How can an international student invest in the US?

Dear International Student,

The best would be to open a brokerage account because:

  • they may pay you cash to open the account (when I was a student, many years ago, we got alarm clock radios for opening bank accounts)
  • there are no maintenance fees
  • you will earn interest on the cash you have even if you are not invested,
  • they will provide you with a Visa card that you can use to withdraw money from anywhere in the wold, with no fees of any kind
  • Some will also provide you a checkbook free of charge.
  • You can use it to pay all your bills (free of charge) and save both envelopes and stamps
  • Then, I would recommend that you invest on an ETF like SPY. This is not one stock, but rather a stock which tracks the S&P 500. It will only cost you $8 to buy it. Over the long run, you could make 7% a year and dividends are around 2%.

International students are allowed to open brokerage accounts. You will have a few more steps than a US citizen, but you will have a major benefit: if you do not live in the US, you will not pay any capital gain taxes. If you were a US citizen, you would have to pay 20%.

I am not a financial advisor and I do not receive any commissions of any kind from anyone. I was once an international student.

It depends a bit on what country you are in. If you want to invest ‘in the U.S.' you might me that you want to invest in American companies, essentially betting on their future growth in value. Assuming this is what you mean, consider buying an "index fund." Though you aren't interested in investing in stocks, that is the most effective way for a young, non-millionaire individual to invest money. An index fund comprises hundreds or thousands of stocks so that every dollar you invest is spread across that number of companies. Then, if one fails or goes bankrupt, you lose a tiny amount of money, which is ideally counteracted by the growth you experience in other companies' stocks.

Do a Google search for online brokers in your country, or check the website of a large, national bank. Chances are a broker or your bank will give you access to buy index funds. For your interest in the U.S.A., buy either the Vanguard Total Stock Market Index Fund or the Vanguard S&P 500 Index Fund. They come with low fees and wide diversification of risk, all by investing in American companies. You might have to pay a transaction fee to the broker or bank, so make sure you understand what fees will be charged up front.

We explain all of this in detail on our website, Wonder, Learn, Invest! - Personal Finance for Millennials. Come check it out or get in touch with us!

If you are not looking to invest in stocks, what kind of investments are you interested in?
It all depends on the investment type and your knowledge in that field.

You really need to speak with a financial adviser in person for this. This is because he will have to know your status on some confidential information such as your visa status, source of funds etc. Yes, you can invest in the stock market but do speak with an adviser in person.
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