Indian expat Hemant Mundhra, who runs a start-up in Dubai, says he steadily grew his income as an employee in the UAE by changing jobs and not on-the-job salary increments.
Mr Mundra, 58, has substantial savings owing to his long expat life in the Emirates and mostly invests in the Indian stock market, international index funds and property.
The entrepreneur, who has been in the UAE for 28 years, is from the north-west Indian state of Rajasthan, but was born and raised in the city of Kolkata in West Bengal. He currently lives with his wife and daughter, 25, in Al Karama, Dubai.
He is a chartered accountant and management accountant and also completed a certification in international taxation and a diploma in international financial reporting standards.
What was your first job and salary?
My first job in India was with Aditya Birla group in Kolkata in 1991 as a management services executive and my salary was 3,500 Indian rupees ($39).
I worked for six years after qualifying as a chartered accountant in India and moved to Dubai in 1997 to gain international exposure and save more money.
In the UAE, my first job was as a finance manager in a toy department store and my salary was Dh8,000 ($2,178). Since then, salary progression happened not through increments, but by changing jobs.
Later, I joined a British-German conglomerate for a salary of Dh10,000 as a finance controller and then switched to Al Tayer Group for a salary of Dh12,000 as finance manager. Then I moved to Saif Al Ghurair Group as group finance manager for a salary of Dh26,000 and worked there for five years.
I then moved to Abu Dhabi to work with the office of a ruling family member, where my salary doubled to Dh50,000. I worked there for five years.
Tell us about your current role. What is your salary now?
I decided to start my own practice, TotalCFO management consultancy, in 2016 but I treat myself as a salaried employee. I draw a salary of Dh40,000 as a managing partner and chief executive. It is an accounting and tax advisory firm that offers outsourced chief financial officer services to small and medium enterprises. Besides advisory services on VAT and corporate tax, we also provide help with international taxation, cross-border transactions and transfer pricing.
Do you have considerable savings?
Yes, I have considerable savings because of the number of years I have worked in the UAE, returns on my investments and yields from properties in India. I have also saved for my daughter's wedding. I don’t save the same certain percentage of my salary every month, it varies but has accumulated over time.
What asset classes do you invest in?
I invest in the stock market for the long term. I don't do short-term trading. I hold around 12 individual stocks in India in companies like Titan and HDFC Bank, mutual funds and also invest in index funds and exchange-traded funds in international markets.
I also invested in three properties in India from 2006 onwards. I sold two properties in Pune and Bengaluru because the market was getting saturated and there was no scope for future capital appreciation. I used the proceeds to invest into stocks and ETFs. The third property is in Bengaluru and has been rented out. I purchased it for 10 million Indian rupees.
Initially I was under the false belief that since I'm a chartered accountant, I know all about market dynamics, saving and financial planning, but I realised that I could do better with my savings. Engaging with a few financial experts has empowered me to deal with my finances better. They advised me to stay consistent with my investments and not change them frequently.
Do you have any debt?
Around 15 years ago, I almost fell into a debt trap, so I decided to consolidate all my debts and credit cards into a personal loan, which I paid off over nearly two years. After that, I made it a point to never accumulate any credit card debt or take out a personal loan. I only use credit cards to avail of benefits now.
Growing up, were you taught how to handle your finances?
I grew up seeing my mother manager the family finances. My father earned a modest salary of nearly 3,000 Indian rupees in the late 1970s. My mother would spread it across different envelopes assigned for house rent, groceries and other expenses. I was in charge of counting money. If an envelope was empty, no money would be spent on that category that month. From this method, I learnt to track my expenses, something I follow until now.
I have fixed a particular day of a month where I take a printout of my credit card statement and categorise my expenses into various categories on an Excel sheet. This helps me track my expenses.
What are your major monthly expenses?
The biggest monthly expense is always on house rent. Next is vehicle rental cost, because I haven't purchased a car and have been leasing one for the last 20 years. Then comes credit card payments, which is a summary of my monthly expenses. I’ve also given my wife a card, so all household expenses can be tracked and we pay with cash for very few transactions.
I also estimate my yearly expenses, for example, one family vacation and clothing requirements, divide it by 12 and allocate reserve funds accordingly.
How do you budget your income every month?
I make sure that our overall household expenses do not go beyond Dh25,000 month, and the remaining Dh15,000 is allocated to yearly expenses and maintaining an emergency fund.
I have a 12-month emergency fund, but do not touch the amount to sustain my family for six months. With the remaining money in the fund, I use it either when the rent cheque comes due or to meet an unforeseen expense. I then replenish the emergency fund within three to four months.
Have you started saving for retirement?
I thought of retirement only 15 years ago. It was quite late. I plan to work actively for two more years. After that, I will continue to work, although not at the same pace, because my job is based on knowledge, qualification and experience, not age. So, I will fund my retirement with returns from my existing investments, plus what I will keep earning in the coming years. Since I didn’t plan earlier, I could not create a proper retirement fund.
What do you spend your disposable income on?
I spend it on travel, clothes, visiting restaurants over the weekend, exploring new attractions in the UAE and on concerts and plays.
Do you worry about money?
I used to worry about money 15 years ago. But I realised that I should instead worry about my health, because if I keep my health intact and stay active, I will not depend on anyone.
What are your financial goals?
My goal is to invest the money I earn through my business into the Indian stock market and index funds and let the investments grow. Since I was a late beginner, I don’t have a big corpus of funds invested. While my salary takes care of all my yearly and monthly expenses, everything else goes into my investments.
What is your idea of financial freedom?
I used to think that having lots of money is financial freedom. Then I realised that if I can reach a stage where I can forego a source of income and do work for free instead, that is when I am financially independent.
Do you earn passive income?
I have three sources of passive income: capital appreciation on my index funds, dividends I receive from my Indian stocks and rent from my property.
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