The stock market has been rocky lately. If you are working toward FIRE (Financial Independence, Retire Early), you probably felt it. Watching your savings drop can be hard emotionally and financially. This is especially true when those savings are supposed to pay for early retirement. A recent fall in U.S. stocks made many people question their FIRE investment plans. But don’t panic yet. The good news is you can make smart changes and spread out your money in different ways. This includes looking at strong real estate places like Las Vegas. Doing this can help your long-term plan get through this rough time.
What Is FIRE Investing – And Why Is It Vulnerable in Bear Markets?
FIRE (Financial Independence, Retire Early) is a money idea where you save a lot, spend little, and invest simply. The goal is to stop working decades before most people do. This idea often involves:
- Saving 50 to 70% of what you earn
- Mostly putting money into low-cost index funds
- Spending as little as possible on things you don’t need
- Keeping a high savings rate for 10 to 15 years
The main belief here is that putting money in the stock market for many years will give good average returns. People hope for about 7–8% a year after prices go up. But this idea has risks, especially when you plan to become financially independent during a market drop.
One big risk for FIRE plans is called the “sequence of returns risk.” This happens when your investments lose a lot of value soon after you retire. This is exactly when you start taking money out.
Say you saved $1 million and plan to take out 4% ($40,000 each year). If the stock market falls and your savings shrink by 25% in the first year, taking out $40,000 hits your smaller savings much harder. This can mess up how long your money will last and make it run out faster later on.
So, people getting close to FIRE need to be extra careful. A bear market at the wrong time could hurt even the best money plan.
The Stock Market Crash – What Happened?
The rough stock market from 2022 to 2023 surprised many FIRE investors. Several things caused the market to go down:
- Prices kept going up, reaching levels not seen in 40 years
- The U.S. Federal Reserve quickly raised interest rates
- Problems with getting goods where they needed to go and world tensions
- Worries about a recession coming
All these things together made investors less sure about the market. This was especially true for stocks that were expected to grow fast or were seen as risky. Many FIRE savers had put a lot of money into these during the good market times before.
The S&P 500, which tracks how U.S. stocks are doing, fell more than 20% from its highest point. This officially put it into bear market territory. And the Volatility Index (VIX), often called the market’s “fear meter,” went above 33. This showed many investors were worried.
This crash wasn’t just in stocks. Crypto markets fell, tech stocks struggled, and even some bond markets did poorly. For FIRE investors who had most of their money in stocks or ETFs, the effect was clear.
After the Crash – What’s the Historical Context?
It’s easy to feel bad during a market drop and think everything is falling apart. But looking back at how the market has done over time shows it usually gets better.
Think about three big drops:
- The Dot-Com Bust (2000–2002) – The Nasdaq index fell nearly 80%. But by 2007, it had gained back a lot.
- The 2008 Financial Crisis – The S&P 500 lost more than half its value. But it reached new high points five years later.
- The COVID-19 Pandemic (2020) – The stock market dropped over 30% in just weeks. And then it bounced back to record high points in less than a year.
The average bear market in the U.S. lasts about 9.6 months. More important, the average gain in the year after a bear market is about +43.4%. These times show that stock market drops, while they feel bad, are just short periods in a much longer trend of growth.
For FIRE investors, this gives both proof and comfort. The main thing is to think long-term. And you should not sell everything in a panic and make your losses real.
Rethinking FIRE Post-Crash – Flexibility Is Key
FIRE doesn’t have to be all or nothing. Crashes remind us that people retiring early, or getting there soon, need to be able to change their plans easily. Being able to change is perhaps the single most important thing to keep your financial independence over many years.
Here are some ways FIRE investors can change their plans:
1. Looking at different ways to do FIRE:
- Coast FIRE – Build up your savings early. Then let it grow without adding more money. You just work simple jobs to pay for your living costs.
- Barista FIRE – Stop working your high-stress job. Instead, take a part-time job (maybe with benefits) to help pay for things and take out less from your savings.
- Fat FIRE – Save a lot more money from the start. Aim for a bigger cushion so you can live comfortably and have nice things in early retirement.
2. Changing how much you take out:
The idea of taking out 4% each year has been popular for a long time. But now, experts suggest taking out less during rough markets. Dropping to 3–3.5% in down years can really lower the chance of your savings running out.
3. Finding ways to earn some money for a while:
- Earn money from things you enjoy, like photography or helping others with your skills.
- Rent out a room or a place you own for vacations.
- Do jobs like driving people or delivering food that have flexible hours.
Earning some money during bad market times can help your investments last much longer. It also means you might not have to cut back on how you live very much.
Alternative Assets: Protecting with Real Estate
Putting too much money in stocks hurts when the market crashes. But real estate can give you stability, money coming in, and protection when prices are going up.
Rental properties give you money coming in every month. This money doesn’t depend on how the stock market is doing. The price of the property might fall for a while. But the monthly rent often stays the same. Real estate also has good points like:
- It’s something real you can see and touch (not just numbers on a screen)
- It has tax benefits (like writing off costs)
- You can use borrowed money to build value (equity)
Las Vegas, in particular, is a good place for real estate. Lots of people want to rent there, and people keep moving there. Even when things are uncertain in the country, Las Vegas keeps pulling in people who live there and people who invest. They are looking for lower taxes, good prices, and more jobs.
