How an Abu Dhabi resident quit full-time work at 56 to pursue financial independence

Yogesh Sharma has savings, enough set aside to cover emergency expenses and invests in low-cost index funds

Yogesh Sharma's passive investments generate income that exceeds his annual spending. Chris Whiteoak / The National

Yogesh Sharma, a UK citizen living in Abu Dhabi, worked full-time from 1990 to 2022.

He stumbled upon the financial independence, retire early (Fire) movement accidentally when he received a copy of the book Unshakeable by Tony Robbins in 2017.

Over five years, he delved deeper into the concept of financial independence and eventually quit his job in 2022 after working for one of the UAE’s largest telecoms companies for 15 years.

Now 58, he is a financial independence enthusiast and practitioner, splitting his time between Windsor in the UK and Abu Dhabi.

“I started the Fire journey in 2017 when I was age 51. In five years, I was able to get things in order where I was able to work out that our passive investments can generate enough to be more than our annual spending. Therefore, we can depend and live off investments,” Mr Sharma says.

“I was able to make a path to financial independence from 2017 and could see from my spreadsheet and countless … hours of reading, hearing podcasts and fine-tuning my Excel workbook that we could step off the treadmill in 2022.

“This is because of intentional planning, high savings rate, having emergency funds and loading everything we had into low-cost index funds.”

The Fire movement entails extreme saving and investment strategies that enable people to retire much earlier than traditional financial plans would allow.

The movement originated from the 1992 best-selling book, Your Money or Your Life by Vicki Robin and Joe Dominguez.

Advocates typically remain in the workforce for several years, saving up to 70 per cent of their annual income. When their savings reach about 30 times their annual expenses, or about $1 million, they quit their day jobs or retire from work altogether, Investopedia says.

Mr Sharma recalls conducting extensive internet research and discovering Mr Money Mustache, a personal finance blogger, and Andrew Hallam, a personal finance author and former high schoolteacher.

He acquired Hallam’s book Millionaire Teacher which emphasised that financial success can be achieved by following certain habits without requiring extensive financial knowledge.

“The key thing I took away from Unshakeable was that you have to be a part owner in the world’s best companies,” Mr Sharma says. “Hallam’s key ideas resonated with us as expats in the UAE. He urges us to take future pension planning seriously.”

Among his favourite personal finance books are The Psychology of Money, Die With Zero and The Algebra of Wealth, among others.

He also met with members of SimplyFI, a Facebook group of personal finance and investing enthusiasts in Dubai.

After listening to many financial podcasts and buying books on personal finance, Mr Sharma realised that he had to get his house in order and review some of his bad financial decisions.

“For nearly a decade, I was one of these people in the UAE who had subscribed to a very expensive financial savings and investment scheme. Once expats leave their home country, they can become targets of the financial advisory industry,” he says.

“We can accept that we've all made financial errors. But you can always course correct. It's never too late.”

The Fire movement forces you to think consciously about what you spend on, have emergency funds organised and where you should invest, says Mr Sharma, who wrote a financial guide book titled Your Wheel of Fortune, available on Amazon UK.

Grow the gap between your income and spending, and then invest the gap. You should be able to create the gap because you are a conscious spender with a budget, he says.

“We tend to outsource these important decisions to the financial advisory industry. You can do a lot better if you manage your investments yourself with discipline, with the help of companies like Vanguard and other brokerage account platforms,” he says.

“Keep your finances simple but also make automatic payments, so you're not doing too much active management month by month or every quarter. This way, you're buying more investment funds every month. Another great habit is to do dollar-cost averaging.”

The best asset classes are limited, he says, citing low-cost index funds and rental properties as his best picks.

Mr Sharma was able to develop a more balanced investment portfolio after becoming a financial independence proponent. Before that, his investments were too property-focused.

His wife and he currently have four Vanguard index funds that cumulatively invest in 10,000 of the best listed companies globally.

Two of them are variants of the US market while the other two are focused on global equities and global small-cap stocks, he says.

“My wife and I have always been savers. It's always helpful if both spouses are on the same page when it comes to money, finance and investing,” Mr Sharma says.

“When our careers took off, we gradually got into the first main asset class, which was rental properties.

“But we fixed our focus on property as an asset class and weren't thinking at all in terms of investments, apart from a branded savings and investment scheme, which was extremely high risk and high fees. That didn't materially produce any net return.”

A spreadsheet helped him to understand that the couple had a good savings rate and should maximise their ability to invest in low-cost index funds every month. So, he used the returns from his rental properties to invest in the stock market.

The best thing an average retail investor can do is to not be greedy about excess returns but just be happy to take market returns, he says. Compound interest and time do the hard work for you, he says.

“I looked at all my investments, my different buckets of income and added them up. I adopted a strategy of paying down my mortgages to ensure that maximised the chance of net cash income,” Mr Sharma says.

“Otherwise, most of the revenue from property goes into servicing debt, property maintenance, paying for property agents and accountant’s fees.

“Try to do an assessment of your financial situation. It requires an active management of your spending.

“Once you have income, you can apply wisdom and decide how much of a savings ratio you can develop, and then put the gap between income and spending into investments like mutual funds and low-cost index funds.”

Keep your investment fees to a minimum, he says.

“We shouldn't be paying more than 1 per cent total annual expenses for paper financial instruments. If you’re paying 2 per cent or 3 per cent, then it's game over because perhaps a third to two thirds of your future stock market growth return gets dissipated in paying the fees,” he warns.

Money can give you options. At some point, you can decide if you do not need a job any more. You can create new options for yourself, do part-time work or try a different job related to your hobbies and passions, he recommends.

Financial freedom is subjective but the Fire movement hastens the path to financial independence, he says.

How to join the Fire movement

Ben Bolger, a financial planner in Abu Dhabi and co-founder of digital learning platform Squirrel Education, says the Fire movement “isn't about joining a club; it's about making a personal commitment”.

“Fire challenges the traditional thinking that you must work until age 65-70 before you can start living life on your own terms and in line with your values,” he says.

“The first two words of Fire, financial independence, signify reaching a point where your income from assets and other sources covers your monthly expenses, independent of employment income.”

For those interested in exploring the Fire movement, the first step is education.

Mr Bolger says start with books such as The Simple Path to Wealth by JL Collins, listen to podcasts such as ChooseFI and follow influential figures in the movement such as Mr Money Mustache.

Also join numerous online communities and social media pages where you can connect with others on the same journey, he adds.

He says the Fire movement is guided by straightforward maths: The less you need to maintain your lifestyle and the more disposable income you can invest in income-generating assets such as index funds or property, the quicker you can achieve financial independence.

“For some, the idea of being financially independent is highly motivating. They may reassess their lives, adopt more of a minimalist or frugal mindset to cut out unnecessary spending, live on a tight budget and save every penny,” Mr Bolger says.

“However, the majority of the world's population tend to overspend and underprepare for the future. In my view, it's about finding a balance.

“We shouldn't forego living life today for the sake of rushing to financial independence in 10 years or 15 years, but that doesn't mean we should ignore our responsibility to live below our means and invest in our future.”

Once you understand financial independence and you are on the road to achieve it, don't get distracted by outside noise or promises of get-rich-quick schemes, Mr Bolger says, warning that they do not exist.