Last month, Eric Richard was in Bali, Indonesia, enjoying the tropical weather and carefree life of a retiree. Last summer, at 29, Richard had quit his job as a corporate operations manager to become a "digital nomad."
Now he is hunkered down at his parents' house in Michigan, having returned to the United States as concerns over the coronavirus outbreak grew and travel bans were put in place around the world. He is in self-isolation as a precaution.
And in recent weeks, he said, he has seen his net worth drop by more than $100,000.
"It's definitely not a great feeling, to say the least," Richard said.
Financial independence, retire early
He is an adherent of the FIRE movement, the personal finance strategy popular among millennials. It stands for 'financial independence, retire early.'
The FIRE movement was born during the stock market's historic 11-year-long wealth-creating run. Professionals in their 30s and 40s were saving up million-dollar nest eggs and quitting their jobs in the prime of life to live off investments. It was unheard-of in modern times, at least for anyone without a trust fund.
Now the coronavirus has thrashed several nation's economies, from Japan to Germany. The U.S. stock market had its steepest drop ever in March. Naturally, some are predicting the decline or end of the FIRE lifestyle.
Should I just sell everything?
Pete Adeney, aka Mr. Money Mustache, a guru of the movement, said he had been hearing from disciples who were asking if they should "sell everything now." Reddit's FIRE message board is filled with nervous chatter, as those "firing" and those who have already "fired" seek advice and comfort.
"Anybody here own property they use as Airbnb's?" one user asked, referring to a popular FIRE strategy for generating income. "What's your situation looking like?"
The answer came back: "Airbnb is a mess right now."
In 2018, many people in the FIRE movement believed they had the financial resources to enjoy retirements as long as six decades. If they whittled their living expenses to nothing and withdrew no more than 4% each year from their portfolio (known as the 4% rule), all would be fine.
Kristy Shen and Bryce Leung, a married couple from Toronto who in 2015 quit their tech jobs in their early 30s to travel the world, were also in Bali when the global outbreak struck. They watched their investment portfolio drop by six figures in one day, a stomach-churning moment for anyone.
But the couple, who wrote a FIRE how-to guide, "Quit Like a Millionaire," consider themselves "some of the most pessimistic people in this space," Shen said. That caution, along with their engineer training to create multiple backup plans, has served them well.
"Based on interest and dividends that got paid out last year, we can cover this year's expenses," Shen said.
Leung, who invested through the Great Recession, added: "There was a lot more reason to be scared in 2008. They were saying money is going to be toilet paper."
Sitting back and making your money grow
Jason Long, a former pharmacist in rural Tennessee who retired in 2017 at age 38, with about $1 million, said he was better off now than then - even after the stock market plunge and discounting his living expenses. For three years, he has sat back and watched his investments grow.
"We're in a society that values capital more than labor," Long said. "I don't like that, but I take advantage of it, I guess."
Long said he felt for the FIRE folks who retired in 2019 and had less of a cushion. "I probably wouldn't have been able to sleep if I had been in that situation," he said.
Losing financial independence
That unfortunate circumstance is where Richard finds himself. Not only did he retire less than a year ago, but he also practices "lean FIRE" - generally defined as a net worth of between $500,000 and $1 million (as opposed to the $1 million and more many accumulate before "firing").
And with the current travel restrictions, Richard and others can't live in a cheap foreign country, a common FIRE tactic known as "geographic arbitrage." In Bali, for instance, he and his girlfriend were staying in "a lovely guesthouse with a pool," minutes from the beach, he said, for less than $800 a month. Who knows when he can get back?
Still, he had his own lucky timing: He sold a portion of his investments in February, at the peak, earnings he will live on until the market comes back. And if the market continues to go down, Richard said: "I wouldn't be opposed to picking up part-time or freelance work. Financial independence, to me, gave me the freedom to leave my corporate job to pursue things I'm passionate about. It's not about never doing anything to earn money again."
For Adeney, the current moment is a test of the principles of financial independence. For years, he has taught his fellow "Mustachians" to not be reliant on a job, to live modestly, to squirrel away an emergency fund, to invest in the stock market consistently over the long term. And he has been reassuring his followers on his blog that those practices can offer psychological comfort, now more than ever.
"This is a happier way to live whether you are in an economic boom or a deep recession," Adeney wrote in an email. "But its biggest moment of strength is at times like this."
He added: "This could all be misinterpreted as smugness, but I don't intend it that way. My hope is that by being self-sufficient ourselves, we are in a better position to help out other people who really need it."
Shen and Leung are similarly sanguine about their continued future as millennial retirees, though they are making lifestyle adjustments. "Going forward, we are going to live on $40,000 a year, and maybe less," Shen said. "Because I'm finding all kinds of deals."
Indeed, Shen and Leung, back in Toronto and self-isolating for two weeks, will soon be moving into a two-bedroom condo downtown they found on Airbnb that normally rents for $111 a night.
The rate now? It's $39.
