FIRE Portfolio 2024: The Better Way.

Warning: This article challenges the commonly accepted playbook. Read only if you’re ready to roast some of the most popular investing memes. If you’re looking for classic couch-potato FIRE portfolio recommendations, I wrote a dedicated article summarizing them with extensive commentary. Always a good place to start.

So, you want to retire early?

TL;DR: A typical FIRE approach is a more aggressive take on Boglehead wisdom, focusing on low-cost index funds and a simple mix of stocks and bonds. It aims to strike a balance between safety and growth while keeping things simple enough for even moms and pops to handle.

If you’re that type of bubble-wrapped samurai, and going even slightly against the grain scares you, you’ll build a FIRE portfolio inspired by Bogleheads, following the 3-fund portfolio recommendation, maybe weighting it a bit heavier on the stocks side:

If you’re already retired, or you just love moving slowly — look no further.

But if you’re more like me, you may see some cracks in this playbook:

1. Bonds are wealth preservation, not wealth-building assets. They protect you from short-term volatility, but long-term, they just bleed value due to inflation (the real one, not the manipulated CPI joke). Your true protection long-term is diversification, not government guarantees. Unless you believe in your government more than in capitalism and the market itself — in that case, I can’t help you.

2. Not all stocks are equal. Big tech eats the world. If every company relies on tools provided by Apple, Google, Microsoft — the scenario where small companies outperform those giants is very unlikely. Yes, there will be another “Apple” one day, but if you invest too broadly, you’ll dilute that effect anyway. The top 10 Nasdaq companies perform better than the Nasdaq 100, which performs better than the S&P 500… you get the gist. I don’t see this changing anytime soon.

3. Stocks are highly correlated. Even investing in a broad market doesn’t protect you from bear markets. There’s a better way to diversify.

Let me offer you a better way—something I personally do. But first, take the bubble wrap off. Seriously, it’s not needed.

Diversify Through Asset Classes

Let’s start here:

You can achieve a much better and safer portfolio by combining different asset classes instead of just different stock indexes.

Look at the chart below. This is gold and stocks since 2000. While it may seem that stocks are only going up, for half of this timeframe, stocks were not doing great as a long-term capital multiplier. In that same time, gold was just growing. Then the market switched. You see the green line in between? This is what happens when you mix both: you achieve a portfolio that is much more stable and safer than what adding bonds can ever offer.

Actually, if you look at the three moments when the market dropped significantly: the DOTCOM bubble, the 2008 crisis, and the beginning of COVID—each time, gold consistently provided protection.

Stock-bugs keep saying things like “I don’t like gold because it’s a non-productive asset.” If you want to invest with feelings, sure. You know what I don’t like? Losing money for 10 years straight. The 3-fund portfolio didn’t protect from that. Gold did.

I see you, my Boglehead buddy, reading this and dying inside. It’s ok. Don’t change, you’re doing great. For everybody else, let’s continue.

The World Is Burning

AI Disruption

Forget job market disruption—AI’s real impact is in your portfolio. Large models are becoming essential in every business, and AI companies are capturing a much bigger slice of overall growth, as everyone else now has to share profits with them. Broad market index funds like VOO are great for those nearing retirement, but if you’ve got years ahead, consider pivoting to QQQ before AI takes over your portfolio too.

Gold Is Back

Let’s not forget that much of the market’s wild growth has been fueled by money printing. While the stock market has generally hedged against inflation, we can’t ignore the potential disruption of this model. On the surface, central banks are discussing CBDCs, but behind the scenes, with less media attention, we see developments like Basel III and gold quietly returning as a “tier 1” asset.

The Wildcard (That Keeps Winning)

Finally, what’s the asset that has outperformed everything else over the last decade, changing finance and investing like nothing before? You guessed it—the magic internet money. What makes Bitcoin great for long-term portfolios is that it’s not only a macro asset representing the trillion-dollar crypto market but also another low-correlated asset class.

Here you have it—the FIRE trifecta portfolio that can get you to early retirement… even earlier.

Let’s Expand:

Nobody Gets Fired for Recommending Vanguard

It’s comfortable to recommend things everybody recommends. It’s a way to avoid responsibility: if the S&P 500 or bonds fail, nobody will blame you for investing “by the book.” That’s just bad luck. Who could have predicted that? But if you picked Bitcoin, the responsibility is only yours. Your family warned you at Christmas, didn’t they? By picking bonds and a broad market index, we’re simply extrapolating the past, quietly hoping that if this strategy fails, at least our friends won’t think we’re total losers.

