This year, I’ve been happily earning a bit of an online income. The more I earn, the more I find myself Googling phrases such as:
cheapest country for cost of living
How does an expatriate invest?
Should I move overseas for any period of time, how might my portfolio change? Investing is so easy in the US: Heck, my lazy portfolio consists of approximately 50% domestic index funds and 50% international. Well, jeeze, life is dandy in America but I sure wouldn’t want my domestic fund entirely invested in a common country for expatriates like Thailand! Sorry, Thailand. You’re a beautiful country.
So how does an ex-patriot invest? Well, if you’re in a hurry to finish this article and get right to your answer, here it is: an expatriate invests the same as you and me. If I were to go live overseas right now, my portfolio would look exactly the same: with Vanguard, 50% US funds, 50% international. You can simply wire money from foreign bank accounts into your Vanguard accounts. However, you must still be a US resident with a US address listed. Often people use their family members home addresses. This is hardly a hassle since everything is paperless. So if you still have a US address but want to live abroad, keep doing what you’re doing. It’s easy.
I believe the Vanguard low-cost index fund approach is best and quite frankly, even if you would like to support investment firms based in your new land, it will be challenging to find foreign firms who have the same investment strategy. Vanguard is finding it hard to convert other countries to their low-cost, low-risk way of thinking.
But if I would ever want to cut ties with the US, things would get more complicated.
Until this year, you were just held to your honor to report all money you have in foreign accounts. Now, the US makes countries give up your account information.
About a month ago, the US created something called the Foreign Tax Compliance Act. It requires all financial institutions from around the world to report all the assets and income of US citizens with at least $50,000 in an account.
A lot of expatriates are now going to the extreme and renouncing their US citizenship. This means they will not have access to the Vanguard we all know and love.
Well, good news is Vanguard does have a watered-down version of their US offerings. That or you can instead look to local investment options. Each country still has great trading platforms if that is something you enjoy doing. The trading game is still very much available all over the world to anyone.
At the end of the day, unless I renounce my citizenship (extremely unlikely!), I will continue investing with Vanguard. Should I renounce my citizenship, I would look into the Vanguard global offerings.
Living abroad suddenly doesn’t seem as scary as I had thought. Would you like to see more posts like these in the future? It’s all very interesting to me, at least.
Image over Thailand courtesy of Eustaaquio Santimano