A millennial generation affected by a coastal fire explains how they invest their money

• Amberly Grant achieved “Coast FIRE” by increasing her income and investing the excess.
• She has maxed out three tax-advantaged accounts: a 401(k), a Roth IRA and an HSA.
• She prefers to invest in index funds because they are diverse, low-risk and uncomplicated.

When Amberly Grant came across the FIRE (Financial Independence, Early Retirement) movement in her mid-20s, she accepted the concept but didn’t know if she would ever make enough money to participate.

“I had the tools, but I didn’t have the resources. I was making $15,000 a year and spending most of it — because you can’t really save that,” Grant, who spent her early 20s traveling the world and doing odd jobs, told Business Insider.

“So that was my attitude, just a little bit concerned. There’s a stereotype in the FIRE industry where it’s a bunch of people who are engineers and make really good money for 10 years.”

Over the next decade, Grant made several important moves – notably: Increase your income while keeping the cost of living low and investing the excess—that prepared her to achieve “Coast FIRE,” meaning she’ll never have to put another dollar into her retirement account again.

The current amount in their investment account will grow and compound over time to such an extent that by age 60 it will be enough to maintain their lifestyle in retirement. Today, at 36, she theoretically only needs to work to cover her expenses, but she’s still contributing to her nest egg because she wants the chance to retire sooner – and she’s well on her way to to do so in the next decade, she said.

“I really don’t think I’m 100% unable to work,” noted Grant, who is a senior project manager for a financial and accounting software company. “For me, it’s the financial independence part; Early retirement is not that important to me. I want the option to walk away from work if it’s not fulfilling or good for my family.”

Increase your income and save and invest the surplus

At 19, Grant left the small Canadian town where she grew up to travel and work. Over the course of six years, she did everything from cleaning the house to walking dogs to teaching English abroad.

She didn’t earn enough to save anything, but she never accumulated any debt either.

While Grant was happy with her lifestyle, she wished she could tell her younger self, “You’re worth more than $15,000 a year,” she said. “I didn’t believe that for a long time because I came from such a poor background.”

Her attitude began to change when she enrolled in community college at age 25. After two years, she transferred to CU Boulder’s Leeds School of Business and began pursuing “more professional jobs,” she said.

When she graduated at age 29, she got her first full-time job as a project coordinator. It came with a salary of $52,000.

Having lived on $15,000 a year for her entire adult life, she immediately had excess savings to work with. Maintaining her low cost of living, she opened a Roth IRA and began investing in index funds, a popular strategy in the FIRE community.

Grant prefers index investing because it offers broad market exposure at low cost and is relatively straightforward: “For me, it’s just a really easy way to invest in something that’s self-managing. Then I can use my brain power somewhere else, like building businesses, doing my job and getting good at it so I can make more money, hanging out with friends, whatever it may be, and I don’t have to think about it “What my investments achieve.”

Over the past seven years, she has risen in the corporate world and more than tripled her salary. She has also created an additional source of income by purchasing two investment properties and setting up long and short-term rental properties.

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Her Airbnb accommodations in particular are giving her a lot of headaches. There are a lot of moving parts between managing bookings, guests and cleaning staff, and “every once in a while it just breaks down,” she said. But they’re more lucrative than her long-term rentals, and she’s generally learned that the key to financial independence is “doing what other people aren’t willing to do.”

When it comes to real estate: “I renovated one of my units, I rented out my units, I rented rooms, I had roommates, I had short-term rentals, I had medium-term rentals.” I’m constantly changing my strategy and as a result I’ve been in the In the last few years, you probably earned an additional $150,000 that went directly into investments.

Maximum use of 3 different tax-advantaged accounts

Once Grant was making more than $15,000 a year and had enough to start saving, she opened three tax-advantaged investment accounts — a Roth IRA, a 401(k) and an HSA — and began maxing them out.

The contribution limits, which have increased since she started using the accounts, are $7,000 for a Roth, $23,000 for a 401(k) and $4,150 for an HSA in 2024.

An HSA (Health Savings Account) is intended for healthcare costs, but can also be used as an investment vehicle and to supplement your retirement account.

It comes with a triple tax benefit: You can contribute pre-tax dollars (which reduces your taxable income), your contributions and earnings grow tax-free over time, and you can withdraw your money tax-free to cover qualified medical expenses. (Also like an IRA, you can invest your HSA funds in mutual funds, stocks, or ETFs, depending on what the plan offers.)

If you withdraw money for anything other than qualified medical expenses, you will pay ordinary income taxes on the withdrawal and owe a 20% early withdrawal penalty. However, once you reach age 65, you can use your HSA money to cover any expenses without incurring a penalty.

While Grant can currently use her HSA funds for medical expenses, she is choosing to pay out of pocket so that her HSA funds can continue to grow and increase.

By maxing out each of these accounts, not only was she able to invest her money in index funds, but by contributing to these accounts, she was also able to lower her taxable income.

Over time, she has accumulated six figures in retirement savings, despite often being considered late in her career by the FIRE community. That’s generally a misconception: People who don’t start investing until their late 20s or early 30s tend to think, “I don’t have enough time,” she said. Her attitude was, “I’m 30. I’m still young. I still have time on my side.”

For her, at least, consistent investing was key: “The fact that I’ve maxed out my 401(k), IRA, and HSA every year since I was financially able to do so has made me a lot of progress.”