How To Invest In US Stocks As A Foreigner: 3 Things You Must Know

Investing can sound like a foreign language especially if you grow up in a country where investing isn’t very popular. But did you know that you can invest in US stocks even as a foreigner?

This blog post will show you how to invest in US stocks as a foreigner and I will reveal 3 things you must know.

For context, I was born and raised in Lima, Peru in a middle class family. Money conversations were pretty much non-existent. There was the classic “save for rainy days”, and the “don’t ever get into debt” narrative.

Fast forward to 2020 when I became not just curious but was committed to figure this investing thing out for someone like me – from South America and not living in my country of birth…

I was shook about how easy it was to invest in US stocks as a foreigner. I’ve been investing since 2020 with an average rate of return of 22.92% per year.

This has brought so much peace of mind and I do feel I am helping change my family from generations of financial hardship and living in scarcity to a life of abundance and peace of mind.

We feel on track about retirement, now we can allow ourselves to be more present with our kids, we discuss more openly about money with our kids and we sleep peacefully at night know our financial future (and that of our kids) is secure.

So here are 3 things you must know about how to invest in US stocks as a foreigner:

Before diving into how to invest in US stocks as a foreigner I do want to mention that none of this is financial advice. I am not a financial advisor. I am a mother of three young kids that was sick of being broke and decided to learn what school didn’t teach: How to grow wealth and secure my family’s financial future.

Delving into financial education (and taking action) helped us grow our family net worth from $200K in 2020 to $500K+ in 2024.

How To Invest In US Stocks as a Foreigner: 3 Things You Must Know:

1. Tax haven for non-US investors
2. What apps allow foreigners to buy US stocks.
3. The secret to succeed in investing and creating long term wealth.

How To Invest In US Stocks as a Foreigner: Apps allow foreigners to buy US stocks.

Investing in US stocks is easier than you might think, even if you’re not a US citizen. The key to accessing the US stock market lies in choosing the right app or brokerage. Brokerages are financial companies that allow you to buy stocks and other financial instruments.

The easiest way to invest in US stocks as a foreigner is to use a US-based brokerage firm that welcomes international investors. These platforms are designed to cater to clients worldwide and provide a seamless experience for buying US stocks. 

My favorite broker is Interactive Brokers and here’s why I believe they’re a great option for those looking to invest in US stocks as a foreigner.

• You don’t need any minimum amount to open an account.
• Their list of accepted countries is very extensive.
• User friendly platform.
• Their fees are one of the lowest in the market.
• It allows you to buy fractional shares.
• They give you access to invest not only in American stock market but also other stock markets like Europe and Asia.
• Transferring funds in and out of your account is very easy.
• They give you free stocks when you use a referral code (I wish someone gave me one when I open my account). Here’s my referral code in case you’d like to receive free stocks.
• Great customer service.

How To Invest In US Stocks as a Foreigner: Tax haven for non-US investors

When it comes to taxation and investing in the American stock market there are three primary types of taxes to consider:

How to invest in US stocks as a foreigner – Taxes on capital gains: 

Capital gains refer to the profits made from buying low and selling high. This type of income needs to be declared in your country of tax residence. The tax rate on capital gains varies depending on your local tax laws and the duration you hold the investment.

How to invest in US stocks as a foreigner – Taxes on dividends: 

Dividends are portions of a company’s profits paid to its investors regularly, be it monthly, quarterly, or annually. A tax is applied to these dividends, which is handled directly by your broker.

The broker will withhold the tax on dividends and apply the corresponding percentage based on the agreement between the US government and your country of tax residence.

This withholding tax can go up to 30% if there is no tax treaty between your country and the US. However, with a tax treaty, this percentage can be significantly lower.

How to invest in US stocks as a foreigner – Estate taxes: 

Estate tax is a tax on your right to transfer property at your death. Similar to dividend taxes, estate tax rates also depend on the tax treaty between your country of tax residence and the United States.

Without a tax treaty, the estate tax can be substantial, potentially reducing the value of your investments passed on to your heirs.

How to lower your taxes when investing in US stocks as a foreigner

Now, here’s the good news for us non-American investors when investing in ETFs (Exchange-Traded Funds). If you want to decrease these taxes then you need to choose ETFs that are domiciled in Ireland, instead of the USA. 

