings for salaried employees in India, with employer contribution. Tax-free returns and 80C benefit.
EPF withdrawal rules
Rules for withdrawing from EPF—partial withdrawal for emergencies, housing, education, and full withdrawal on retirement or job change.
equity fund
Equity funds invest primarily in stocks. They offer higher growth potential but more volatility—essential for long-term FIRE portfolios.
exit load
Exit load is a fee charged when you redeem mutual fund units within a specified period. It discourages short-term trading.
expense ratio
Expense ratio is the annual fee charged by a mutual fund as a percentage of assets. Lower expense ratios mean more of your returns stay invested.
fat fire
Fat FIRE means achieving financial independence with a comfortable or luxurious lifestyle, requiring a larger corpus.
financial independence
Financial independence means having enough passive income or investments to cover your expenses without needing to work for money.
FIRE and family
Aligning financial independence with family goals—spouse, children, parents. Shared vision and trade-offs.
FIRE Calculator
A FIRE calculator estimates how much you need to save and when you can achieve financial independence and early retirement.
fire movement
The FIRE movement is a lifestyle movement focused on aggressive saving and investing to achieve financial independence and retire early.
FIRE number
Your FIRE number is the total corpus you need to achieve financial independence and retire early, typically 25–33x your annual expenses.
FU Money
FU money is the amount of savings that gives you the freedom to walk away from a job or situation without financial stress.
fund overlap
Fund overlap occurs when multiple funds in your portfolio hold the same stocks. Too much overlap reduces diversification benefits.
geoarbitrage
Living in a lower-cost location while earning or withdrawing from higher-value currency. India FIRE advantage.
health insurance retirement
Critical for FI—medical costs rise with age. Plan for adequate coverage before and after retirement.
HRA
HRA is a tax-exempt allowance for rent paid. The exemption is the least of actual rent minus 10% of salary, 50% of salary, or actual HRA received.
Index Fund
A mutual fund or ETF that tracks a market index (e.g., Nifty 50, Sensex) with low fees, used as a core holding in FIRE portfolios.
inflation India FI
How India's inflation rate affects your FIRE number, withdrawal strategy, and corpus planning.
Inflation-Adjusted
Inflation-adjusted means expressing financial figures in real purchasing power by accounting for the eroding effect of inflation over time.
lean fire
Lean FIRE means achieving financial independence with minimal expenses, typically under ₹5–8 lakh per year in India.
LTA
LTA is a tax-exempt allowance for travel expenses during leave. Salaried employees can claim it twice in a block of four years.
lump sum vs sip
Lump sum is investing a large amount at once; SIP spreads investments over time. Both work for FIRE—choose based on when you have the money.
NPS
Government-backed retirement scheme in India with tax benefits, market-linked returns, and mandatory annuity at 60. Used in FIRE planning.
NPS annuity
At NPS exit (60 or later), at least 40% of corpus must be used to buy an annuity—a pension that pays you a regular income for life.
NPS partial withdrawal
NPS allows partial withdrawal of up to 25% of contributions after 3 years for specific purposes—education, marriage, home, medical.
One More Year Syndrome
One More Year Syndrome is the tendency to keep working past your FIRE number 'just one more year' due to fear or perfectionism.
Passive Income
Money earned with minimal ongoing effort—dividends, interest, rent, royalties—that can replace a salary and support financial independence.
PPF
Government-backed, tax-free savings scheme in India with 15-year tenure, ~7.1% interest, and EEE tax status. Popular for FIRE corpus building.
PPF extension
PPF accounts can be extended in blocks of 5 years after the initial 15-year maturity. You can continue investing or make withdrawals without further deposits.
real estate FI portfolio
Role of property in a financial independence portfolio. Rental income, diversification, liquidity trade-offs.
Rebalancing
Periodically adjusting your portfolio back to your target asset allocation by selling overweight assets and buying underweight ones.
rent vs buy FI
Whether to rent or buy a home on the path to financial independence. Math, flexibility, and lifestyle.
Retirement Corpus
Retirement corpus is the total amount of savings and investments you need to fund your lifestyle after you stop earning active income.
safe withdrawal rate
The safe withdrawal rate is the percentage of your portfolio you can withdraw annually without depleting it over your retirement horizon.
Section 80C
Section 80C allows deduction up to ₹1.5 lakh per year for investments in ELSS, PPF, EPF, NPS, and other specified instruments.
Sequence of Returns Risk
The risk that the order of investment returns early in retirement can permanently reduce portfolio longevity, even with the same average return.
side hustle FI
Extra income to accelerate your path to financial independence. Freelancing, consulting, passive income.
SIP
SIP is a method of investing a fixed amount in a mutual fund at regular intervals, helping you average costs and build discipline.
supporting parents FI
Balancing financial support for parents with your own path to financial independence.
SWP
SWP lets you withdraw a fixed amount from a mutual fund at regular intervals. It's a common way to generate retirement income from your corpus.
tax-efficient withdrawal
Strategies to minimize tax when withdrawing from your corpus in retirement—LTCG, STCG, and the order of withdrawal from different accounts.
tax-saving FD
Tax-saving FD is a 5-year fixed deposit that qualifies for Section 80C deduction up to ₹1.5 lakh. Returns are taxable.
term insurance
Pure life cover with no investment component. Essential for FI—protects dependents at low cost.
VRS
Employer-offered early exit with a lump sum. Can accelerate FIRE if the package and timing align.
Withdrawal Rate
The percentage of your retirement portfolio you withdraw each year to fund living expenses. The 4% rule is the most cited safe withdrawal rate.