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TLDR: Spanish investor with \~€32k mostly in VUAA (S&P 500), investing 800€ monthly, seeks advice on whether to diversify or re-balance toward global ETFs, given US concentration and Spanish tax constraints.
Hello everyone,
I'm a Spanish resident with the desire to hit FIRE (or semi-FIRE) in 20-25 years from now. I like the work I do but I would prefer to have more free time to do stuff I enjoy. I made this post to get advice on how I should proceed, if my current approach is good, or if I should re-balance. I consider myself quite new on this sector but with some solid grounds. I'm asking you guys as I believe I could get some solid advice here, and I don't have anyone to talk about this.
In 2021 I found Bogleheads guide and got interested in the whole FIRE process; from having a saving mindset, deciding where to invest, constant DCA, and which rule I should follow once I reach my FIRE number (which is, around 1M€). Since then I tried some stocks and ETFs. Later I decided to switch to a more long-term portfolio.
So I started investing in VUAA, which is the EUR VOO (S&P 500 accumulating in EUR), and 6 months ago in LYP6 (largest 600 European companies). I made the decision to start investing in LYP6 as I believed I had too much weight on US, so I wanted to diversify. My objective was to be able to decide on which markets I would want to invest into, so I added Europe, and I was planning on adding Japan in a future, for example. But I don't know if this is a good approach.
For context, these are my positions right now:
\- 25k€ in VUAA
\- 7k€ in LYP6
I also have some cash and a savings account, but let's focus on ETFs.
I'm able to invest 800€ monthly, and I expect a minimum increase of 200€ per year (so, in 2027, I will be able to invest 1k€ monthly). I'm using a broker that doesn't have commissions for daily recurring buys, so I daily (work days) invest 30€ on LYP6 (trying to re-balance without selling) and 10€ on VUAA.
Lastly, I have to say that in Spain, you pay taxes for gains, based in FIFO (first-in, first-out) rule, so I cannot be re-balancing every time, or my gains will fade away. Plus I don't want to keep looking at markets and manually balance anything every few months.
Now, I have seen some US news and I have some fear on my US weighted portfolio. Also, this is, for me, a time of uncertainty with all that's happening globally, dollar value, economic relations... And possible permanent damages. I'm quite lost on what I should do next, even knowing I should ignore market noise. This are the option I have thought of:
\- Ignore news and keep investing
\- Stop investing and hold
\- Sell a portion of VUAA and buy a global ETF (such us WEBN)
\- Sell VUAA and LYP6 and buy a global ETF
My idea is to keep investing in ETFs, as I believe they are my ticket to FIRE (or FI, at least). However, I'm scared for US future and how that may affect my investments.
What are your opinions? What should I do next?
P.S.: Selling all VUAA would trigger an estimated 400-600€ in taxes. I’m open to do this once if it simplifies my allocation.