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American expat looking to invest problems.

Discussion in 'Banking - Investing - Finances' started by ChMacQueen, Feb 5, 2021.

  1. ChMacQueen

    ChMacQueen DI Forum Patron Highly Rated Poster Showcase Reviewer Veteran Army

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    Not sure if this has been covered before or recently enough to be still valid. I'm looking to invest in stocks or other investments but fairly clueless besides have a few things in mind I'd like to invest in. Problem is every app or inexpensive service for people not looking to dump $50k or larger figures seems to lock American expats out due to the US's insane tax laws demanding expats who may have no set foot in the US for years cough up large sums and report.

    Looking for any suggestions or directions where to get started as web searching has become a massive pain usually outdated nonsense or leading to only support large investors.

    Thanks
     
  2. Rye83

    Rye83 with pastrami Admin Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    If you have back taxes in the US (the only reason I can think that you would need to cough up large sums of money for not reporting) you are almost certainly going to have to pay them before you can invest in the US stock market. I believe reporting is a requirement for all brokerages to have access to the US markets and they are required to provide you with your tax paperwork at the end of each year (no matter if it is a foreign brokerage or not). I also have to pay taxes to foreign countries that I own stock in, so this goes both ways. I don't think the rules are ridiculous here. They want to make sure people are paying their taxes as there is a potential for huge amounts of capital gains to be hidden overseas.

    You are going to have to pay your taxes if you want to invest. If you don't want to pay taxes that's fine I guess, but don't expect any bank to take on the risk and burden of turning a blind eye to that.

    I use Schwab. Easy to use, no minimum dollar amount to open an account for Americans, free checking account with ATM fee reimbursement. I don't know how they would handle you owing taxes as I'm quite sure they specifically asked this and made me check a box to promise that I didn't owe the government taxes and they certainly aren't going to refuse to report your income to the USG.
     
  3. Edward K

    Edward K DI Senior Member Veteran Navy

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    I was looking at all the answers, and this one does mention Schwab, which we use. I started with them in the early 70's. Very easy to use, easy to reach. They might even provide some basic recommendations and financial advice, i believe they started this service a few decades ago..
    Just remember to figure how much risk you can afford, what is your target equity / fixed income, which depends on age and a bunch of other factors. If you want to dabble in riskier stocks, how much can you risk. Skip crypto, options, shorts until later if ever. What's nice about a good portfolio is you can sometimes get 6 to 8% return over a long period, higher returns will have higher risk....
     
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  4. SkipJack

    SkipJack DI Senior Member

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    Try Robinhood.

    https://robinhood.com/us/en/

    They have been in the news a lot lately. I do not have any experience with them.
     
  5. OP
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    ChMacQueen

    ChMacQueen DI Forum Patron Highly Rated Poster Showcase Reviewer Veteran Army

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    Disabled vet so not required to pay or report taxes since no other income. Issue is I've looked at a number of the easier stock apps / brockerages and they have closed out for American expats. I also don't have a US residence to really claim besides a mailing address. I'll do a bit more digging on Schwab. I thought they stopping taking new expat accounts like many others but it doesn't look like it now.

    Robinhood though doesn't take US Expats like all the other basic inexpensive apps I have looked at. Plus I wouldn't be to sure on them as well since they blocked certain stocks recently when hedge funds were taking a nasty hit because commoners decided to beat down hedge funders costing them billions. Its that sort of action I would also like to be able to get in on but robinhood could have ruined some small people playing a smart game due to their corruption protecting hedge funds.
     
  6. Rye83

    Rye83 with pastrami Admin Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    Schwab has a newer robo investor account option as well for those that do not want to pick their own stocks/ETFs. Answer a few questions to determine your investing goals (income/growth/short term goals/etc) and risk levels and they will sort everything out for you. I think the minimum account balance for this option to be free is 5k USD. Three out of my 4 accounts (rollover/roth/traditional IRAs) with Schwab are with their robo investor option, only my personal dividend/income account is managed by me personally. I pull in far better dividend income from the personally managed one than the Schwab robo investor does but mine may (possibly) be subject to higher tax rates (I'll find out next month how well I did with the tax loss harvesting...my realized gains were HEAVY in the red, mainly due to COVID).

    Prior to Schwab I used the WealthFront robo investor. I hated it. No option to pick your own stocks or control where your money was going. I didn't stick with it long enough to know if it was going to provide any returns.

    Schwab, and a few other banks, also blocked trading for those stocks. I think that was mainly for people trading on margins (buying stocks with someone else's money). Worth a watch if this is a concern for you. (If you are new to trading you should not be even thinking about options.)


    I think this guy gives pretty solid trading/dividend income advice (for the most part, I disagree strongly with a few of his picks) and my portfolio is pretty much in line with his.

    https://youtube.com/c/JosephCarlsonShow

    Btw, he uses something called M1 Finance. I really like their user interface and they offer fractional shares. If I were just starting off and/or had limited investment income I would probably go with them.

    I'm not sure how they would know you are an expat. That is in no way a legal term/citizenship status...you are American or you are not American. Since you have a SSN I see no reason why they wouldn't open an account for you. Give them a PO box/forwarding address and nothing more.
     
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  7. cabb

    cabb DI Forum Patron ✤Forum Sponsor✤

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    With the robo investing I've seen, you pick a risk level and they pretty much do the rest. Are you comparing your personal (non-retirement) account to what WealthFront offers? Apples and Oranges. I have money with WealthFront and their tax loss harvesting works well. It would be interesting to see a performance comparison of various robo investing platforms. Most analysis focuses on cost, tax loss harvesting, customer service, etc. It's probably because you would have to compare at equivalent risk levels to be fair.

    I'm not suggesting that Wealthfront is a better for someone who lives outside of the US. In all that I've read, Schwab sounds like the best option. Do they do tax loss harvesting with their robo investing accounts?
     
  8. Rye83

    Rye83 with pastrami Admin Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    No. I'm comparing Schwab's robo investing to WealthFront's robo investing. I did not like WealthFront's UI at all. Extremely basic and, at the time I was using it, it did not offer nearly as many features/risk factors/financial goals and did a pretty poor job at explaining how it all worked. (It is worth noting that when I was using WealthFront Schwab did not seem to have much going on with their robo investing that I am aware of.)

    My comment on my personally managed portfolio was comparing it to Schwab's robo investor. I have one account with the robo investor set to "income" and they play it extremely safe (even with the risk level maxed out) and the income it provides is nowhere close to what my personally managed portfolio is. The robo investor likes to hold a lot of cash (12%) as well when set to income and there is no way for me to change this. I understand this is a sound financial decision for most people who would have selected this financial goal but isn't a fit for me and I had to move some money around for it to make sense.

    I think you just have look at the ETFs they are selecting. There is nothing magical about these robo investors and I believe there is a team of people behind the scenes hand selecting these extremely safe (even at the highest risk levels) stocks/ETFs/bonds for each risk level.

    It isn't an option at all for people who want to pick their own stocks.

    Yes, that is an option.
     
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  9. Ozzyguy

    Ozzyguy DI Member

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    I don't know.
    What sort of return are you guys getting from the robo investing?
     
  10. cabb

    cabb DI Forum Patron ✤Forum Sponsor✤

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    It's all in how you measure it. YTD, calendar year, March 30th until now. In addition, they will do some tax harvesting that doesn't show up directly in the return. When would you like to measure from?
     
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