Hello from Dubai :)

[danclarkie]

Hi, MMM Forum,

I am new to the forum and wanted to make a quick introduction, but mostly I would like to outline my current plans and invite some critical feedback to make sure I have dotted all the i's and crossed all the t's.
The whole FI/ER can be a little daunting, and especially now I opened a brokerage account and dumped most of my net worth into the markets :/

Without further ado, lets jump into the details.

Location:	Dubai, United Arab Emirates
nationality:	British
Age:	26
Income:	$100k
Tax:	0%
Marital Status:	Single
Dependents:	None
Assets
Emergency Fund:	$20k
Investment Acc:	$75k
Motorbike:	$5k
Total:	$100k
Liabillities
Rent:	$18k/Year
Spending:	$21k/Year
Total:	$39k/Year
Savings Rate (YTD):	57%

Phew!

First of all, I realise my Emergency fund is a little too big, this is due to the fact that I have 4 bank accounts and the $20k is across a few of them for various reasons.
I have 3 offshore bank accounts in the Isle of Man and Jersey, in USD, EUR, and GBP.
Currently I have around $5k in the USD acc and a combined $500 in EUR/GBP.
The USD acc is a real Emergency Fund in case that my local bank account gets frozen for whatever reason (it happens)

In the coming month I will move $10k from my local acc into my investment acc and reduce the EF to $10k across Local and Off-Shore Banks.

My Investment acc has been opened to set up a portfolio of Index Fund ETFs as there are no viable alternatives to get access to low TER index funds.

Being in the UAE, dividends from US based Funds/Stocks are taxed at 30% withholding tax (sucks) so a better option is to go with Funds domiciled in Ireland, such as BlackRock iShares and Vanguard UK to avoid the dividend tax.
CGT is 0%.

My current portfolio is:

65.59%	VWRD	VANGUARD FUNDS PLC VANGUARD FTSE ALL-WORLD	$48,883.50
20.21%	LQDE	ISHARES PLC ISHARES $ CORPORATE BOND	$15,061.95
9.82%	VBK	Vanguard Small-Cap Growth ETF	$7,315.80
4.39%	GOOGL	Google Class A Shares	$3,271.50

The main portfolio is basically a 2 fund lazy portfolio with 80/20 split Stocks/Bonds.
I gave myself ~$3,500 for individual stocks to allow myself some creativity to buy and hold individual stocks and allow the remaining 95% to remain long term buy and hold.
This allows me to feel some sense of control, whilst leaving the vast majority of my portfolio in index funds.

I currently rent and don't see that changing any time soon, the real estate market in Dubai feels ridiculously overheated ($400kUSD for a 1br appt) having risen ~30% in the past 12 months.

I could reduce my spending each month, but I am currently quite happy with my savings rate and any further reduction would take my lifestyle below a level I feel comfortable.
Confession, I spend around $800/month on restaurants :S
I ride my motorbike to work each day, a 5min commute and I have spent probably $15 on gas in the last 6 months (Love living in the Middle East)
I put ALL spending on my Credit Card @2% cashback and have a standing order to pay the full amount each month, this has earned me around $1,200 in Cashback in the past 18 months.
Tracking all of my spending on an iPhone app and have a Google Spreadsheet with multiple tabs to track ALL of my finances down to a very anally retentive level.

Looking to hit Early Retirement in around 10 years, optimistically in 9 years at 35.
Which seems just about doable if I factor in my annual bonus and future salary increases, but i take Networthify with a pinch of salt.


My key questions are:

• How does my Portfolio look?
• Is dumping $75k into index funds ETF's the best idea?
• Anything I am missing?
• Any areas for improvement?

Thanks!

Dan

[Zamboni]

Welcome, Dan!

Congrats on getting an early start.

There is no income tax in Dubai?  What is the average rent there?  $1500 a month seems like a lot for rent to me, but maybe it is normal in Dubai.  Between rent and "spending" you spend as much on one person as I spend on a family of 3, so could be room for improvement there if you are really serious about retiring at 35.

[danclarkie]

Thanks for the welcome.

Many Middle Eastern countries have a 0% rate of personal income tax :)

Rent is ridiculous.
I locked in my rental price when I signed 2 years ago, but at market rate my apartment (1br, 2 bthrm) now would be up to $2,750/month.

The only key areas that I think I could cut back my spending would be on eating out and drinking.
Typically i spend around $10/day on lunch, but usually eat at home for dinner.
Otherwise, Dinner in a restaurant or take-away can range from $5 - $50.

I think the real budget killer is alcohol :(
A pint of beer is around $12 in a typical bar with long drinks costing more, I recall once paying $28 for a Gin n Tonic about 2 month ago.

