The FIRE road map: Early retirees explain their 2-part investment strategy to hit financial independence

• Kristy Shen and Bryce Leung retired in 2015 in their early 30s.
• They said a "two-phase FI investment strategy" helped them achieve early retirement.
• Phase one is wealth-building, while phase two is income generation.

When Kristy Shen and Bryce Leung decided to pursue financial independence in 2012, one of the first things they did was change their investment strategy.

For years, the Toronto-based couple had been saving for a home, keeping cash in a bank account for a down payment and closing costs. But as home prices in their market kept rising, they started considering other options. That's when they discovered the financial independence, retire early (FIRE) community through bloggers like Mr. Money Mustache and J.L. Collins.

At first, parts of FIRE seemed unrealistic, including the idea that someone could retire in their 30s through basic index investing.

"I didn't really believe it," Shen told Business Insider.

However, after studying the 4% rule and running their own numbers, they concluded that a $1 million portfolio could support their modest lifestyle. Their FIRE number was calculated by multiplying their annual spending — about 40,000 Canadian dollars — by 25, a common rule of thumb in the FIRE community based on the 4% rule.

The couple redirected about 500,000 Canadian dollars they had saved for a home into index funds and kept contributing to their portfolio. By 2015, they reached their goal and quit their engineering jobs to travel the world. BI confirmed their seven-figure net worth by reviewing screenshots of their investment portfolio.

Shen and Leung have been living off their portfolio ever since. They've also earned some income from their two bestselling books, "Quit Like a Millionaire" and "Parent Like a Millionaire (Without Being One)," but said they don't rely on those earnings to sustain their lifestyle.

Achieving financial independence required a two-part strategy: first, building wealth aggressively by saving and investing most of their income, and then restructuring their portfolio to generate reliable income in early retirement.

They call it a "two-phase FI investment strategy."

1. The accumulation phase

During phase one, or the accumulation phase, Shen and Leung focused on building wealth. The couple used a variety of savings strategies — including trimming three major expenses (housing, transportation, and food) and avoiding lifestyle creep — to save and invest up to 70% of their income. They said their combined income started at around 65,000 Canadian dollars and peaked at around 160,000 Canadian dollars.

They were comfortable maintaining an aggressive portfolio during this phase because the money was meant for long-term growth, Leung explained: "You typically want a relatively aggressive allocation where it's mostly equities. You can go up to 75%, 80%, even 90% equities because you don't need that money right now and you're trying to get the future gains to reach your FI target."

Shen and Leung invested in low-cost index funds tracking U.S., Canadian, and international markets. They also took full advantage of tax-advantaged accounts.

"Anytime that you have an opportunity to get free money or tax-advantaged money, you definitely want to take advantage of that," Leung said, pointing to accounts like 401(k)s, Roth IRAs, HSAs, and 529 plans. "The less money you give to the government, the more money you have for yourself."

2. The income phase

Once the couple hit financial independence and stopped working, their strategy shifted to what they call "an income strategy."

At that point, their goal was no longer just long-term growth. Instead, their focus became generating enough income from the portfolio to cover living expenses without having to sell investments during a market downturn.

"Instead of relying on capital gains and just looking at the total value of your portfolio, what becomes really, really important is how much dividends and interest and other types of income your portfolio is paying," Leung said. "Because when you actually need the money every year to live off of, you can't depend on the wild gyrations of the stock market."

That matters most in the first few years of retirement, which can be the most vulnerable stretch for a new retiree. If you retire and immediately have to sell investments while stocks are falling, it can do lasting damage to your portfolio.

To reduce that risk, Shen and Leung aim to cover as much of their annual spending as possible with portfolio yield — income from dividends and interest instead of selling investments. That way, they are less exposed to downturns when they need cash flow most.

There are a few ways to make that work: lowering living expenses, shifting more of the portfolio toward fixed income, and adding higher-yielding assets.

When you're building your portfolio, it's fine to have a high equity allocation, they said, but in retirement, you want stability and income. That means moving some money out of more volatile stocks and into assets designed to generate income and hold up better during market swings.

"What you do in that situation is you shift money from equities that are very volatile and put more money toward more stable assets, like bonds, preferred shares, real estate investment trusts, and these kinds of investment vehicles," Leung said. "Their job is to pay an income rather than to be a high-flying stock, and then you live off the income."

He said that the strategy has been especially useful during the market instability of 2026.

"What I'm doing is shifting more money into more dividend- and interest-paying assets," Leung said. "As a result, even though the stock market is dropping, we can afford to wait and not sell anything because the interest is enough for us to live off of."