During my short time at a big bank, I learned the old corporate joke: nobody gets fired for buying IBM.

Ideas Are Risky Business

When you think about risk more broadly, there are different types of risk. One basic way to de-risk a portfolio is diversification, but that can mean very different things.

One way to approach this is to check past volatility and correlation. But if you look through a geopolitical lens, a portfolio of VOO and bonds is just “Dollar” in two different flavors. It’s not really diversified at all.

On the other hand, gold traditionally hedges against inflation, currency devaluation, geopolitical instability, and economic uncertainty. Bitcoin adds financial censorship and systemic risks to the list. Both of them are defensive assets.

Which portfolio is riskier? That depends entirely on how you define risk.

Is QQQ the New VOO?

QQQ is essentially an ETF tracking the Nasdaq-100 Index. Why do I call it an “AI ETF without AI in the name”? Just look at the top 10 holdings.

Symbol	Company	Allocation
AAPL	Apple Inc.	9.15%
MSFT	Microsoft Corporation	8.08%
NVDA	NVIDIA Corporation	7.66%
AVGO	Broadcom Inc.	5.08%
AMZN	Amazon.com, Inc.	4.84%
META	Meta Platforms, Inc.	4.74%
TSLA	Tesla, Inc.	2.69%
COST	Costco Wholesale Corporation	2.66%
GOOGL	Alphabet Inc. (Class A)	2.50%
GOOG	Alphabet Inc. (Class C)	2.42%

Over 42% is made up of Apple, Microsoft, NVIDIA, Amazon, Tesla, Meta, and Google—major companies driving the AI revolution. Quite a good proxy with some extra diversification as a bonus.

If the argument against it is recency bias, I agree. This trade isn’t forever, but for the next 10 years, it could give you the boost you’re looking for.

What Is Basel III and Why Does It Matter?

Basel III is a set of international banking regulations designed to strengthen bank capital requirements, improve risk management, and increase transparency in response to the financial crisis of 2008. It classifies gold as a Tier 1 asset, meaning banks can now count gold as a risk-free reserve, increasing its demand and stability, making it a valuable hedge in a diversified portfolio. In recent years, China has been the biggest buyer of gold. Are they taking a risk or hedging?

The Plan ₿

There’s no doubt that with ETF approvals, Bitcoin is becoming part of mainstream finance. However, while ETFs are convenient, holding Bitcoin on your hardware wallet provides an additional layer of protection. The “I” in FIRE stands for “independence,” and this is where Bitcoin delivers as hard-to-confiscate money outside of the system and political control.

Bitcoin, Not Crypto

It’s a mistake to lump Bitcoin in with other cryptocurrencies. Bitcoin is a macro asset like gold, whereas something like Solana is closer to investing in a startup. If you’re accustomed to building a portfolio with ETFs, think of Bitcoin as a “crypto ETF” representing the entire crypto market. Its unique features, like limited supply, no founder, and decentralized holdings, guarantee its special long-term status, making it ideal for a FIRE portfolio.

How Many Bitcoin Cycles Before You Retire?

When you think about investing in Bitcoin, the 4-year halving cycle is your reference. Always aim for more than one cycle. Two or three cycles? That can fix more than a few past investing mistakes.

Currency for Robots

One of the early pitches for Bitcoin was the idea that “internet money” is the money for robots. With the explosion of AI, I see this argument coming back. And it makes sense: algorithms can’t open bank accounts or make payments independently. But they can create Bitcoin wallets and transact. This closes the loop with my AI thesis, so let’s move on to the last important point.

Implementation Matters

The final key part of the QQQ/Gold/Bitcoin portfolio is that it’s designed for dollar-cost averaging. Acquiring risky assets gradually means that not only do violent price drops not scare you, but you also bet on them—they lower your average price.

If you already have substantial savings, stick to a broad market index and the traditional approach. But with new money, an equal allocation into stocks, gold, and Bitcoin is what I call the FIRE Portfolio 2024.

Finally, while just buying and holding is a valid tax-efficient approach, anyone who’s invested in Bitcoin for a while knows how it can end: the asset that initially made up 20% of your portfolio becomes 80%, making you sweat at night.

The short answer? Portfolio rebalancing. That’s a topic for a coming article, but my basic guideline is simple: don’t rebalance too often because transaction fees and taxes will eat into your returns. But if any of the three assets surpasses 50% of your portfolio—rebalance.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, including the possible loss of principal. Always conduct your own research before making investment decisions.