When you invest in Irish-domiciled ETFs, you benefit from lower withholding tax rates on dividends compared to US-domiciled ETFs.

For example, while the US may withhold 30% on dividends paid to foreign investors, the rate for Irish-domiciled ETFs can be as low as 15%, due to the tax treaty between Ireland and the US that you can benefit from as a non-US investor. 

Irish-domiciled ETFs also help in reducing the estate tax burden. US estate tax can be as high as 40% for investors with assets over $60,000 in the US.

However, if you purchase Ireland domiciled ETFs you get zero estate tax. You read that right! ZERO. This means that more of your wealth is staying in your family and not in the government.

How to invest in US stocks as a foreigner – How to buy Ireland domiciled ETFs

Getting started is a piece of cake. Companies like Blackrock and Vanguard have established ETFs domiciled in Ireland.

These ETFs offer the same exposure to US and global markets but come with the added tax benefits of being domiciled in Ireland.

For instance, if you want to invest in the S&P500 (the biggest 500 companies in the USA), instead of choosing the popular VOO you can consider CSPX.

CSPX is the S&P 500 ETF by Blackrock, domiciled in Ireland, with dividends automatically reinvested, and even though it is listed in the London Stock Exchange, this fund can be purchased in US dollars.

How To Invest In US Stocks as a Foreigner: The secret to succeed in investing and creating long term wealth.

Majority of people who venture into the stock market, lose money because of different reasons:

1. They are trading instead of investing (it’s not the same!)

Trading is a full-time job, it requires you to be glued to your computer for hours every day and its high risk because you are basically guessing if the stock price will go up or down, not to mention, you need lots of money to make any decent returns.

Trading is considered active income which means, you potentially make money as long as you are actively trading.

If you don’t trade, you don’t make money. In contrast, investing is when you choose assets that will grow in value in the long term and your wealth grows passively. 

2. They don’t know what is their risk tolerance

Your risk tolerance is made of your ability to take a risk and your willingness to take a risk. Not knowing what is your risk tolerance is the reason why 96% of traders lose money because they take more risk than they can afford.

3. They don’t know how to choose assets that are aligned to their risk tolerance and goals

Another crucial aspect of investing is knowing how to choose assets that are aligned with your risk tolerance and goals.

The method I follow is called the Invest Diva Diamond Analysis (IDDA) and it shows you exactly what information you need to look into when researching stocks and how to make sure they are the right assets for you. 

Learning how to invest in US stocks as a foreigner will transform your financial future because you’ll realize how investing is crucial to building wealth.

A barrier that latinos face that keep them from building wealth is the lack of financial education.

A study from the Financial Industry Regulatory Authority (FINRA) highlights that Latinos in the U.S. are less likely to have investment accounts compared to their white counterparts, largely due to limited financial education​.

Also, learning how to invest in US stocks as a foreigner is important because you’ll know how to make decisions based on strategy and not on guesses.

For me, joining Invest Diva’s powercourse was life changing and helped me finally go from not knowing anything about money to growing my family’s wealth year after year. Check the free masterclass that got me started with investing.

Conclusion – How to invest in US stocks as a foreigner

If you thought that investing in US stocks as a foreigner was a complex thing, I hope this blog post helped you realize that it is actually much easier than it seems. 

No matter where you live, no matter what your starting point is, I believe investing is a powerful tool to help you go from living paycheck to paycheck to building generational wealth.

The key to successfully start investing in US stocks as a foreigner is to make sure you are choosing the right platform, that you take advantage of tax reductions that are made specifically for non-US investors that want to invest in US stocks and most importantly, getting educated first so that you have the confidence of following a strategy that considers your unique personal financial situation, goals and circumstances. 

If you’re ready to take control of your finances and to learn how to make your money work for you, I would highly recommend that you follow the step by step path of learning from Invest Diva, just like I did when I started investing.

Start by taking the FREE Triple Compounding Training here. If you’ve got any questions for me, leave me a comment below and I’ll reply. I look forward to seeing you on the inside!

Disclosure: I am not a financial advisor and this is not financial advice. This information is for educational purposes only.  This post ‘How To Invest In US Stocks As A Foreigner: 3 Things You Must Know’ may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please see terms of service page for more information.