My Dubai Salary: ‘I began investing at 42 and plan to achieve financial freedom by 55’

Elie Irani, an IT professional, says a higher saving rate helps bring financial independence faster

Elie Irani educates others on building wealth through investing in low-cost exchange traded funds. Photo: Elie Irani

Elie Irani, a 49-year-old Lebanese national in the UAE, started investing at the age of 42 and is on track to achieve financial freedom in five years.

He invests exclusively in low-cost exchange-traded funds (ETFs) and automates his saving and budgeting strategies.

“The main factor that will determine how fast you could retire is not what you invest in,” says Mr Irani, who’s been in the UAE for 20 years.

“The major determining factor in how soon you could retire is the percentage of your salary that you save and invest. It’s called saving rate. The higher your saving rate, the earlier you could reach financial independence, or retire.”

While his professional background lies in information technology, Mr Irani has a personal mission to spread financial literacy.

He founded Wise Investor Middle East, a blog and YouTube channel about saving and investing for financial independence. He is also involved in the SimplyFI Common Sense Personal Finance and Investing Facebook group as a contributor and moderator, and is also a member of UAE – Grow Your Finances, another Facebook group.

What was your first job and salary?

I started as an IT support engineer in Lebanon in 1995 on a monthly salary of $600. After 10 years, I moved to the UAE to join a multinational IT company.

Tell us about your current role

I help businesses implement my company’s cyber security, networking and firewall solutions.

Do you manage to save?

I've been saving and investing consistently for the past seven years and plan to reach financial independence in my mid-50s. The first thing to do before you invest is to pay off high-interest debt, such as credit cards because they charge an annual interest of 45 per cent in the UAE. I pay for everything with my credit card, but at the end of each month, I have an automatic settlement set up for my card payment.

Then, build an emergency fund, which is three to six months’ worth of living expenses to sustain yourself in case of a job loss, medical emergencies or a huge car repair.

The best way to save is to pay yourself first. I have a few bank accounts. As soon as I receive my salary, I have standing instructions arranged with the bank to distribute the monthly income in my salary account to different accounts in the percentages that I want. I have separate accounts for my emergency fund, savings, rent payment, travel and leisure, and large payments, such as car registration or car maintenance.

I tend to plan upfront for big spending I foresee in the year by transferring a small portion each month to a dedicated account. What's left in my primary account is used to pay for utility bills, petrol, etc. You need to track your expenses for some time to set up this system.

I try not to fall prey to lifestyle inflation. I'm neither thrifty nor extravagant. I'm somewhere in the middle.

What asset classes do you invest in?

I invest 50 per cent of my monthly income exclusively in a balanced ETF portfolio of world stocks and world bonds. I believe in global diversification and am not comfortable betting on a single country or a single industry.

My favourite DIY trading platforms are Interactive Brokers and Swissquote. For someone who doesn’t want to go the DIY route, they can automate their savings with Sarwa, which will automatically invest the money in a portfolio of low-cost ETFs for a small fee. But you can trade for much cheaper if you do it on your own.

After reading more than 30 books on personal finance, I noticed a recurring pattern to avoid high-fee investments. Hedge funds or mutual funds are unable to beat index funds or ETFs over the long term. Fees compound over time. Over an investment timeframe, which is typically 20 to 30 years, 1 per cent in fees will cost you thousands of dollars in terms of total cost.

During 2020, I used the money set aside for travelling to invest in crypto coins. But this was money I was willing to lose.

Have you purchased property?

I have purchased property in my home country, but not in the UAE. This is intended to be my retirement property, but it was an emotional decision.

I have nothing against real estate investment. I'm in team rent as opposed to team buy because I don’t believe that renting equates to throwing money down the drain.

Do you have any debt?

I have a small car loan. I was forced to take the loan because my previous car was caught in last year's rains, so I had to replace it. But it was not a smart financial decision because a car is a depreciating asset. For those looking to make the most bang for their buck, a smart decision would be buying a car that’s two to three years old, in great condition and possibly under warranty, and paying for it in cash.

My credit card bills are paid off automatically each month and I don’t have to think about it.

Growing up, were you taught how to handle your finances?

No. All I was taught was to score good grades in school and land a high-paying job. No one taught me that the way to building wealth is by acquiring assets and investing. The earlier you start, the better. I did not start early. But it's never too late.

Most people think that if they start in their 40s, they just have 20 years left. That's not true because although you have 20 years for accumulating wealth, you don't pull out your investments when you stop working. That's a big mistake most people make. You keep the money invested all the time and only withdraw enough each year to cover your living expenses. My investment timeframe is my entire lifetime. I started investing when I was 42 and will keep investing until the day I die.

Do you worry about money?

I used to worry about money until I figured out my expenses a few years ago. I didn’t know what would happen to me if I stopped working in the UAE because we don't have proper pension. I worried whether my savings would sustain my retirement. These worries triggered my search for answers. I came across good personal finance books and learnt about index investing and ETF investments.

What are your best money saving hacks to offset inflation?

Three most common ways to generate passive income streams are by investing in the financial markets, properties or building a business. In my case, the best way to beat inflation is investing in a portfolio of ETFs.

What are your financial goals?

I don't have any short-term financial goals because I know exactly what I spend each year and save for these as I go. For the long term, my goal is financial freedom.

What is your idea of financial freedom?

Financial freedom is a state where you don't rely on a paying job to pay for your expenses. You could get passive income from rent, a business or stock market investments.

There’s a simple formula to attain financial freedom: if you have 25 times your annual expenses, or 300 times your monthly expenses, invested in a portfolio of ETFs, you could safely draw down 4 per cent each year and cover your retirement expenses.

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