How can I invest while living abroad?
U.S. expat brokerage account restrictions vary between brokerage firms. Some firms let clients keep their existing brokerage account once they have moved overseas but will not permit clients to open a new brokerage account due to residency in a foreign country.
U.S. expat brokerage account restrictions vary between brokerage firms. Some firms let clients keep their existing brokerage account once they have moved overseas but will not permit clients to open a new brokerage account due to residency in a foreign country.
For US citizens and green card holders, any funds or ETFs domiciled outside the US suffer highly unfavourable US tax laws. Because of this, US taxable persons should generally hold only US domiciled funds and ETFs.
One way to diversify your portfolio is to put some of your money in overseas investments. Foreign markets may respond differently to economic conditions than U.S. markets. That means strong performance abroad may help to offset weak performance at home.
U.S. stock is a popular investment for U.S. citizens and foreigners alike. There is no citizenship requirement for owning U.S. stock and foreigners can easily access U.S. stock through U.S.-based brokers and international brokers.
If your destination country does not allow foreign ownership of certain stocks, you may need to sell them before your move. This will ensure compliance with the local regulations and prevent any potential legal issues.
If you're only moving abroad temporarily, such as for a one-year work placement, it sometimes makes sense to leave your investments and manager in place. Conversely, if you are planning to live abroad for longer, it normally makes sense to transfer your investments to an expat financial planning specialist.
Please note: You need to be a U.S. citizen with a U.S. mailing address to open an account. If you live or work outside the U.S., please check out our international site.
Using U.S.-domiciled funds through an expat-friendly U.S. brokerage company is the preferred way for American expats to save and build wealth. Foreign Pension Plans – Many American expats contribute to foreign pension plans.
In addition to paying U.S. taxes, a U.S. citizen living in the United Kingdom may be exposed to U.K. income taxes assessed by the HM Revenue & Customs (HMRC). Prior to implementing any investment strategy, an investor must always consider the tax implications that are created by being subject to two tax jurisdictions.
Is international investing a good idea?
Markets outside the United States don't always rise and fall at the same time as the domestic market, so owning pieces of both international and domestic securities can level out some of the volatility in your portfolio. This can spread out your portfolio's risk more than if you owned just domestic securities.
International bonds are a great way to diversify a portfolio as the investor can gain exposure to foreign securities that may not necessarily move in tandem with securities trading on local markets.
Start by allocating 15% to 20% of your equity portfolio to foreign stocks. That's the percentage I typically maintain in the Vanguard portfolios. It's meaningful enough to make a difference in your overall returns, but not so much that it will ruin your portfolio when foreign markets temporarily fall out of favor.
Can I establish a relationship with Fidelity? A. No. Unfortunately, we do not open accounts for any new customers residing outside the United States.
- #1 – Understand the interaction of U.S. and local tax obligations.
- #2 – Maintain a U.S.-based investment account.
- #3 – Avoid passive foreign investment companies (PFICs).
- #4 – Understand the challenges surrounding foreign pension funds.
Account Features for U.S. Expatriates
As a U.S. citizen living abroad, enjoy a number of advantages with Schwab, including: Convenient access to your money through U.S. dollar–denominated checks, debit cards, and the Schwab MoneyLink® Electronic Funds Transfer Service.
Most expats have a bank account in their home country and a local account in their host country. You should also consider opening an offshore account, as this can be the most effective way to save, invest and manage your money while you're abroad.
Yes, it is a good idea to tell your bank that you're moving. If you don't, you could find that access to services like online banking is restricted once you've moved abroad. The bank could also freeze or close your account. You don't want to risk cutting off access to your money.
The global financial landscape
Many US brokerage firms are no longer able to retain clients that live outside the US. This may include the majority of mainstream brokers, including Fidelity, Morgan Stanley, UBS, Wells Fargo, and Merrill Lynch.
You can access your Robinhood account from almost anywhere. However, certain laws and regulations (specifically those administered by the U.S. Office of Foreign Assets Control (OFAC)) prohibit account access for some countries. Robinhood has also made a risk-based decision to restrict access for some other countries.
What happens to 401k if you move abroad?
When moving abroad permanently, it is generally true that 401(k) and IRA accounts can be maintained and managed from anywhere in the world. However, there may be limitations and restrictions based on the type of account, the destination country, and local retirement account regulations.
Typically, it's not illegal for Americans to keep money in accounts outside the U.S. as long as you aren't doing it to avoid paying taxes on it or for any other illegal reason. There are many legitimate reasons to keep money in an offshore account (which is loosely defined as any account not on U.S. soil).
While Fidelity wins out overall, Vanguard is the best option for retirement savers. Its platform offers tools and education focused specifically on retirement planning.
Please note that, if you move abroad, we reserve the right to place restrictions on your account. This may affect our ability to provide you with the Vanguard Managed ISA. If required to do so, we may also inform any relevant foreign authority about your investments.
If you want to actively trade within your accounts, Fidelity might be the better option. However, if you want to focus more on index investing, or you want to use a robo-advisor, Vanguard has a slight edge.
