Investing guide for expats living in the US part 2 – Part one is here.
Some alternative investments can be accessed by investors who are living as non-residents in the United States. Some of these alternative investments include Cryptocurrencies, Commodities, Precious Metals, Private Equity, Hedge Funds, and even Art.
However, you can discuss the alternative investment options available for you by getting in touch with an expert financial adviser (like us).
Stock Market:
As always, we have kept the best information for the last, and now is the time for us to discuss how expat investors living in the United States can get access to the US Stock Market.
Just like most other types of investment options we have discussed in this article, there are no specific citizenship requirements for individuals who wish to invest in US stocks.
Even though all the investment securities in the US are regulated by US law, there are particular regulations that restrict non-citizens from investing in the US stock market.
By no restrictions, we mean that non-residents will not be objected to, but they are subject to various US laws which operate for protecting US interests.
Only with the help of an international stockbroker, expats living in the United States are able to invest in US stocks and bonds while abiding by these laws.
As we discussed before, most of the brokerage firms in the United States will require additional documentation from individuals who are no permanent residents or citizens.
To make things easier for foreign nationals and expats who are enthusiastic about investing in US companies, most companies are listed on the stock exchanges of foreign countries as well.
Important Information:
One of the common mistakes done by most non-residents living in the United States is that they do not consider the taxes, as taxes can be burdensome while investing.
However, the USA has tax treaties with most countries and these tax treaties can be utilized by expats in the United States for reducing their taxes.
Any person would be considered as a non-resident alien who is unable to meet the requirements for the green card test or the substantial presence test and will be taxed accordingly.
If any individual passes any of these tests, then they shall be taxed as per the same tax rates that apply to citizens.
Non-resident aliens are only subject to taxation on the income derived from the sources in the United States, and this income is taxed at two different rates.
One is the tax rate for effectively connected income and the second is the tax rate for FDAP (fixed, determinable, annual, or periodic) income.
Only the individuals who can file their returns in a timely fashion are eligible for deductions or credits in their taxes.
Most of the details regarding the information about taxation are provided by IRS on their official website, and you can get access to that information by clicking here.
Investment Tips:
In this article, we have mentioned various types of investment options available for expats who are living in the United States, but these options may not be suitable for all investors.
You might be wondering why? Well, an investment portfolio should be based on some factors such as investment goals, financial stability, risk tolerance, etc.
For example, savings accounts and certificates of deposit may not be suitable for people who want to gain more returns, as they may or may not (mostly may not) be able to beat inflation.
Especially when we are dealing with the COVID-19 pandemic all over the world, returns from conservative and steady investments such as savings accounts won’t be able to beat inflation.
This means the interest obtained from the money you invested in a savings account may not be enough to get on with your living costs after you withdraw them.
Even some types of bonds may not be ideal for most investors as the returns from some bonds may not help an investor reap more benefits.
Nonetheless, aggressive investing (investing in riskier securities) may not be the solution either, especially if you do not have the required amount of risk tolerance.
A good portfolio would be a well-diversified portfolio, and all the investments should be carefully monitored regularly. Every now and then, it is wise to rebalance your investments depending on your financial stability and investment goals.
Bottom Line:
The process of investing can be troublesome, and if not done right, people usually end up losing a lot of hard-earned money.
Therefore, we highly suggest you consider opting for the services of an efficient financial expert (like us) to care for your investment needs. Only financial experts can get to know your financial situation clearly and provide investment advice based on that.
This article clearly outlined most of the investment options available for the expats living in the US and we even covered some available for the foreigners who want to invest in the US.
We strongly hope this article was useful to you in order to find the information for which you have been searching.
If you are an individual with a substantial amount of money or if you want to invest some money (at least $500) every month, then you can opt for the top-notch investment-related services offered by us.
You can even get access to our financial services from the comfort of your mobile phone by installing our mobile application.
You can even learn everything about investing with the help of our Adam Fayed Academy so that you can get access to all the information and knowledge to take things into your hands.
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