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# Financial Independence, Retire Early (FIRE) Journey

I am a 30-year-old Bulgarian resident gearing up for my Financial Independence, Retire Early (FIRE) journey. This journey involves investing approximately 50 k€/year for the next 10-15 years using Interactive Brokers (IBKR) with the goal of retiring with about 40 k€/year plus inflation adjustments.

AI Legalese Decoder can help in this situation by providing legal expertise and guidance on tax-efficient investment strategies, ensuring compliance with international regulations, and optimizing portfolio diversification.

# Building the First Investment Portfolio Strategy

Currently, I am in the process of constructing my first investment portfolio strategy and would greatly appreciate your insights and opinions on the matter.

## ETF Parameters for Equity Side

For the equity segment of my portfolio, I intend to choose one or two Exchange-Traded Funds (ETFs) that meet specific criteria:

### Domiciled in Ireland
One of the reasons for selecting Irish-domiciled ETFs is that Ireland does not withhold any of my taxes. Additionally, Irish Double Tax Treaties (DTT) make Irish ETFs less tax-inefficient.

### ESMA-Regulated and UCITS-Compliant Trading Venue
Opting for ETFs traded on trading venues that are ESMA-regulated and UCITS-compliant ensures that capital gains from transactions with public companies on regulated securities markets in EU/EEA countries are income tax exempt for Bulgarian residents.

### Exposure to Global Stock Market
Seeking exposure to the global stock market in an ETF is to maximize diversification within the portfolio.

### Currency Denomination
The ETF currency denomination does not play a significant role in my decision-making process.

### Currency Trading in EUR
Choosing ETFs traded in EUR aligns with my earning and spending currency, as well as my retirement plans in Europe, thereby reducing currency conversion costs.

### Non-Currency Hedged
Avoiding currency-hedged ETFs is based on the belief that currency fluctuations have minimal impact on the volatility of the world stock market and that long-term performance remains similar whether hedged or not.

### Accumulating Distribution Policy
Opting for an ETF with an accumulating distribution policy helps bypass the 5% Bulgarian dividend income tax.

### Total Expense Ratio (TER) < 0.25% Keeping fees low with a Total Expense Ratio (TER) below 0.25% is considered advantageous, as lower fees generally lead to better returns. ### Minimum Holding of 500 Companies Ensuring that the ETF holds shares of at least 500 companies helps in diversifying the portfolio effectively. ### Physical Replication Preferring physical replication over synthetic replication minimizes third-party risks associated with the ETF. ### Fund Size > 1 Billion USD
Selecting ETFs with a fund size exceeding 1 billion USD facilitates quicker buying and selling, lower bid-offer spreads, and reduces the likelihood of liquidation.

## Example
As a reference point, the following ETF aligns with the outlined parameters:
IE00B4L5Y983
SWDA / IWDA / EUNL
[ETF Profile](https://www.justetf.com/uk/etf-profile.html?isin=IE00B4L5Y983#overview)

## Questions
1. What are your thoughts on these parameters?
2. Have I overlooked any pertinent parameters? Any suggestions for additions are welcome, along with relevant references for further study.

In the near future, I will also draft a similar post addressing:
– The fixed-income facet of the portfolio
– The emergency fund

Your insights and expertise are much appreciated. Thank you!

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