FIRE, in plain English.

A guideline from US research suggesting you can withdraw 4% of your portfolio in year one, then adjust that amount for inflation each year, with a low chance of running out over 30 years. It came from the Trinity Study and assumes a US stock-and-bond mix.

What it means for you — A quick sanity check for "how big must my pot be?", but 30 years is short for an early exit, so many treat it as a ceiling rather than a target.

The flip side of the 4% rule: save 25 times your annual spending, and 4% of that pot covers one year of costs. It is a fast way to turn a spending figure into a target number.

What it means for you — Multiply your yearly spend by 25 for a rough finish line, and by more if you want a wider safety margin.

Saving 30 times your annual spending, which implies a withdrawal rate near 3.3% instead of 4%. The larger multiple builds in more room for long retirements, weak markets, and surprises.

What it means for you — A more cautious target than 25×; it takes longer to reach, in exchange for a wider margin over a 50-year horizon.

An accumulating (Acc) fund reinvests dividends automatically inside the fund; a distributing (Dist) fund pays them out to you as cash. The choice affects how you receive income and how it is taxed, which varies by country.

What it means for you — Accumulating keeps compounding hands-off while you save; distributing gives you cash to live on in drawdown, but check your local tax rules first.

Reaching partial financial independence, then taking a low-stress or part-time job that covers part of your spending so the rest of your portfolio can keep growing untouched. Named for the idea of an easy job like making coffee.

What it means for you — A halfway step for people who want out of a demanding career but are not ready to stop earning entirely.

My term for the challenge that arrives after you hit your number: with no job to shape your days, you have to decide for yourself what your time is for. The money problem is solved; the meaning problem is not.

What it means for you — The hardest part of an early exit is often not the maths but what you do on the Monday after you stop.

The cyclically adjusted price-to-earnings ratio, which compares stock prices to average inflation-adjusted earnings over the past ten years. It is used as a rough gauge of whether a market is expensive or cheap.

What it means for you — A high CAPE when you retire can point to lower future returns, so some people withdraw more cautiously in pricey markets.

Tax on the profit when you sell an asset for more than you paid for it. Rates, allowances, and the treatment of long-term holdings vary widely by country.

What it means for you — Selling investments in drawdown can trigger this tax, so where you live and when you sell both matter.

The point where your existing investments, left alone, should grow into a full retirement pot by your target age with no further contributions. You still work to cover today's costs, but you no longer need to save.

What it means for you — Once you hit it you can stop saving and, in theory, take a lower-paid job you enjoy while compounding does the rest.

Growth on top of previous growth: the returns you earn get reinvested and then earn their own returns, so a pot can snowball over time. The effect is small early on and large over decades.

What it means for you — Time in the market is the main driver, which is why an early start often does more than a bigger income later.

A fund's domicile is the country where it is legally based (for European investors, often Ireland or Luxembourg). Withholding tax is tax taken at source on dividends, and a fund's domicile affects how much of it you can reclaim or avoid.

What it means for you — An Ireland-domiciled fund often loses less to US dividend withholding than the alternatives, which quietly lifts long-run returns; details vary by country.

The phase after you stop saving, when you fund life by drawing income from or selling down your portfolio — the opposite of the accumulation years. (Confusingly, "drawdown" can also mean a market's fall from its peak.)

What it means for you — Getting to your number rewards saving and growth; living off it rewards withdrawing steadily without running dry.

A fund that holds a basket of investments (often a whole index) and trades on a stock exchange like a single share. Most FIRE investors use low-cost index ETFs as their main building block.

What it means for you — One cheap, diversified purchase can give you thousands of companies at once, which is why ETFs are the default tool here.

A tax some countries charge when you emigrate, treating your investments as if you sold them on the way out so the gain can be taxed. It is designed to stop people leaving purely to avoid capital gains tax.

What it means for you — If you plan to move abroad to retire, this can be a large one-off bill, and the rules vary sharply by country.

The total expense ratio (TER) is the yearly cost of owning a fund, shown as a percentage of your money (for example, 0.20%). It is deducted automatically, so you never see a separate bill.

What it means for you — Small differences compound into large sums, so a 0.20% fund can beat a 1.00% one by a lot over a lifetime.

Retiring early with a large portfolio that funds a comfortable or high-spending lifestyle rather than a bare-bones one. It needs a much bigger number, so it usually takes longer or a higher income to reach.

What it means for you — The choice for people who want early freedom without cutting back on how they live.

The point where income from your savings and investments can cover your living costs, so paid work becomes optional. It is the "FI" half of FIRE and does not require actually retiring.

What it means for you — This is the real prize: once work is a choice, you can keep it, change it, or drop it.

An approach built on saving and investing a large share of your income so you can reach financial independence and stop working decades earlier than usual. It is a framework for buying back your time, not a single fixed plan.

What it means for you — The core idea is simple: spend less than you earn, invest the gap, and let it grow until work is optional.

The size of portfolio you need before work becomes optional, usually your annual spending multiplied by 25 to 30. Below it you are still building; at or above it you can, in theory, live off the pot.

What it means for you — It is the single figure the whole plan aims at, and it falls fast when your spending falls.

Spending deliberately less than you could, so more of your income can go into savings and investments. In FIRE it is a lever rather than a virtue: a lower spend both fills the pot faster and shrinks the pot you need.

What it means for you — It works both ends of the sum — but past a sane baseline, raising your income usually moves the finish line more than cutting deeper.

Enough money to walk away from a job, a client or a situation the moment it stops deserving you — without financial fear. It doesn't have to mean full financial independence; the phrase, popularised in the FIRE world by JL Collins, describes slack, not a finish line.