Las Vegas Market Strength During National Downturns
Even though Las Vegas had a very hard time during the housing crash in 2008, it came back surprisingly strong. Today, the city is not just coming back, it’s doing very well.
Here’s why real estate in the city is doing so well again:
- People moving in – Thousands of people move to Nevada every year. They like that there is no state income tax and that living costs are lower.
- Not enough homes – Builders are not building fast enough to keep up with the number of people who want to buy. This keeps the number of homes for sale low, even if fewer people are looking in some other places.
- Tourism is strong – Las Vegas is still a major place people visit for fun from around the world. This helps the local economy.
Data from GLVAR shows that because there aren’t enough homes for sale, prices are staying up. This is happening even with worries about the country’s economy slowing down. This makes Las Vegas a real choice for FIRE savers who want to put some money somewhere other than just stocks.
Diversifying Beyond the Stock Market
Having a balanced investment plan doesn’t mean you have to get rid of stocks. But it does mean putting your money into different kinds of assets in a smart way. Think about adding things like:
- REITs (Real Estate Investment Trusts) – These let you put money in real estate without having to own and manage properties yourself.
- Dividend-paying stocks – These don’t jump up and down as much in value. And they give you regular money payments even when the market falls.
- Precious metals – Things like gold and silver can offer protection when prices for goods and services go up fast.
- Bonds and TIPS – These can be sensitive to interest rates, but they can help keep your money steady when stocks are falling.
- Crypto (with care) – It’s still risky, but it could offer big gains if you don’t put too much money into it.
When you spread out your investment plan like this, you protect your retirement money. It helps you avoid having everything hurt at once, like if all your money was in tech stocks and they fell.
Portfolio Rebalancing – What FIRE Investors Should Do Now
The best time to fix the mix of your investments is when the market changes. Don’t wait ten years.
Steps to Rebalancing:
- Look at what you own now – What percent is in tech? In foreign investments? In real estate?
- Change things based on how much risk you can take – If you plan to take money out soon, move away from assets that change a lot in value.
- Add assets that are safer – Put some money into dividend stocks, real estate, or bonds that will be paid back soon.
- Use tax-loss harvesting – Sell investments that have lost value. This can help lower your tax bill on any investments that made money.
Also, think about keeping enough cash or short-term government bonds to pay for 2 to 3 years of living costs. This way, you won’t be forced to sell your stocks when they are worth less just to pay bills.
Lessons from Experienced Investors
People who have retired early before, or during, bear markets know that being able to handle tough times is as much about how you think as it is about money.
They keep these ideas in mind:
- Keep going – Don’t sell everything because you are scared.
- Change your plan, don’t just react – Work a few hours more before touching your investment money.
- Keep your goal in sight – Remember why you wanted FIRE. Even cutting back for a short time doesn’t mean you failed.
It’s not about being perfect. It’s about being able to keep going and knowing how to make changes without giving up on your goals.
Smart steps for FIRE Investors in Las Vegas
Las Vegas offers many chances for FIRE investors who are smart about it. If you are worried about your stocks, here’s what you can do right where you are:
- House hacking – Buy a building with a few units. Live in one and rent out the others.
- Buy with borrowed money – Use low, fixed loan rates to buy properties that will be yours for a long time. You use other people’s money to build up what you own.
- Use Opportunity Zones – In some areas, you can get tax breaks on money you make from selling investments if you put it back into real estate in those areas.
According to Steve Hawks, who works in real estate locally, a simple duplex or triplex can bring in $2,500–$3,500 in rent each month. This can cover a big part of what you need to live on in early retirement.
Steve Hawks’s Take: Real Estate Insight from the Ground
Steve Hawks is an experienced Las Vegas broker. He has helped many people protect against losing money in the stock market by buying property.
Here is one good example: A client who was almost 60 took money from his 401(k) without penalty to buy a triplex. That investment now brings in $3,200 each month. That’s enough to stop taking money from his other investments for a while, wait for the market to get better, and keep living his life the way he wanted.
Steve says timing is important. And right now, buyers who are being careful might find better deals. Temporary uncertainty is making property prices go down a bit.
FIRE investing today isn’t just about two choices. Las Vegas real estate gives you something real you can track. It’s another tool for your freedom kit.
Getting Ready for Future Market Drops
Every investor should expect the market to fall again during their life. FIRE investors, since they plan to be retired for a long time, should figure that the market will crash several times before they turn 70.
To get ready:
- Keep your money in the market, but don’t just leave it – Keep putting in small amounts regularly, even when the market is down (this is called dollar-cost averaging).
- Use tax-advantaged accounts smartly – Money taken from Roth IRAs in down markets doesn’t add to your taxes.
- Train yourself emotionally – Read fewer scary headlines. Focus more on your plan.
- Get help from experts – Work with advisors who understand early retirement planning and how real estate works.
Market drops aren’t your problem. Not having a plan is.
The Long View Still Wins — But With Changes
The FIRE path is a long game. Storms like the current market drop are small bumps on a path you can still follow. With careful changes to how you invest, FIRE is still a goal you can reach.
Real estate, especially in strong places like Las Vegas, gives you another support when stocks are shaky. You don’t have to give up on FIRE after a crash. You just have to change.
Are you thinking about changing your investments or looking into real estate to help protect your money? Steve Hawks offers free talks for local people who want to make their early retirement plan more steady. Schedule a chat today and see what you can do.