Lalit Mukhi, 37, an Indian living in the UAE, says he has partially achieved financial freedom. He credits a savings-oriented mindset and effective investment strategies for this milestone.
Mr Mukhi recalls his first investment while studying at college in India, in 2004, when he saved 25,000 Indian rupees (about $555 at the time) and bought 25 grams of gold.
However, he grew his savings and investments after learning about the Financial Independence, Retire Early (Fire) movement in 2022. Since he was already living frugally, he managed to attain financial freedom, based on his projected retirement needs in India, in 2023. He is working towards achieving this milestone for his UAE lifestyle, as well.
Mr Mukhi, who is from New Delhi, is a golden visa holder in the UAE. He lives in Damac Hills 2 in Dubai with his wife, who works as a life coach, their child aged one-and-a-half and his parents. He’s been in the UAE for the past six years.
He completed his engineering degree in electronics and communication and an MBA in India.
What was your first job and salary?
When I started my career in 2009, I earned a monthly salary of 8,000 rupees (about $166 at the time). I worked as a project engineer for a telecommunications project.
After one and a half years, I moved to a different job in Bengaluru, India, where I earned 33,000 rupees per month. I then shifted to Germany on the same job, which paid me 300,000 rupees per month.
I shifted to Mumbai and worked on a Jio project in 2014, after which I switched to another telecommunications company in Delhi. I was sent to Abu Dhabi on an internal project with the same company in 2018. I lived there for 5.5 years and recently moved to Dubai.
I earned a salary of Dh30,000 per month in this job.
Tell us about your current role. What is your salary now?
I currently work as a programme manager for a digital transformation project with a local bank. I earn more than Dh30,000 per month in this role.
I earn the same amount as my salary from my passive income sources every month.
What asset classes do you invest in?
I invest in equities in India and the US, in debt instruments such as fixed deposits in the UAE and National Bonds. I also invest in the peer-to-peer lending platform Beehive, which allows me to lend to small and medium enterprises.
I own a three-bedroom townhouse in Dubai’s Damac Hills 2, which I bought for Dh800,000 last year with a mortgage. Its value has now appreciated to Dh1.2 million. I also invest in gold bars, coins, gold bonds in India and gold exchange-traded funds.
I have always had good savings because I have a saving mindset. However, I was initially using my savings to only invest in real estate and gold. This was a mistake.
I learnt about investing through media outlets and YouTube. Investing is a very simple journey and I learnt that index funds are a great tool. I started investing in the stock market in 2017.
When I came to the UAE, my income rose three-fold and I managed to save more because of no taxes. I started investing in a big way during the Covid-19 pandemic since I had saved a lot of money. I bought good stocks at a discount and looked at the crash as a buying opportunity. I've never sold a single stock to date and I am in it for the long term.
My equity portfolio is equally split among index funds and individual stocks. I picked up stocks of technology companies like Microsoft, Meta and Amazon at a 50 per cent discount when the Russia-Ukraine war started in 2022. I invested a good amount of money in these stocks and today they have appreciated multi-fold.
I have around Dh2.5 million worth of equities in my portfolio and approximately Dh1 million worth of debt instruments. This excludes my property and gold investments.
Do you manage to save and have considerable savings?
Yes, I’m quite frugal in terms of spending. When I was younger, I was more extravagant, but I've learnt my lessons. I currently spend a maximum of 30 per cent of my salary and 70 per cent goes towards savings, of which I currently invest 10 per cent in gold since I am bullish on its outlook.
Currently, I allocate most of my savings towards the debt part of my portfolio because I want to increase my debt investments. Systematic investment plans continue on a regular basis and I’m waiting for a market correction to invest a lump sum.
Do you have any debt?
Yes, I have a mortgage, which is a good decision since I pay less in loan instalments every month compared to rent. Recently, I took a personal loan at an interest rate of 3.7 per cent. I used this money to invest in fixed deposits, which offer me a return of 5 per cent to 5.5 per cent. So, I am earning a profit on it.
I also took a car loan to buy an electric vehicle at an interest rate of 3.5 per cent. However, I put the same amount as the car loan from my savings in a fixed deposit, which pays me an interest of 5 per cent. Therefore, I earn a profit of 1.5 per cent.
Growing up, were you taught how to handle your finances?
When I was a kid, I was taught to save money, but not to invest in anything, just to put it in fixed deposits.
My parents taught me three good habits. First, to save a good percentage of money from my monthly income. Second, to never take a loan, and third was to take calculated risks. This is what I did with my investments.
What are your major monthly expenses?
The biggest expense is my mortgage payment, followed by food, water, electricity and some leisure activities once in two weeks.
How do you budget your salary every month?
I don't budget because my emotions and spending habits are under control. At the end of the month, I make sure that my expenses do not go beyond 30 per cent of my salary.
I don't go for big expenses often so that my budget doesn't go haywire.
Have you started saving for retirement?
I've already achieved my retirement corpus for India. All my expenses can be paid off from my current investments. So, I can retire anytime in India, but not in the UAE.
Since I draw an active income and I love my job, I still want to continue working for a good amount of time. I might try entrepreneurship in a year or two so I can spend quality time with my family.
Do you have an emergency fund?
I have two years’ worth of expenses in my UAE emergency fund.
Do you worry about money?
I only worry that I should not get accustomed to UAE luxuries so much that I cannot survive without them in India.
What are your financial goals for the short and long term?
I have already achieved my short-term goal of financial freedom. My long-term goals are to grow my wealth with the power of compounding and share my financial knowledge with my son, friends and family.
What are your best money saving hacks to offset inflation?
Focus on your passive income. For example, I ensure that the profit I earn from my Beehive investment is equivalent to my Dubai Electricity and Water Authority bill. If my utility bill increases in the future, I will also ensure that my investment increases so that whatever interest I earn from Beehive or other debt instruments will go directly to cover my expenses.
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