For years, Kristy Shen and her husband, Bryce Leung, chased the dream of homeownership.
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“We were desperately trying to buy a house,” Shen told Business Insider.
Having grown up in poverty in China, she was initially more comfortable putting money into a home than into the stock market.
“My thinking was, ‘The stock market is scary.’ Everyone tells us, especially our parents, that houses are safe.”
While real estate may have felt safer, the barrier to entry was much higher. Despite both working in tech and earning good salaries, homeownership in Toronto still felt out of reach.
“It just seemed like every time we saved money, it was for nothing,” Shen said. “Housing prices would just go up.”
Entrepreneurship did not initially do much to improve their finances, either.
“We tried so many different entrepreneurial pursuits,” Shen said. “We tried starting a software business, which is actually our wheelhouse. We’re coders, so we thought, let’s try to make an app and see if we can make money from that.”
They tried other ideas, too, including a bartering side hustle called Swap It and an Amazon business. They also tried to make money through writing. Nothing took off.
“When you’re an entrepreneur, you have to be the marketer, you have to understand how to troubleshoot the code, you have to network with other people and collaborate,” Shen said, adding: “There was a lot of face-planting over and over again.”
Keeping it simple: saving most of their income and investing in index funds
The answer to the couple’s search for financial stability turned out to be far simpler: save most of their income and stash it in index funds.
“Super saving” and index fund investing are core principles of the financial independence, retire early, or FIRE, movement, which they discovered online while looking for alternative ways to use the down payment money they had saved but could not put toward a home.
“FIRE was the only thing that actually worked,” Leung said. “FIRE really is just a recognition of, this is how the math works, and if you save up this amount, then you’re done.”
The couple used the 4% rule, a common FIRE guideline that says you can withdraw about 4% of your portfolio each year in retirement. That means you need roughly 25 times your annual expenses invested. They were spending about 40,000 Canadian dollars a year, which put their FIRE number at 1 million Canadian dollars.
They saved up to 70% of their income by avoiding lifestyle creep and keeping the “big three” expenses — housing, transportation, and food — under control. Then, they invested most of those savings in low-cost index funds, including VTI and IEFA.
In 2015, a few years after they began investing diligently and consistently, they hit their FIRE number, quit their jobs, and began traveling the world. They were 31 and 32 at the time, and have been living off their portfolio ever since.
The basic FIRE principles felt far more controllable and manageable than entrepreneurship or buying real estate.
“It is the only thing that really does consistently work because it doesn’t require market conditions to be right or having the right product or having the right team,” Leung said. “Entrepreneurship requires a lot of factors that are outside your control.”
FIRE, on the other hand, is mostly within your control, with the biggest levers being how much you spend and how you invest.
“You can change how you spend,” he said, “and you can change how you invest.”
