Living in Colombia as a Canadian and wanting to invest in the US stock market led to one important question –
How can I invest in the US stock market as a non-resident?
Being from Canada, when doing my investment research, it didn’t seem to make financial sense to invest there as a non-resident. This is because of the high tax implications and quite honestly, the lack of assistance to non-residents.
Recently selling my house in Canada, I couldn’t just leave all my cash doing nothing in a bank account, making virtually nothing on interest, and losing to inflation.
I tried opening a Questrade account, but it wouldn’t let me create it. Robin Hood isn´t available in Colombia. Finally, something worked. An institution let me open an account as a non-resident of the United States. It was Charles Shwab.
This is not an advertisement for Shwab. This is my truth.
Transferring funds over to USD from CAD(Canadian dollars) left me with a little anxiety as 1 USD would equal about 70 cents CAD. Ouch, I know. But that’s the way it is, at the moment of writing this.
The reasoning of investment. The thought of leaving, let’s say, 10,000 dollars in CAD in a Canadian bank account would still be 10,000 in 20 years. It was time to invest in a brokerage account.
This is how you may be able to open an account and start your investment journey.
Steps to Open a Charles Schwab International Account:
- Visit the Charles Schwab Website:
- Navigate to the International Accounts Section:
- Look for a section on the website specifically related to international accounts. This might be under “Accounts” or a similar category.
- Choose the Type of Account:
- Charles Schwab offers various types of accounts, including brokerage accounts and retirement accounts. Select the type of account that suits your needs.
- Check Eligibility:
- Ensure you meet the eligibility criteria for opening an international account. This may include residency requirements and other factors.
- Provide Personal Information:
- Fill out the online application form with your personal information. This typically includes your name, address, date of birth, nationality, occupation, and tax identification number.
- Financial Information:
- Provide details about your financial situation, including income, employment status, and investment experience. This information helps the brokerage assess your risk tolerance and investment needs.
- Choose Funding Method:
- Decide how you will fund your account. This could involve linking an existing bank account, transferring funds, or other methods depending on the options provided by Charles Schwab.
- Submit Documentation:
- You may need to submit supporting documentation, such as a copy of your passport, proof of address, and possibly additional financial documents. Follow the instructions provided during the application process.
- Review and Confirm:
- Before submitting your application, carefully review all the information you’ve entered. Ensure accuracy to avoid delays in the account-opening process.
- Wait for Approval:
- Once you’ve submitted your application and required documents, you’ll typically need to wait for the account to be reviewed and approved.
- Receive Account Information:
- Once your account is approved, you’ll receive information about your new Charles Schwab International account, including account numbers and instructions on how to access your account online.
- Fund Your Account:
- Follow the instructions provided to fund your account. This may involve transferring funds from your linked bank account.
Tips and Considerations:
- Be aware of any fees associated with international accounts, including currency conversion fees and transaction costs.
- Understand the tax implications of holding investments in an international account.
Remember to check the latest information on the Charles Schwab website or contact their customer service for the most accurate and current details on opening an international account with them.
But what now? You have opened your international brokerage account. What will you invest in?
I am not a gambling man. I will not be purchasing many single stocks. My plan is –
Investing in S&P 500 ETFs
Investing in the S&P 500 Exchange-Traded Funds (ETFs) has emerged as a cornerstone strategy for investors seeking exposure to the U.S. equity market. This article delves into the myriad reasons why S&P 500 ETFs are considered a compelling and prudent investment choice.
**1. Diversification and Broad Market Exposure:
One of the primary advantages of investing in S&P 500 ETFs is the unparalleled diversification they offer. The S&P 500 index comprises 500 of the largest publicly traded companies in the United States, spanning various sectors such as technology, healthcare, finance, consumer discretionary, and more. This diversification helps mitigate the impact of poor-performing individual stocks and sectors, providing a more stable and balanced investment.
**2. Historical Performance:
(This is my favorite part, a track record)
The S&P 500 has a remarkable track record of delivering solid returns over the long term. Historical data shows that, despite short-term market fluctuations, the index has demonstrated resilience and the ability to rebound. Investors can benefit from the compounding effect of long-term capital appreciation, making S&P 500 ETFs an attractive choice for those with a buy-and-hold investment approach.
**3. Low Costs and Efficiency:
(Keep the fees down. Over time they add up)
S&P 500 ETFs are known for their cost-effectiveness. As passive investment instruments, these funds aim to replicate the performance of the S&P 500 index rather than relying on active management. This results in lower management fees compared to many actively managed funds, allowing investors to retain a larger portion of their returns.
**4. Accessibility and Liquidity:
S&P 500 ETFs are easily accessible to a wide range of investors. They trade on major stock exchanges like traditional stocks, providing liquidity and the flexibility to buy or sell shares throughout the trading day. This accessibility makes S&P 500 ETFs an ideal choice for both individual investors and institutional investors looking to gain exposure to the U.S. market.
**5. Benchmark for Performance:
The S&P 500 serves as a widely accepted benchmark for assessing the performance of investment portfolios. Investors and fund managers frequently compare their returns against the index to gauge the success of their investment strategies. By investing in an S&P 500 ETF, investors align their performance with a widely recognized and tracked market benchmark.
**6. Dividend Income and Shareholder Value:
(The word Dividend is like music to my ears)
Many companies within the S&P 500 are known for distributing dividends to their shareholders. Investing in an S&P 500 ETF can provide investors with a steady stream of income through these dividends. Additionally, as companies within the index grow and prosper, shareholders may also benefit from share buybacks and increased shareholder value.
In conclusion, investing in S&P 500 ETFs offers a compelling combination of diversification, historical performance, cost efficiency, accessibility, and benchmarking advantages. While it’s essential for investors to carefully consider their financial goals, risk tolerance, and investment horizon, the S&P 500 ETFs remain a popular and widely regarded option for those seeking a solid foundation in their investment portfolios. As with any investment decision, it’s crucial to stay informed about market trends and consult with financial professionals when needed.
Disclaimer. I am not a financial professional. I´m just a non-resident of the U.S who is sharing an experience. Consult with a pro before making any financial decisions.
Thanks for reading, Amigos. Share the blog if you found it useful.