Those soon stack up to the $800/month food and drinks bill, I very rarely drink in the week, but I guess I should also try and cut down on the weekends too.

[Zamboni]

Packing your lunch is a no brainer.  I've gotten a bit lazy about this lately as my employer keeps feeding me lunch (up to 2-3 times per week now; pampered and spoiled, I know.)  I try to keep a can of soup in my desk for the off days.  If co-workers invite me out for a special lunch, then I go to be social, but I try not to make it a habit.

Regarding the alcohol:  Start a "bring a dish" dinner party movement among your friends?  Invite them over for rental movie night?  Start hosting BYOB parties?  This didn't work when I was younger (we'd run out and someone would have to make a beer run), but now whenever I do that I end up extra beer and bottles of wine because everyone always brings more than they can drink.  At your age I used to invite people over to watch sitcoms and play cards and if I made some garlic bread, then somebody else would invariably bring the beer.  The key is getting used to rejection and being willing to ask until someone says yes and then keep asking until a couple of people are coming.  Sometimes I'd have to call like 8 people to get someone to go to a concert with me even if I already had free tickets.

How much liquor are you allowed to bring back with you when you visit the UK?

[danclarkie]

I often have visitors from outside the country, so getting alcohol via Duty Free is possible.
It is also possible to buy alcohol from special stores, provided you have an alcohol licence.

The problem is, drinking in a small apartment is not the same as going for after-work beers on the rooftop terrace of a 50 story hotel, etc.

Still, I take on-board your thoughts. I think the only smart way to go about it is to simply reduce my spending on alcohol and restaurants but I need to consider whether the lifestyle downgrade is worth the savings rate increase. I know this will probably rile most Mustachians, but there is something to be said about living your life whilst you are young, and a 60% savings rate is not terrible.
Still I think I could push it to 65% / 70% at a squeeze.
My previous 6 months savings rates run as follows:

October 2013	55%
November 2013	56%
December 2013	76%
January 2014	55%
February 2014	38%
March 2014	62%

February would be higher but I decided to buy a new Xbox.
December would be lower but I was out of the country for 2 weeks :)

I would be keen to hear any feedback on my investment portfolio/strategy as this is what worries me the most, especially with all the talk of a coming bear market...

[warfreak2]

Hi, welcome! You can easily retire at age 33. Let me explain...

The problem is, drinking in a small apartment is not the same as going for after-work beers on the rooftop terrace of a 50 story hotel, etc.

It may be nice to drink on the roof of a tall building, but is it $12/beer nice?

$800/month is almost 10% of your income, and it's ARE YOU SHITTING ME, ALMOST HALF OF ALL OF YOUR (non-rent) EXPENSES spent on "drinking beer on a rooftop"*. "Being on a rooftop" is free, and "drinking beer" is cheap, so basically you're paying through the nose only for simultaneity.

Seriously, cut that down to $0 and your savings rate goes from 61% to 71%, and instead of retiring in ~11** years, you will retire in ~7** years. You're essentially working an extra 4 years for... simultaneity. Also, anywhere else you can cut your expenses, will reduce these 7 years rapidly.

*Yes, I realise it includes dining, too. The same applies to dining. "Eating nice food" is cheap and "being in a nice place" is free/cheap, you can have both, it's just the combination of them that's expensive.

**These figures would be ~12.5 and ~8.5, except you already have $95k in liquid assets.

[arebelspy]

The wife and I have considered going to teach in Dubai for a year or two for fun after FI.  Seems like an interesting place.

Mustachianism is all about priorities and spending on what is important to you, and weighing that against what else you could do with the money (spend it on something else, invest it to reach FI quicker, etc.).  Determine what is and is not worth your money and time, and cut out the bullshit that isn't.

Welcome to the forums!

[Zamboni]

Aha!  You are right that 50 stories high is more fun. 

However, the other posters have a point:  you can still do that and not spend so much at it.  I have lived in two very expensive places when younger (not Dubai expensive, though, from what you are saying) while I was poor, and I still partied it up in nice places while spending nearly nothing.  Dress well, behave like you belong, and tip your server a buck even if all you get is tap water.  That is all it takes.   

Tips from the trenches:  if you like the social lubrication of liquor, then have a couple of beers/drinks with friends at home or some other cheap location BEFORE you go out to the 50 story rooftop.  Once in the fancypants place, get just one there if you really feel you must buy an alcoholic drink there.  Remember, lots of people don't drink liquor at all, and the bartender is perfectly happy getting you soda or water (or a soda water.)  I have spent a lot of time in very fancy social places spending absolutely no money on drinks, and guess what?  No one there cares.  Try not to be "that guy" who hogs the sweet table by the outlet at the coffee shop while milking a single small coffee all day, but don't feel obligated to blow the bank, either.  Lots of the hippest places it actually takes effort to spend money:  you have to angle up to the bar, wedge in with your money, get their attention.  It's easier to get one round (or one water) and then just hang out with friends away from the bar area. 

