American EP holders, how do you invest?

[MAGE]

I have been looking into how I can possibly invest and grow wealth in Singapore as an EP holder. It seems however, as an American we cannot sign up for Tiger or Moomoo stock exchange.

The DBS multiplier account is okay but seems to be catered more for the very rich to get anything worthwhile.

We would like to start investing, but not sure what programs are out there for us?

And as my PR status is pending - those of you with PR, does this limitation of signing up for stock exchange apps lift with PR?

Any guidance will be great as a noob investing foreigner in Singapore. Btw, I have been here for about 3 years, so it's not that I'm new to the country, just investing:)

[malcontent]

Welcome to the forum. I see this is your second post since Nov 2020. There are several Americans who are active on this board, including myself. As a US investor living abroad, there is much you need to learn & I can definitely help you out with that.

But first, we get a lot of flimflam posters on this board and it would be good if you can tell us a little more about yourself first, how did you end up in Singapore?

[MAGE]

But first, we get a lot of flimflam posters on this board and it would be good if you can tell us a little more about yourself first, how did you end up in Singapore?

Mmm, for me it was really just a new opportunity and chance to try out my field in a completely different region of the world? Trying new experiences, but after being here a couple years we thought it seems to be a good place to try to make a long term home - but as I started looking in ways to invest, it seems quite difficult.

But yea, mainly got here through recruitment and I'm working at a pretty well known company that is headquartered in SG.

[malcontent]

But first, we get a lot of flimflam posters on this board and it would be good if you can tell us a little more about yourself first, how did you end up in Singapore?

Mmm, for me it was really just a new opportunity and chance to try out my field in a completely different region of the world? Trying new experiences, but after being here a couple years we thought it seems to be a good place to try to make a long term home - but as I started looking in ways to invest, it seems quite difficult.

But yea, mainly got here through recruitment and I'm working at a pretty well known company that is headquartered in SG.

Interesting. So most people who move to Singapore from a Western country usually do it either:

1. For love — most often a local love interest, but just about any local family ties can be enough to incentivize people to move here.

2. For money — a comfy expat package, or at least a career or salary progression / opportunities. It usually takes quite a lot of incentives, because Singapore is one of the most expense cities on the planet.

You said we, so I assume your partner came over from the US with you and is not a local or from the region? And neither of you have any local or regional connections? That would be unusual… but not unheard of.

~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~

Back to the subject at hand, investing as a US investor abroad. The first thing I can tell you is that tiger and moo moo did you a favor by turning you away… you could have easily ended up in deep doo-doo.

The first four letter word you need to know is PFIC which stands for passive foreign investment corporation. Most foreign investments are defined as PFICs for US tax purposes and are tax toxic to US persons.

There are very few investments available locally that are appropriate for US investors. And it’s not like the old times where it’s unlikely that the US will find out, things have changed drastically under FATCA.

So where does that leave you? It actually isn’t as bad as it seems, because the US has the lowest cost, most sophisticated and diverse investing options on the planet. Even if you want to invest in Singapore stocks, or any other part of the world, the US not only has it all, but has it for zero commissions and razor thin spreads that are the envy of the world. Even the local company SEA Ltd decided to list on the NYSE instead of the SGX, that says a lot!

If you have a US address you can use, you can sign up for any US broker (avoid Merrill Edge) and simply don’t tell them where you live or else you’ll create a compliance headache for them and they won’t want you as a client. If you don’t have a US address, TD Ameritrade does have an office here and does offer commission free trading even for US investors living in Singapore.

I will stop there and see if you have questions.

[malcontent]

As you might imagine, what I described above is just scratching the surface.

As a first step on your learning journey, I highly recommend that you sit through this 2.5 hour seminar that goes into much more detail on what PFICs are and how to avoid them as a US expat —

https://youtu.be/GL0zy09xfsU

[Myasis Dragon]

malcontent has provided lots of details. As an American, you can invest in virtually anything throughout the world via US exchanges and trading entities. ETF's out the wazoo.

I'm an American who spent 8 years in Singapore. I never could identify local Singapore investments that made more sense than what was available to me in the USA.

[malcontent]

malcontent has provided lots of details. As an American, you can invest in virtually anything throughout the world via US exchanges and trading entities. ETF's out the wazoo.

I'm an American who spent 8 years in Singapore. I never could identify local Singapore investments that made more sense than what was available to me in the USA.

That was a smart move myasis.

I moved to Singapore shortly after graduation, so had little in the way of US investments, and almost no knowledge about all of the US tax & compliance vagaries.

Like any other local employee here, I started investing locally, but after a few years I slowly woke up and cleaned house. Today, if it’s not in my IRA account it’s in my NRA account (non-resident alien spouse) so virtually nothing is subject to any US tax or reporting.

The NRA spouse is certainly the best tax shelter available to an American abroad. With the $155k annual gift tax limit to foreign spouses, it’s pretty hard to hit that ceiling.

[Myasis Dragon]

^^^^^^
With a wife of now 43+ years, an NRA account was a non-starter!

I did learn the hard way that the earned income exclusion doesn't apply to joint incomes.

[malcontent]

I learned the hard way that you can’t make an IRA contribution if you wipe out all of your income with the earned income exclusion!

I had been doing that for 7-8 years until I finally realized it wasn’t allowed… and 20% *choke* per year penalty applied!

After two weeks of sleepless nights and frantic web searches, I finally figured out how to fix it without paying any penalties — I had to reduce my exclusion using the physical presence test and choose a 12 month period that had fewer days in the tax year… fortunately the IRS didn’t object to all of my amended returns, which went back further than they normally allow.

[Myasis Dragon]

^^^^^^^^^
Yeh... I found that out about my Roth IRA's... but my accountant said, "We made the error, if the IRS comes back with penalties, we will pay them. But, after I reversed everything out on an amended return, I never heard another word.

[malcontent]

It was exactly the same case for me, except I have always done my own taxes by paper from the beginning until now. Some of my methods won’t even work with e-filing.

For example, filing as head of household -and- claiming an exemption for my NRA spouse. I didn’t realize the IRS system was auto-correcting this and disallowing it until one year when they sent me a bill and a threat of audit if I didn’t accept it. I promptly sent them back my refusal and sited the tax codes that allowed me to file this way. It them took several months, but they finally accepted it.

As for the IRA, mine is also a Roth. And what a great deal for someone overseas who can exclude or deduct there way to no tax and still contribute to a Roth! No taxes on the way in, and none on the way out — it just doesn’t get any better than that!

The first year I was able to make a Roth contribution was the first year it became available, in 1998. 2010 was the first year my income exceeded the Roth limits and the same year congress opened up the back-door. I’ve continued to use that up until now. The back door may close in 2022, but funny enough, 2022 might be the first time that a deductible IRA contribution could make sense for me.

[Lisafuller]

I’m not too savvy but I invest using Fidelity.

[malcontent]

I’m not too savvy but I invest using Fidelity.

Fidelity and Schwab are the top two in my opinion. Lots to like about both. Fidelity has the only mutual funds with absolutely zero fees. Schwab has the only debit card with no fees and unlimited reimbursements of all ATM fees, even overseas. Better than most premium wealth management accounts!

I’ve been with TD Ameritrade since back when it was Waterhouse. They are also really good and have the best apps. They recently merged with Schwab, so my account will be moved over next year. Hopefully Schwab will keep their apps.