Invest In The Stock Market As A Non-U.S Resident

Being an immigrant living in a third-world country, something that always worried me was money. I was always thinking about what would happen if I got sick or lost my job, How would I survive? How I was going to eat or pay the rent?

Just like any curious kid, I would go online and look for ‘secrets for financial security or financial freedom’.

The one answer that would always come up is, Invest.

Among the most popular ways to invest I would get are;

• Financial certificates
• Real estate
• Stock market

Analyzing each of the options I ran into certain drawbacks.

A financial certificate in my country usually does not provide more than 3% annual interest.

To invest in real estate as an immigrant kid without any type of track record, a stable job, or necessary funds, it was impossible to apply for a house loan. Also, mortgage interest rates range between 10–16% annum.

Stock market

The one that made the most sense to me was the stock market, I had the option of investing in stable companies with a small amount of money, using a stable currency (the dollar), receiving dividends, and average growth of 10% per year.

But, just like this came with great opportunities, it was also accompanied by 2 big obstacles;

1- Finding a broker that would accept an immigrant client

First drawback. Most brokers only accept US residents. And, if they do accept non-US residents, the first requirement is to have a valid local ID from where you are residing.

I came into the Dominican Republic as Student. So, I do have a valid visa but I do not have any local ID. You might have the same issue, most immigrants go abroad with a work visa, not with a residency.

2- Transfer money to my brokerage account without paying crazy fees

There are two options to add money to a brokerage account.

• International Wire
• ACH transfer

International Wire is extremely expensive, using your local bank will cost you around $35 — $70 per transfer. My first $200 transfer cost me $55 just for fees.

ACH transfers are cheap, usually less than $1 per transfer. But you need a bank account located in the US.

Opening my first brokerage account

Don't fall for the trap.

There are plenty of brokers that let you register with minimum info, like Etoro and other CFD brokers.

The issue with those brokers are;

Hidden fees

1. High spread between buying and sell prices
2. If your stock is CFD you don’t get your dividends payed
3. If you don't trade in 30 days you get charged.

After scanning the markets and sending dozens of emails the only brokers that gave me the chance to apply were Interactive Brokers and TD Ameritrade.

At first, I was more interested in applying for TD but the process is extremely long and they ask me to scan some docs, sign them and send them back physically.

So, I decided to go with the one that gave me the least inconvenience, Interactive Brokers.

IBKR requirements

1. Application

The first step is to go online, select Open account and fill in the information about yourself.

2. ID

I used my passport, and never got an issue.

3. Proof of address

A utility bill, or rental contract. I would say the easiest is the electricity bill or your telephone/internet bill.

After going through these 3 steps your account should be active in less than 7 days.

Transferring money to your brokerage account

This for me was even worse than registering. Brokers like Interactive Brokers or TD only accept international wires or ACH transfers.

As I explained before International wires have a cost that varies according to bank from $ 35 — $ 70, no matter how minimal the amount you are sending.

My first transfer was $ 200, and I had to pay $ 55 for my international transfer. Before investing a single penny, I had already lost 27.5% of my balance.

That means I would need 3 years to recover my investment. 4 months after opening my IBKR account I found Xoom, a Paypal service that allows you to make ACH transfers, using your debit/credit card. But, unfortunately, it was not available in my country.

Then I came across an alternative called Wise.

How to send money abroad for fewer fees using WISE

Wise offers a cheap way to send money to the U.S. without the crazy fees you pay using your local bank.

The process is simple, you first create an account, second add cash to your USD balance, and third, you send that balance to your recipient.

1. First, we start by adding cash to our USD Balance

The minimum accepted is $3

Let’s use as an example $200.

Adding $200 to my Wise account using my debit card. The total fee is $2.28$. Which is 1.14%.

2. Fill in the recipient information.

To be safe, I sent IBKR an email asking them for the recipient's information.

3. Select your payment method

Because we are transferring to the US account, we have the option to use ACH transfers where you will be charged by Wise only $0.93.

Total fees

• The fee for adding $200 to my Wise account is $2.28.
• The fee for making the ACH transfer is $0.93.

The total fee for transferring $200 to my brokerage account is $3.21

Doing the same using international wire transfers cost me $55.

$3.21 is 1.60% of $200

$55 is 27.5% of $200

PS: If you register using my link, your first transfer is free.

https://wise.com/invite/ua/lucienm16

After making the ACH transfer it would take around 5 days for IBKR to validate it. I have done this around 6 times and never got an issue. I hope this helps you start your path into investing in the stock market.

Disclaimer: This is not financial advice, I am just a guy with a laptop sharing his opinions and experience. This is for entertainment purposes only. Always Do your own research before investing.

Check my other post on investing. If I can help you by answering any question, shoot me a DM on Twitter.