[Falconer]

Hallo and welcome!

I myself stay in the UAE (abu Dhabi) but spend many days in Dubai. I find eating out and going for drinks aside from rent is also my biggest expense. It's very simple, if you do not have an alcohol license it is illegal to keep alcohol at your place, so I don't really have another option. Drinking on a private roof top might easily land you in jail if the wrong person gets annoyed by loud party guests.
Dubai is full of amazing clubs, bars and restaurants so it is very difficult not to spend quite a bit of money when young and wanting to socialize. And being a guy does not help either, girls get free drinks from the bars (ladies nights etc) while guys have to pay through the roof.
I always try to go out to places where at least one of my friends gets discounts. Just make sure you have a girl with a FACE card with you and drinks in many places get much cheaper. Barasti does 50% discount for face card and platinum card.

But saying that looking at your savings rate I would say you don't have to improve much.

5500 AED sounds ok for Dubai for a 1br. But it could be less if you find a place to share. I pay 3000 aed all bills included in Abu Dhabi where rents are normally higher than DXB. Its in a 3br 3bth apartment sharing with a friend. And from June that is going down. As we are going to get a third flat mate (his brother).

[danclarkie]

Haha FACE card is cool, my gf is Emirates cabin crew so she has one.

I have 20% discount in Radisson Blu hotel bars via my employer and 20% in Barasti for Tecom Labour Card.

With regards to rent, man, my rent in Marina is up for renewal in 3 months. The current price for a 1br in Marina has rocketed to 140k/year (The National)

That is over $38,000 a year on rent for a 1 bedroom apartment.
I currently pay just under $18,000 a year in rent.
Bills on top I would guess the total is just over $20,000/year.

If I were to do it again I would have gone for a studio appt and saved maybe $3k-$4k a year, but now I am not moving anywhere whilst I have the rent locked in at this rate.

Do you have the EmiratesNBD platinum credit card?
It's 2% cashback, I use it for EVERYTHING and have a standing instruction to pay the balance in full each month.
In the last 18 months I have made about 3,500dhs in cashback!

We should organise a Dubai Moustachian event soon, I know a couple of other guys that have contacted me that live in Dubai.
Be cool to meet and exchange war stories, over a beer, on a 50th floor hotel terrace :P

[Fiador]

Hi Dan,

Here another Dubai Mustachian. i have started reading MMM and planned to retire in 7 years, but one year later and after learning a lot we are looking into FI in 2018 ( only 4 years)
It would be great to meet and chat one day
I am spanish 40 parent of two and the only mustachian living on the Palm : )

Cheers

[Fiador]

UPDATE

Location: Dubai, United Arab Emirates
nationality: Spanish
Age: 40
Income: $US 290,000 ( 2 salaries including Bonus)
Income rent houses : $US 20,000 year  it is planned to double at quarter 3 when the new house will be for rent
Tax: 0%
Marital Status: Married
Dependents: 2 kids and one nanny 

Assets :
Emergency Fund: 0
Acc Company pension (like 401) :US$140K
House in Mexico :

- House  :US$ 75,000  (paid)
- Apartment  : US$ 183,000  ( 20,000 still to pay)
- Apartment  : US$ 260,000 (  160,000 still to pay)
- Land plot : US $70,000 paid
- Land Plot : Us $ 32,000  paid
 Total: $760,000
But we do not own a house to live and we currently live rented

Investments :
Loan House :    $40,7  K per year ( 6.9 % interest)  $160 K to pay total   4n years to go
Pension contribution $ 54 K per year 

Expenses and liabilities :

Rent ad utilities : $ 46k/Year
Loan car Rav 4 :    4,7 K per year ( 1.9% interest ) 9,5K pending I drive a Honda civic 2009  :  Fully paid, no intention to replace
Eating out : 16 k per year ( mostly not cooking)  Mostly we go to restaurants with discount and vouchers
Groceries : 6.5 K
Holidays : 5 K
Schooling : 9 K per a freaking nursery
Nanny : 11K per year
Miscellaneous  : 7.8 K

Total Expenses : $106 k/Year
Savings Rate (YTD): 65%

we happily live the 35/65 rule and planning FI for 2018 where we wiil head to South france for a sabatical year. then hopefully move to mexico for ER life
For all of this to happen , we need to end the loans + pay or build the house where we will live + increase the pension investment to 500 K