With 27 years' experience as a chartered accountant, Naveen Sharma has successfully managed other people’s money for decades. But he admits he has made some mistakes with his own finances, and is still learning. The 49 year-old, who has lived in Dubai for more than 20 years, became chairman of the Dubai chapter of The Institute of Chartered Accountants of India last month. The Dubai chapter, which has more than 3,000 members, is the body’s largest overseas chapter outside India and has been operating in the UAE for 35 years.
How did your upbringing shape your attitude to money?
I grew up in India and culturally we think you should do what is required. If you have to pay Dh1, you pay Dh1, and if you have to pay Dh1million, you pay Dh1m; this means we pay the right price at the right time. But you should have self control when it comes to money. I did my chartered accountancy where I was taught how to use money effectively. So, since my childhood, I have followed that path.
When did you become a chartered accountant?
I started my Chartered Accountancy qualification in 1987, completing it in 1990. We understand the value of money by going through our articleship (a three-year practical training phase for accountants) whereby we learn how to earn money, how we should invest money, how we should use money and how that money should earn money; that is the principle of compounding interest. If you saved money 27 years ago, today that money has been subjected to the compounding effect. Your money is working for you. You are not working for your money.
Are you a spender or a saver?
I am a balanced person. If I am required to spend money, I don’t mind. If I'm not required, then I don’t spend. I don’t go beyond a certain point and kill my desire to save money. But at the same time, I have control over my spending.
How much did you earn in your first job?
If I convert the amount into dirhams you will laugh. I started earning Dh166 a month; my job was to ensure the financial compliance of an oil extraction project. That was my first salary in 1990. In today’s money it would three or four times that.
Do you use a financial adviser here?
I am a chartered accountant myself and my profession provides information to others, so usually I don’t take any advice from anyone.
Where do you invest?
I have 50 per cent of my total savings invested where I don’t need the money for the next five years, like real estate. So I have purchased a few properties in Dubai because I believe in the city. That 50 per cent I don’t need until my retirement. And then for the remaining 50 per cent, half of it I invest in the equity market where I feel there are chances of making more money – so I invest in the local market, and also the UK market, because I feel that the UK is a very transparent and mature market with opportunities. And some, 25 per cent, I prefer to keep liquid. You don’t know when your loved ones will need money.
What’s your most treasured possession?
My house in Downtown Dubai, because we live there. I also have a house in The Meadows that I rent out.
What financial advice would you offer your younger self?
I would say you only live once, so do not save at the cost of killing who you are. Saving will come but you have to focus more on earning the money. You have to improve your skills to make sure you can earn money. Go for the right skills; this is the only way to earn more money. When I came here I realised I had to pursue some international qualifications, so I did that 15 years back, studying for my Certified Public Accountant US in 2002, along with other qualifications, that really helped me think differently in the international market.
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What’s your biggest financial regret?
Losing some money in the equity market in India. I thought I didn’t need the financial advice of an expert. I thought I was right and I lost heavily in the mid-1990s. I invested around Dh27,000 in companies which were not very active, based on the fluctuations on the market, and I thought the companies had given a good return in the past three to six months. I ignored the fundamentals. I ignored their promoters and other liquidity and I lost 90 per cent of my investment.
What did you learn from that?
For the next year I couldn’t bring myself to invest. I started disliking the equity market. I felt it wasn’t for me. Then I realised the mistake was not in the market. I made the mistake. So then I started looking at the market differently and looking at the fundamentals. You have to be risk averse. Don’t pay attention of the gains. Pay attention to the risk. Is my capital at risk? I decided I should not lose what I have. The gains will come if the capital is there. in my early 30s it was difficult to digest that but somehow over the years I realised the risk management is much better than the gain management.
Do you have a financial plan for your future?
I know what I have to do but I do not have a 100 per cent accurate plan. I have a fairly good idea though with some sort of plan but as I am getting older I have to think about my retirement. I now want to focus on that and not play with capital. I won’t get this money back. My earning days are limited, so I am more risk averse now.
When would you say you became financially mature?
When I lost in the market, so five years ago when I was 45.
What happened then?
I realised that we have to have a different asset class to invest in and we have to think on the fundamanentals and don’t get carried away when everybody is investing in the market and volatility is very high. Ignore that. If the market is falling, let it fall. If you feel this is the right time to buy, buy whether the market is up or down. And then sell whenever you feel it is down. And believe in yourself.
Have you ever bought anything on impulse?
Many times. The worst one was a second home I purchased. Real estate moves in a cycle. I purchased and sold in a gap of 18 months and then realised I should have given it more time. It should have been at least four to five years. At the end of the day, the market will be there but the timing may not be right. That’s why I missed it. I purchased early and thought that the market would go up.
Would you say you are good with money now?
I could have been better. I have no regrets, but I feel I need 100 per cent more than I have. Because we need to plan. The market is always volatile and I sometimes feel like I have less money.