What it means for you — Long before your full number, a cushion this size already changes how you work: the option to say no is a kind of power.

Earning or holding money tied to a strong economy while living somewhere cheaper, so your savings stretch further. It can be international (moving countries) or domestic (a cheaper region or town).

What it means for you — Moving your life to a lower-cost place can cut your FIRE number sharply, because a smaller spend needs a smaller pot.

Pay and perks so good that they keep you in a job you would otherwise leave, because walking away feels too expensive. Common with high salaries, bonuses, or stock that vests over time.

What it means for you — The more your spending rises with your income, the tighter the handcuffs, which is why lifestyle creep is worth watching.

A fund that simply tracks a market index (such as a global stock index) instead of trying to beat it, which keeps costs low. It gives you broad diversification in a single holding.

What it means for you — Owning the whole market cheaply tends to beat picking stocks or paying active managers over the long run.

The gradual rise in prices over time, which means the same amount of money buys less each year. Even modest inflation compounds, roughly halving cash's spending power over a couple of decades.

What it means for you — Your plan has to out-grow inflation, which is why long-term savings usually sit in investments rather than cash.

Retiring early on a deliberately small budget, covering the essentials with little to spare. It needs a smaller portfolio, so it can be reached sooner, but it leaves less cushion.

What it means for you — A faster route to freedom for people happy with a frugal life; the risk is having little slack if costs rise.

My phrase for why cutting your spending helps in two ways at once: it frees up money to invest now, and it lowers the number you need to retire on. A €1,000-a-year cut both adds to savings and, at 30×, drops your target by about €30,000.

What it means for you — Trimming a recurring cost does double duty, which often moves your finish line faster than earning more.

Everything you own — investments, cash, property — minus everything you owe. It is the bluntest single measure of where the whole plan stands.

What it means for you — For a FIRE number, most people count only the invested part: the flat you live in doesn't pay for the groceries.

The habit of delaying retirement again and again, working "just one more year" to feel safer, even after hitting your number. It is usually driven by fear of the unknown rather than real financial need.

What it means for you — Past your number, extra years often buy comfort you will not need while spending time you cannot get back.

A way of comparing what money actually buys in different countries, adjusting for local prices rather than raw exchange rates. It shows that the same income can mean a modest life in one place and a comfortable one in another.

What it means for you — PPP is the engine behind geoarbitrage: it reveals where your money stretches furthest.

The "retire early" half of FIRE: leaving full-time work long before the traditional retirement age. In practice it often means the freedom to choose your work rather than stopping all activity.

What it means for you — For many people the goal is not idleness but the right to spend their days on their own terms.

A nominal return is the headline growth figure; a real return is that figure after subtracting inflation, showing the true gain in spending power. A 7% nominal return with 3% inflation is only about 4% real.

What it means for you — Plan with real returns, or you will overestimate how much your money will actually buy in retirement.

Periodically adjusting your holdings back to your target mix (say 80% stocks, 20% bonds) after market moves push them out of line. It usually means trimming what rose and topping up what lagged.

What it means for you — A simple rule that keeps your risk level steady and stops one good year from quietly taking over your portfolio.

The percentage of your portfolio you can withdraw each year, rising with inflation, with a high chance of the money lasting your whole retirement. The 4% rule is one estimate of it; longer retirements point to lower rates.

What it means for you — The lower the rate, the safer the plan and the bigger the pot you need, so it is the key dial in the whole calculation.

The share of your take-home income you save and invest rather than spend, shown as a percentage. It is the single biggest factor in how many years it takes to reach financial independence.

What it means for you — Raising it shortens the timeline from both ends: you invest more and you learn to live on less.

The danger that a run of poor returns early in retirement does lasting damage, because you are selling investments while prices are low. The same average return can leave you fine or broke depending on the order the years arrive.

What it means for you — It is why the first few years after you stop working are the most fragile, and why a cash buffer helps.

My way of describing money: not a scoreboard or a pile of things, but freedom you have saved up and can later spend as time, choice, and calm. Each amount you keep is a slice of future life you no longer have to sell.

What it means for you — Framed this way, the point of saving is not to get rich but to own more of your own days.

An account that shelters your investments from some tax, such as a UK ISA or SIPP, a French PEA, or a workplace pension. What exists and how much you can shelter varies by country.

What it means for you — The right wrapper can save years of growth versus a plain taxable account, so it is worth checking what your own country offers.

A 1998 study by three Trinity University professors that tested how long retirement portfolios lasted at different withdrawal rates, and popularised the 4% rule. It used historical US stock and bond returns over 30-year periods.

What it means for you — It is the source of the "4%" figure, but its 30-year, US-only basis is why early retirees often plan more cautiously.

A European set of rules for investment funds that sets standards for diversification, disclosure, and investor protection. A UCITS fund can be sold across the EU and is the common structure for European index funds and ETFs.

What it means for you — For European investors it is usually the standard, well-regulated way to hold an index, unlike many US-domiciled funds you often cannot buy.

An annual tax on the total value of your assets above a threshold, rather than on your income. A few countries levy one (Spain, Norway, and Switzerland among them), while most do not.

What it means for you — If you retire somewhere with a wealth tax it becomes a recurring cost on your portfolio, so it is worth factoring in; rules vary by country.

Tilting a portfolio toward higher-income assets (such as dividend stocks or bonds) near retirement so more of your spending comes from income rather than from selling. The aim is to sell fewer shares during early downturns.

What it means for you — One way to soften sequence-of-returns risk in the first fragile years, at the cost of some growth.