中文

Financial Freedom:Guide to Retiring Early in HK

If you are tired of the 9 to 5 work grind, this article is great for you as you will learn ways to set yourself on the path to financial freedom through investment.
masthead-media

What is financial freedom/financial independence?

Financial Independence, Retire Early (FIRE) is a movement of devotees committed to a lifestyle involving extreme savings (saving up to 80% of monthly salary) and investment that aims to allow them to quit their day jobs or retire from work altogether.


So, when can you retire? Some people suggest that when your savings reach approximately 25 times your yearly expenses, then you may quit your jobs or and retire. This is calculated based on FIRE devotees making small withdrawals from their savings, typically around 4% of the balance yearly, to keep pace with the inflation.

​​Financial independence retire early calculator

So, when can you retire? You can work this out by an online FIRE calculator. If you are determined enough, you will realize that it is not impossible to retire early!
Step 1

Enter some basic information including your age, annual income, your annual expenses and your current net worth.
Step 2

Enter your asset allocation in percentage. Assets refers to stocks, bonds and cash.
Step 3

Enter the expected returns for each category.
Step 4

Press Calculate to work out the result.

4% rule: What is it?

The 4% rule is a common rule of thumb when it comes to how much you can withdraw from your money in investments in your first year of retirement. As its name suggests, you should be able to comfortably live off 4% of your money in investment during the first year of retirement and then adjust for inflation each subsequent year. If you follow this, you shouldn’t be outliving your money during a 30-year retirement. 

See below an example of the 4% rule:

Situation 1Situation 2
Monthly ExpensesSituation 1$20,000Situation 2 $10,000
Yearly Expenses Situation 1$240,000Situation 2 $120,000
Retirement Savings Required Situation 1$6,000,000Situation 2 $3,000,000

Best Online Brokers and Trading platform in HK

Stock Trading Platform Commission Fees (US Stock)Commission Fees (HK Stock)Features
Stock Trading Platform Valuable Capital Brokerage AccountCommission Fees (US Stock)US$0.99Commission Fees (HK Stock)HK$0Features
  • Create account: online registration and activate account with e-signature
  • Support US and HK stock trading, A Shares, ETFs, futures, funds, warrants, callable bull/bear contracts, inline warrants, IPO
  • IPO subscription margin interest rate at 1.6%, up to 95% margin
Stock Trading Platform SoFi Hong Kong Brokerage AccountCommission Fees (US Stock)US$0Commission Fees (HK Stock)HK$0Features
  • No commissions fees on trades
  • Fractional share trading
  • Start investing with as little as US$10 to own fractions of stocks, including Amazon, Tesla and Apple
Stock Trading Platform Webull Securities AccountCommission Fees (US Stock)US$0Commission Fees (HK Stock)HK$0Features
  • Provide access to Hong Kong Stocks, A shares, ETF, derivatives listed on the SEHK, Hong Kong IPO and Odd Lot. US stocks will be coming soon.
  • Offer 8 types of charts, 50 technical indicators, 12 types of line drawing and adding CYQ function.
Stock Trading Platform Saxo MarketsCommission Fees (US Stock)US$3Commission Fees (HK Stock)HK$18Features
  • Offer access to over 40,000 markets at industry-leading prices across stocks, ETFs, bonds, commodities, options, futures, funds, managed portfolios, FX and CFDs
  • Access 19,000+ stocks across core and emerging markets on 37 exchanges worldwide - HK, US, CN, UK, EU and JP

FAQ

How can I achieve financial independence？

You can achieve financial freedom/financial independence through saving and building passive income. You can work out when you can retire using an online FIRE calculator. If you are determined, it’s not impossible to set yourself on the path to FIRE.