How To Start Investing As an Immigrant

6.5 MIN READ

Learning how to start investing is one of the most powerful ways to set your family up for financial success. As an immigrant, you have many investment options in the US. We help you find a large number of investment options for both aggressive and conservative investors to realize financial wealth.

What is Investing?

Investing means buying an asset in the hopes that it grows in the future. The phrase we live by is ‘buy low and sell high.’ For example, if you buy a stock in a company, you buy ownership in it. If you buy stocks when they are priced low and sell them after they grow in retirement, you’ll walk away with capital gains or profits.

If you buy stock high and its price falls, you’ll have a loss, but losses are often offset by gains. And you don't realize those losses unless you sell. This may help your tax liability and is one of the main reasons investors should always diversify their investments or spread their money out over a variety of investments.

Stocks aren’t the only way to invest. You can invest in bonds, ETFs, mutual funds, and even real estate. Bonds are a more conservative investment, especially if you invest in government or corporate bonds - you almost always earn your money back, but your earnings are usually lower than stock investments because there’s little risk involved.

If you want to invest in stocks, but don’t want the risk of investing directly in a single company, consider ETFs (exchange-traded funds) or mutual funds, both of which are diversified investments in multiple companies and sometimes industries. The diversification is done for you, which is great for beginning investors.

Why Should You Invest Your Money?

Investing helps grow your money in ways that no other method can. You work hard for your money, but it may not be enough to fund your future endeavors, whether we’re talking about seeing your children through adulthood, buying a house, or retiring.

Immigrants especially should invest to build wealth. Many immigrants come to the US to pursue education and employment opportunities. They also come here to fulfill their dream of building wealth and creating financial freedom.

While saving money is great - it will never compete with the returns you could earn when you invest. Savings accounts provide minimal returns but have little to no risk. Investing requires some risk, but provides ample returns.

Related Article | Top 10 Immigrant Money Questions

Types of Investment Accounts

As you learn how to start investing, you’ll hear various investment account types. Each has different tax liabilities, contribution amounts allowed, and minimum deposit requirements. The three main investment account options include:

Taxable brokerage accounts - You contribute funds after paying taxes to your taxable accounts. You can invest in stocks, bonds, mutual funds, and ETFs. You can even invest in real estate funds or commodities. There are no tax advantages and you pay taxes on all capital gains (profits) while losses offset your tax liability.

IRA - An Individual Retirement Account is a tax-advantaged account. You receive a tax deduction for all funds you contribute to your IRA, up to $6,000 per year in 2020 ($7,000 age 50 or over) if you're eligible. Your earnings grow tax-deferred. This means you pay taxes when you withdraw the funds during retirement. You cannot withdraw funds (without a penalty) until age 59 ½. Most people are in a lower bracket during retirement, which means they owe fewer taxes.

Roth IRA - This is a version of an Individual Retirement Account with different tax rules. Instead of receiving the tax break when you contribute, you receive it when you withdraw the funds. The earnings grow tax-free. When you withdraw the funds you don’t pay taxes, which may provide more funds during the time you need them most. Your modified adjusted gross income (MAGI) needs to be within certain limits to be eligible to contribute.

How to Start Investing

The easiest way to start investing is to start now. It doesn’t matter if you have $5 or $500, start as soon as you can.

Decide how much you’re comfortable investing and set it aside each month. Set up an automatic transfer from your bank account if you can, this eliminates the risk of not skipping a month or two.

Choose an investment account. IRAs, Roth IRAs, and taxable investment accounts are all great options depending on your goals.

Choose an investment strategy. Consider why you’re investing. Is it for long-term savings, such as retirement, or something more short-term, such as saving for a home?
Choose your options. There are many investment options including stocks, bonds, ETFs, mutual funds, and even real estate investment funds.

5 Investing Considerations You Must Know

If you invest in stocks, you may earn dividends in addition to the capital gains earned when the stock grows

It’s best to try to mimic the market (S&P 500 usually) rather than beat it. The market usually turns a 7 - 8% earnings profit over 10 years.

Investing should be a long-term vision, don’t expect overnight gains, it takes time and patience.

Don’t make emotional investment decisions. It’s easy to pull out of the market when things go bad, but that can be one of the worst investment decisions.

Investing can far outweigh the outcome of saving money. Immigrants often need to build wealth and investing is the best way to do it.

Related Article | Can I Roll an RRSP into an IRA?

Is a Green Card, Citizenship, or Social Security Number Required?

There isn’t a federal law mandating immigrants to have a green card or citizenship to start investing. But since you must use a broker to invest, check with your individual broker. Some require citizenship or a social security number and some don’t.

What Documents and Requirements are in Place for Immigrants to Invest?

It’s easy to start investing as an immigrant. You’ll need a permanent address in the United States and proof of employment.

Some brokers also require an identification number. If you choose not to apply for a social security number, apply for an Individual Tax Identification Number, which you’ll need to file your taxes. This may make up for the lack of a social security number and open more doors for you.

Which Immigrants Are Not Allowed to Invest in the United States?

Most immigrants can invest in the United States since there really aren’t citizenship regulations. However, if you are from a country known for money laundering or who has been sanctioned by the US government, you may face more difficulties.

What Happens to Immigrants' Investments if they Leave the U.S.?

Every brokerage is different. Contact your brokerage to find out if you can manage your investments from abroad or if you need to. Some do not allow you to place transactions on your account while abroad and others don’t even allow you to log in. It can vary depending on your broker.

Benefits of Investing with MYRA Wealth

MYRA Wealth is a multicultural and international financial advisory company that provides access to financial advisors when and where you need them. MYRA advisors are international and multicultural as well and can help you with your investment needs. We are a fiduciary which means we operate in your best interests. We don’t work on commission, but rather always make sure we set you up to achieve your financial goals.

Learn How to Start Investing Today

If you’re ready to invest, don’t delay. The faster you start, the quicker your money can start growing. We’ll help you learn how to best invest your money so that you realize gains, reach your financial goals and understand the importance of financial wealth.

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