U.S. citizens choose to move out of the country for all sorts of reasons. Work, finance, or even just a desire for a change in scenery can be enough to move. Of course, with investing being seen as one of the best ways to build wealth, many expats find that they want to continue investing. If you find yourself in this boat, so to speak, remember the following!
Tax Implications
One of the certainties you can count on as an investor is that Uncle Sam will come to collect if you’re a U.S. citizen, regardless of where you’re living. You still have to file a tax return, even if you aren’t living in the country. If you’re making money out of the country, whether it’s from investments or a job, you’ll probably end up owing the IRS tax dollars. The consequences of failing to file an accurate tax return can be pretty costly. You can protect yourself from this by hiring a tax professional who specializes in helping expats and investing to help you make sure everything is in order each year.
Investing Through ETFs
EFTs, or exchange-traded funds are investment securities that are similar to mutual funds and are traded on stock exchanges. ETFs allow you to invest in U.S. stocks even if you live overseas. That can really help if you want to continue to invest in U.S. stocks when you are no longer living in the country. They can be a great option since they tend to be both low-cost and low-risk.
Exchange Rates
Once you become an expat, there’s a good chance you’ll find yourself using a different form of currency. Only 11 countries in the world use the U.S. dollar aside from the United States as their official currency. Unless you’re living in one of those countries, you’ll need to keep an eye on exchange rates when you’re investing. The more times you have to convert currency, the more money you’ll pay in foreign exchange rates. That can eat into your investments, so be aware of that and try to minimize currency exchanges.
If you want to invest as an expat, you’ll definitely need to do your research first. There are tax implications and exchange rates to keep tabs on. You may find it best to make some changes in how you invest too. FATCA, a law passed in 2010, makes finding a good brokerage as an expat harder than it is for U.S. citizens living in the country. Make sure you’re prepared for all the ways investing will change as an expat. Remember, you can always consult a tax expert if you have questions!
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